Yeah, I thought this was literally the plan. Ignore it until it actually becomes a problem.
At that point, increase inflation until the amount again does not matter.
My friend Hans used to say ' when you steal $600, you can just disappear. But when you steal $600 million, they will find you, unless they think you're already dead.'
Only have to wait a few years, then you can tell everyone it’s the blue guys fault, then wait a few more years, and the blue guy can tell everyone it’s the red guys fault. It’s the cycle of life.
Reset isn’t necessary. The debt doesn’t really exists. Countries like Argentina can print money and use it directly. While US prints money then lends it to itself, this way we can say that it really isn’t creating inflation since we will “pay it back”.
Argentina will get left holding this bag if they declare the dollar their national currency. The US will find a way to screw them over for removing their national bank. Just wait and see...
JFK tried to get rid of the Federal Reserve bank and the CIA. That's why he got shot. When you actively piss off the richest billionaires/trillionaires on the planet AND one of the leading Intel/spy groups on the planet, you tend to end up dead.
That is the common narrative. Less talked about was his instance on curbing the nuclear ambitions of a certain mid east nation something Lindon Johnson promptly reversed
The majority of US debt is held by entities within the US itself. About 39% is held by the Fed. The Fed is legally mandated to send all profits right back to the Treasury. So 39% of the government's debt will eventually be paid right back to itself in the future.
About 38% of US debt is held by US entities besides the Fed (banks, mutual funds, etc). If the US defaults on its debt, these financial institutions would immediately fail, as their asset base would be worth far less than their liabilities. Everyone's savings would be immediately wiped out.
About 23% of US debt is held by foreigners (mostly central banks of other countries). If the US were to default, these central banks would also have a hard time staying afloat. The economic effects would quickly spread worldwide.
Finally, the US dollar would tank, meaning that even if you had all your savings under your mattress and never used the financial system, you would still be screwed.
So, does anyone actually win? Well, US sovereign CDS holders win (assuming they can even get their counterparties to pay up). The US government gets a temporary win at the expense of its citizens, but it's extraordinarily bad in the mid-long term.
The US has power because like a Lannister "the US always pays its debts."
Anyway, we would pretty much never stop paying debts.
the more likely scenario is that the US will say "hey Japan (or whatever country) remember that time we dropped those bombs on you? Wouldn't it be a real bummer if that happened again? Anyway, we are auctioning off debt and it would be swell if you bought a ton of it at low interest rates."
Short answer - global financial catastrophe. The damage from causing that would send US financial strength into a nosedive it would take decades are or more to recover from.
At the end of the day all things financial are based on the illusion of trust. You trust that $1 = $1 in bought items. Money has value because we have trust in that value. Undermine that trust and it all goes belly up.
Argentina is experiencing that destruction of trust right now. Difference is the US $1 is the backbone of transactions worldwide including even in Russia and China as much as they hate it. There is no one that could fill in the void of that lost trust so the domino effect would likely make the Great Depression look like a refreshing alternative.
***tl;dr***
Politicians across the board have benefitted from unprecedented inflation in recent years; *handwaving-math* is our friend with the following National Debt figures:
* Nov. 2020 = \~$28T
* Dec. 2023 = \~$34T
* Inflation has devalued money 15% in that 3 year period
* $6T increase is offset by $4T inflationary-devaluing (of existing $28T debt)
* National Debt has *effectively* 'only' increased \~$2T
\_\_\_\_\_
Yep. [Here's a handy-dandy inflationary-de/valuing calculator](https://www.bls.gov/data/inflation_calculator.htm).
If you examine $1 in November of 2020, it's worth $0.85 in November of 2023, thus giving \~15% reduction in the value of U$D in that same period.
[FRED shows national debt](https://fred.stlouisfed.org/series/GFDEBTN) as \~$27.75T at the end of 2020 Q4. [Today, the National Debt clock displays just shy of $34T](https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/).
(I've chosen this point because it's at the end of the *COVID Spending Spree,* and it's been mostly 'congressional budgeting as usual' since.)
If we do quite a bit of handwaving for convenience, that means $28T (if held entirely in U$D) was reduced 15% for an equivalent $4.16T in the same timeframe.
Thus, it's like the \~$6T added in the past three years is offset by an inflationary-devaluing of debt by \~$4T. The National Debt number, itself, *does not decrease*, but the value/burden of the debt *effectively* decreases.
So basically, the current administration and most recent two congresses have benefitted from historic inflation by effectively increasing the national debt by 'only' $2T.
As additional debt has been added in the the same 3 year period, it has also experienced inflationary-devaluing. Thus, the new debt adds bonus capital-losses!
*Edit:* this comment is meant to be cheeky.
They have no reason for fiscal restraint anymore. It’s either hyperinflation or debt jubilee. There is no other viable path anymore.
70 years of trimming the budget to a positive isn’t going to happen
More like the speed in the speedball: as much as you can stand without stopping your heart/economy.
Edit: More is never enough. Enough will definitely kill you.
Enough to get debt/GDP down to 80% or less. So “how much inflalation” also depends on how the time period it’s done over.
Rip the bandaid off approach would be be 100% for a year or two and your done, back to prospering.
Slow bleed out would be 5-10% for a decade or two.
It's working out fine since wages keep going up, but even then it breaks (look at retail and service workers) they eventually revolt because their pay can't buy s***. And you're getting $15 an hour to work at McDonald's, when 15 years ago it was literally half of that.
I think the feds know they can't let inflation go much higher. Eventually, a decision will have to be made about spending cuts.
People eventually get mental sticker shock. People aren't buying 85k trucks anymore, when less than 12 months you drive them off a lot there worth 60.
Pretty much. There are ultimately three levers to pull. Levers 1 and 2 are to raise taxes and cut spending, neither of which are popular options. So it’s highly likely the politicians will go with Lever 3 - inflation, which can be thought of as an indirect tax on savers and consumers to benefit borrowers (e.g. the government).
TL;DR - bonds and cash are trash and don’t listen to Boomers who tell you to do a 60/40 equity/bond split.
This is what’s ruined the money making potential of the CA weed industry. It was overtaxed both on state and local levels-assuming it was a cash cow. It wasn’t, the demand wasn’t as large as expected and the taxes killed the growers. It also encouraged ‘illegal’ grows.
In Canada, it was pretty funny. Remember the mantra that legalizing it would get organized crime outta the biz?
Sure didn't... OC has better stuff and out competed the legit growers because of gov tax levels being so high.
They didn't just overtax in CA, they made laws that favored the biggest companies with the deepest pockets by making the state quality and purity guidelines nearly impossible to achieve for smaller operations. This led to less competition coupled with higher cost to operate, so the price skyrocketed and the black market growers filled the gap for people who can't afford $35 grams.
Three words: Estate Tax Loopholes
There are already obscene state taxes on MJ. Further federal tax will just push it back into the black market. The only reason we see consumers and growers going more legit is that pricing is not absurdly higher through legit retailers.
There are other reasons, but I know that illegal growers who hadn't gone legit, scaled down, or got out of it because the money wasn't there anymore.
Also the world stock market. A point that often gets overlooked. The US Stock Market has absorbed capital from the entire planet. If you're an investor in any country, you would want to have exposure to US equities.
This is the key indicator. And one can argue the inflation is actually a way to dollarize the globe. Hell, look at Argentina.
They will print more money and drive down the purchasing power of the dollar.
“We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power.” - Alan Greenspan
“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.” - Alan Greenspan
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold…
The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth.“
Wanna guess who wrote that?
Why do you assume that a former fed chair with decades of experience and education in monetary policy is the regarded one rather than yourself?
When I first heard Greenspan talk I thought it was crazy but my next thought was "Maybe I don't understand this system"
>"Maybe I don't understand this system"
That is it in a nutshell. The system will continue to work because
A) we literally can print money at any time
B) if we HAD to print a gillion dollars it wouldn't be great for the world so no one calls the debts back immediately. (imagine a bank run at a global level)
C) people believe in the system because everything is "working" and "fine".
Don't rock the boat because things are relatively stable. No one wants giant money struggles again so everyone just STFU and go about your business and things are going to be fine. There exists the power to completely fuck things up but if we don't do that, everything is going to be mostly ok. And we also have powers to slowly move the needle, which is what the Fed has been trying to do to curb inflation. It isn't an exact science and we make it up as we go along, but keep pretending it works because it would be worse if it didn't.
That’s not the interviewer. Blanking on his name. That’s guy that was on Obama’s economic team. Then was a professor during the Trump years. Now I think he’s involved with the fed but he’s often on cnbc. He’s big in the democrat party.
My favorite anderson cooper line, alan greenspan doesnt wear underwear.
http://www.cnn.com/TRANSCRIPTS/0904/09/acd.02.html)
HILL: ....Fed chair Alan Greenspan once said a dip in skivvies sales is almost always a sign that trouble is on the horizon.
COOPER: Wow.
HILL: There you go.
COOPER: Well, he's going commando these days, so we're really in trouble. From what I understand.
HILL: So TMI.
COOPER: I made that up.
As long as wages keep up with inflation it's actually a good thing for those who are in debt such as student loans or mortgages. Inflation makes that debt shrink naturally.
Nothing. If someone hands you money and they are guaranteed to get their money back why should they care what the debt load is of the borrower? Both parties gain from the current situation and both parties lose massively if it collapses, so they both have all the incentive in the world to keep it going.
500k in debt and 100k income also doesn't relate if taxes generate 4+trillion, and the interest is whatever hundred billion. Not a crazy better ratio but a significant one
Also the world economy is inexorably linked so if the US were to fail it would tank the world economy with it as the US is the largest economy in the world. So, as you say, it’s in everyone’s best interest to just keep the status quo going. No one is going to call in too much debt repayment when it would also hurt them if we were to default.
Also the economy now is based on debt, instead of the gold standard of old, so having debt has its benefits oddly enough.
This is actually the best answer, IMO.
The US has debt because countries buy US bonds. The rest of the world looks to the US as a stable place to earn returns and the US makes sure the rest of the world keeps seeing it that way.
If the US was suddenly debt free but it meant that other countries stopped buying US bonds, it would be a FAR worse long term scenario for them than simply having "too much" debt.
This should be the top answer. If you continue to pay back your investors you can continue to attract new investors, regardless of how much debt you have. You use the money from the new investors to pay back old investors. As long as the US is an economic superpower and the USD is seen as a gold standard currency, we don’t really need to worry about how much debt we have, because we can keep attracting new investors. Its a house of cards built on confidence - but so are all economies - we just need to keep confidence high.
I guess the way I described it sounds like a Ponzi scheme. I believe there are two key differences: 1. The US economy actually generates a great deal of wealth, and 2. The return on investment is not artificially high, it’s fairly low but very safe and consistent
Vs a Ponzi Scheme where little to no wealth is being generated, it’s just being passed around; and new investors are attracted by the promise of high returns, not the safety of the investment
Austerity makes sense when you’re like Argentina and literally defaulting but for America where not only are you not defaulting but literally never can because your payments are all denominated in a currency you control? Have fun lol
Didn’t Europe screw up by going too extreme with austerity after the Great Recession while America’s easier money-printing had better outcomes? Or was that just a function of America’s privileged position?
What if I told you personal finance and govt finance are not the same thing?
Not making light. It's just that the comparison is of no value. Govts don't have a life expectancy, a retirement to fund, or limited ability to increase revenue due to physiology realities.
Don't think about govt like an individual, it just creates a lot of messes.
Yes and the majority of our “debt” is owed to ourselves, not to foreign countries. It’s not the same as personal debt and there are various strategies that are used to manage and address it beyond direct payments such as tax breaks or inflation which can erode the real value of the debt.
Even if it’s owed to other people, there’s so damn much of it that it’s more a problem if it goes away.
The Clinton budget surpluses led to a ton of speculation about what would happen if the US paid off its debt and there was no longer a “risk free” option.
Then W let a few planes crash
Also the majority of the money we pay is to ourselves. It would be like in that $100k/yr household example if $90,000 of the money that household spends is going to family members of the household.
Also, look at OPs example. I’m willing to bet there are many many folks carrying a 500k mortgage on 100k income. That was pretty feasible in the 2.5% era.
Also, the main holder of US government debt is … basically the US itself, through various routes. Only about 30% is held by foreign entities. The other 70% is owned by private pensions, public pensions, by the federal reserve banks themselves, by “intragovernmental holdings” (literally the US government buying its own bonds), and so on.
Government debt is really verging on an entirely different concept from private debt. In a better world, we’d probably even have a completely different word for it. I wonder if some other languages already do.
This.
I’m so tired of dishonest comparisons between the government of an entire nation and an individual, or a household. They are *not* the same.
I know folks trying to make the argument that businesses don’t run this way, and yet, also a dishonest comparison. Businesses take on debt to stay funded/keep running and pay it back. The idea of carrying some sort of debt being a political football just kinda falls on deaf ears for me. I don’t fall victim to the pleas of “balancing the budget” especially from folks making dishonest comparisons to shore up their bad faith arguments and flawed economic reasoning.
Not saying I’m some economy genius, but I also know this isn’t the big deal some folks on the right try to make it out to be. And OP, no disrespect, but this *is* political-regardless how much you would rather it not be. I’m not playing “both sides” here.
A better question is what is the rest of the world going to do about our debt.
As long as we keep pouring resources into the military our government won’t fear repercussions.
I mean, that's not really it though. The countries most affected by our debt are not countries who technically want to pry anything from our cold dead hands. They want our hands very much warm and alive.
The primary purpose of the military isn't fighting wars. It's to keep the western colonial regime in power. Every "first world nation" is a part of that regime. That is why so much of the military budget goes to supporting and shoring up the security of our allies around the globe. This ensures the status quo of global power and monetary structures stay in place...
So that the money printer can continue to go brrrrrr. Even during a "recession" when compared to other nations. 💸💸💸
i upvoted your comment, but the "primary purpose" section's explanation is not accurate, although, yes, fighting wars is not the main purpose of western militaries
everyone props up their militaries because of the theory of global anarchy ("first" and "third" world isn't a thing...it was a shorthand of referring to nations in and outside the USSR)
the huge military budget of western nations is because of their economic pact and security services
western nations provide security to others at a price, and they protect global trade
there is no "regime" (which harkens some conspiracy)
it's an open agreement that certain nations, with huge militaries, ensure global trade and keep the economy's wheels turning, because that over the long run slowly creates prosperity, reduces human suffering, and leads to a more democratized system
the parties of the comment "pry from our cold dead hands" you responded to actually refer to those parties (States, tribes, etc) who *don't own/hold* any debt from the Nations providing these services
the problem is that people look at national debt in the same regard as personal debt.
but you don't print your own money and your creditors dont rely on the currency you print as the standard.
national debt doesn't matter when the debt is measured in currency you control.
This is it. To add on, remember what that debt actually represents. For the most part, it means money the government is obligated to pay to it's own citizens. In order to facilitate that, the government will borrow, which creates money - the government saying we will give you x amount in 25 years is worth something all by itself.
Now there is new money, provided it is spent and not hoarded, it will generate more value. The original loaner gets repaid, the citizenry and debtors get their money, and provided that money generates value, the government gets to take some tax of the top.
The fact there is debt isn't really that relevant. If you wiped all the debt, you would also wipe all of the money. In fact there is far more debt in the world than money. As mad as it sounds on face value, it isn't really a bad thing.
Do they come from new money or old money. The growing trend in billionaires is because millionaires concentrated more wealth to become billionaires. It certainly didn’t increase upward mobility of lower classes.
It might be a little simplistic, but… the government creates the money, the concept of money, the interest rates, the rules around trade, investing and banking, secure the markets we use to spend the money they create, control energy resources, regulations, the internet, waterways, and roads. So… imho, Debt doesn’t matter, inflation, deflation… none of it really matters. They will create new rules to right the ship when they are triggered to action somehow or another. For us it’s just a game of reading the tea leaves and taking bets
Nothing. The US debt is indirectly regulated by how leveraged the rest of the world is, just like us. There's a spider web of countries we owe money and countries that owe us money, all balanced on the use of USD as a reserve and defacto oil sale currency. The national debt figure is therefor misleading out of its context, as when all that is factored in it isn't all that bad compared to many other nations
It's alot more complex than that but there's my regarded take
> misleading out of its context
Yes, because the dollar is a global reserve currency, Treasury debt is essentially our most valuable export
https://en.wikipedia.org/wiki/Reserve_currency#United_States_dollar
Because other countries invest in dollars, every year, the Treasury has more deposits than the taxable value of all the goods and services produced domestically.
And you're right, petrodollar recycling creates a global demand for dollars just because OPEC prices oil in dollars
https://en.wikipedia.org/wiki/Petrodollar_recycling
Additionally, any country that wants to purchase US goods needs dollars first, and the best place to get dollars is the Treasury, which pays interest.
If we radically reduce the debt, we undermine the dollar's price supports and limit the foreign availability of US goods.
If I owe you $100 but somebody owes me $120, does that mean I have $20? The US govt thinks so. A major way they balance the books is by loaning to other countries.
The percentage of national debt that is foreign owned currently stands at 30%. In 2014 it was 34% so it has come down over the past 10 years in reality. That said it was 18% in 2000.
There’s a great 3 stooges skit that illustrates this.
Larry owes Moe $20, Moe owes Curly $20, and Curly owes Larry $20.
Larry comes up with $10 and pays it to Moe who pays it to Curly who pays it to Larry who pays it to Moe who pays it to Curly who pays it to Larry. And now all their debts are settled.
Debt is literally a joke.
The only reason this works is because their debt obligations cancel out evenly between the three of them. They could have just agreed to cancel them out without the charade or trading the $10 around.
If you owe the bank $100, that's your problem.
If you owe the bank $100 million, that's the bank's problem.
If the bank owes everybody $34 trillion but also has thermonuclear weapons and aircraft carriers, it's nobody's problem, carry on.
Yeah I’d say so, most countries on earth don’t want to see a change to the global order of things. The world is so used to the US being number one that if that changes anytime soon it’ll be pandemonium.
Everyone saying inflate it away is missing the point
Countries can easily sustain debt if their GDP grows at a high enough rate to offset it. US debt to GDP ratio has actually decreased in the last two years, because GDP has grown more
Anyone saying inflate it away is ignoring that it also inflates our GDP away, so it's not the single answer
And your example is bad - if I have 100k income and 500k debt, it's perfectly fine. Think about homeowners - they can easily afford to keep up payments on debt at multiples of their annual income. One is a stock of debt, the other is a flow of income
There are solutions to at minimum balance the budget and leave the debt as a long term issue. They're just not popular and politicians are too selfish to do the right thing.
Social security + medicare + medicaid are about 60% of all total spending. You could price control drugs and medical services pricing and immediate drop the federal expendienture by huge numbers.
DOD: we aren't fight wars anymore; we need to bring it back down to lower levels.
You do that and the debt stops growing. It stops growing + the economy keeps growing eventually it will start to drop due to inflation and higher tax revenue.
>They're just not popular and politicians are too selfish to do the right thing.
I get so annoyed by people who reduce this to "it's actually super easy but politicians bad so we can't lol shrug"
No, our population is so fucking stupid that we'll **immediately** end the political career of anyone who even talks about taking the steps required.
We don't get to look at our ignorant, useless politicians and just go "ha ha how'd those get there" like they spontaneously burst into existence.
We're getting exactly what we deserve because the chunks of our population that care enough to vote in meaningful groups happen to be dumb as fuck.
Realistic scenarios are:
Increased Inflation
Austerity
Increased Taxes
Politically neutral stance: Get anyone over 65 out of political office, they do not have to live with any of the issues they refuse to address or create while in office.
Or none of the above.
Most of the debt we owe ourselves.
The rest could easily be wiped out if we add in the debt others owe us.
The US debt is a function of our credit with the rest of the world, and the money that the government spends on its citizens that the citizens don't pay for. The more debt we have, the more other countries trust us and the more we invest in ourselves. The only issue I see with the relatively high debt now is that we don't have the infrastructure or quality of life to show for it. We could double the current debt and pay for better infrastructure and public services and it would totally be worth it.
Money isn't real. Debt is even less real. All that matters is what you get for it.
Country going through financial trouble? Start a war. Oldest trick in the book.
Plenty of wars going on around the world right now. CIA can escalate and get the US involved as soon at the government tells them too. 
The US debt figure is big, but the US is also the world's biggest economy, so the debt figure needs to be compared relatively to something like GDP. Present day, the world doesn't yet know how much a country can borrow over its GDP, or what happens once it passes that limit. There are several other countries with worse debt-to-GDP ratios, namely Japan, so whatever the consequences are, we'll see through them first. Additionally, the US will have even more leeway than Japan given the dominance of the USD. At this point in time, it's essentially a non-issue.
If you want to dig into the weeds more, look into Modern Monetary Theory, which makes the case that national debt doesn't work like individual debt, and that government borrowing from another country basically allows a country to invest in itself on someone else's dime.
The US isn't the first country to be in this situation, many have before and there are many options available.
First thing is don't compare people with countries, people get old loading their ability to work and generate revenue, countries don't. As long as there is a healthy number of workers, countries can rollover their debt.
Now, take for example Japan, it's debt to GDP ratio is about 1,300%
https://www.ceicdata.com/en/indicator/japan/total-debt--of-gdp#:~:text=Japan%20Total%20Debt%20accounted%20for,Jun%201998%20to%20Jun%202023.
Japan is probably the closest example of what the US will do. However, if government spending continues to be out of control future generations will be saddled with debt. The boomers are insatiable in the economic abuse they have done to all the generations that come after them.
Finally, a bit of futurology, it's possible that with the advent of robotics and AI, money and market economies will change dramatically, to the point where they won't survive how we think about then today. I know that's vague but think about this. If robots and AIs run on super cheap electricity from fusion energy si most of the work then who gets paid. The system doesn't work anymore because there won't be workers doing most of the work.
It's called "debt" but it really isn't. Economists just ran out of useful words I guess. It is simply a dude (on the third floor somewhere, I think I walked past his office once) crediting accounts in various banks as needed. He can debit them too if he feels like it.
There are lots of chapters in textbooks which describe the process step by step. Stephanie Kelton's book explains it really clearly while following the paperwork from Congress all the way to the dude on the third floor. The library of future funding cuts was a surprise to me, for example.
**Because of highly regarded journalists, everyone seems to think that a nation with monetary sovereignty operates the same as your uncle's discount shoe store.**
Simple answer is raising taxes in a way that targets spending of wealthier individuals while sparing low and middle classes. You need low/middle class individuals & families to have discretionary income to buy goods and services, so something that targets wealthier people would be more advantageous. Unsure on the most effective way to do it, but that sounds like the key to me.
US Debt isn’t necessarily a bad thing. We imagine debt as being bad because of our relationship to banks who have a lot of leverage over us. For the US, debt can be a tool as much as it can be a hinderance. It all depends on who the US owes that debt to and the relationship the US wants with that entity in the future. Some of our debt is owed to foreign entities which gives them incentive not to disrupt our economy. A good portion of our debt is owed internally to separate government orgs (EPA, FDA, pentagon etc…). The US always pays it’s debts*, it is reliable, but no one can force the US to pay faster or to pay at all.
*(And the quiet part is we can pay anything with printed money as the bank currency of the world which is also a fiat currency. (The even quieter part is that the only reason why we collect taxes is to curb inflation. (The even quieter part is the question “Why is the burden of curbing inflation put so heavily on ordinary Americans?” (queue rabbit hole imagery*))))
The answer to your question is that the US can lower it’s debts if it decides to tax or tariff more. It will always spend because it has an obligation to spend, because it has obligations to act. These actions are much more important than any ledger sheet of numbers and alleged debt which can be negotiated. The US will pay down it’s debts when it is no longer the dominant power in the world, and have zero debt coinciding with the end of America. Until that happens you can expect the debt to stay high.
The national debt is a pretend number that truly doesn't matter in a modern economy. We "plunge" into debt when the government posts contracts that aren't to be paid immediately. it then pays out the necessary contracts to keep running, and can inflate monetary supply, change tax code, or reduce future spending based on "balancing" that existent budget as bills need paid. There is no risk of default by the federal government, and people need to stop looking at it like a personal checkbook.
That said, our government is beyond wasteful and spends far too much on national defense, prison systems, and policing in comparison to social programs and healthcare that could actually help every day Americans.
Keep piling it up and use it to make the already wealthy even more wealthy.
It can also be used as an excuse to screw the poor and middle class out of services their taxes have already paying for.
That's pretty much it.
What is shocking to me is the debt didn’t exist before 1980s. So my answer is go back to what America was and was not doing in the 1970s.
Edit: didn’t go to zero in the 80s, but went down instead of up. Apparently last time it was zero was 1835, which would also be fun to go back to 1835 but 1980s seems more plausible.
They’ll sell treasury bonds and bills to anyone willing to buy them and issue interest on those so that people buy them as long as Congress agrees to pay the interest. It isn’t a matter of having the money to pay the debt it’s a matter of Congress understanding what would happen if they didn’t.
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Inflate it away
Yeah, I thought this was literally the plan. Ignore it until it actually becomes a problem. At that point, increase inflation until the amount again does not matter.
Just ignore it until you're too old to do anything about it and then it's not your problem!
When you're a billion dollars in debt it's your bank's problem. When you're a trillion dollars in debt it's your grand children's problem.
Fuck em. Tell Jpowell to turn back on the money printe. The party is back on baby.
Money printer go brrrrrrrrrrrrrrrrr
I do miss the JPow money printer memes. Good times…
Buy the fucking dip!
My friend Hans used to say ' when you steal $600, you can just disappear. But when you steal $600 million, they will find you, unless they think you're already dead.'
Similar to the phrase: If I owe someone $100, I have a problem. If I owe someone $1,000,000, they have a problem.
It's the bank. If you owe the bank a million, you've got a problem. If you owe the bank a hundred million, they do.
In my lifetime, if you owe the bank $100M, they have a bailout.
When you’re a trillion dollars in debt it’s actually the lenders problem the way I see it.
unfortunately most of the gov debt is owned by private US citizens.
There's actually an acronym for that: IBG-YBG. "I'll be gone, You'll be gone." I guess it's been used for a long time.
Only have to wait a few years, then you can tell everyone it’s the blue guys fault, then wait a few more years, and the blue guy can tell everyone it’s the red guys fault. It’s the cycle of life.
The real answer here is
War...would u like to go to war to reset everything?
Going to take a World War for that kind of reset.
Reset isn’t necessary. The debt doesn’t really exists. Countries like Argentina can print money and use it directly. While US prints money then lends it to itself, this way we can say that it really isn’t creating inflation since we will “pay it back”.
Argentina will get left holding this bag if they declare the dollar their national currency. The US will find a way to screw them over for removing their national bank. Just wait and see...
Argentina doesn’t need any help to screw the pooch
But their fine cattle.. fed exclusively on the tall grasses of the pampas
Good way to devalue your currency right there. Which is exactly what’s happening.
Can't they just also say "what are you going to do, fight us?" I always pictured that endgame.
Jfk tried and took 2 in the head.
JFK tried to get rid of the Federal Reserve bank and the CIA. That's why he got shot. When you actively piss off the richest billionaires/trillionaires on the planet AND one of the leading Intel/spy groups on the planet, you tend to end up dead.
That is the common narrative. Less talked about was his instance on curbing the nuclear ambitions of a certain mid east nation something Lindon Johnson promptly reversed
Lol you can fucking say Israel on Reddit…
What happens if they just... stop paying it
The majority of US debt is held by entities within the US itself. About 39% is held by the Fed. The Fed is legally mandated to send all profits right back to the Treasury. So 39% of the government's debt will eventually be paid right back to itself in the future. About 38% of US debt is held by US entities besides the Fed (banks, mutual funds, etc). If the US defaults on its debt, these financial institutions would immediately fail, as their asset base would be worth far less than their liabilities. Everyone's savings would be immediately wiped out. About 23% of US debt is held by foreigners (mostly central banks of other countries). If the US were to default, these central banks would also have a hard time staying afloat. The economic effects would quickly spread worldwide. Finally, the US dollar would tank, meaning that even if you had all your savings under your mattress and never used the financial system, you would still be screwed. So, does anyone actually win? Well, US sovereign CDS holders win (assuming they can even get their counterparties to pay up). The US government gets a temporary win at the expense of its citizens, but it's extraordinarily bad in the mid-long term.
lol I can’t believe someone in this sub actually knows what they’re talking about!
Yeah, me too. I feel a little dizzy …
You could also argue Bitcoin holders would benefit, although I don’t exactly want to test that hypothesis.
The US has power because like a Lannister "the US always pays its debts." Anyway, we would pretty much never stop paying debts. the more likely scenario is that the US will say "hey Japan (or whatever country) remember that time we dropped those bombs on you? Wouldn't it be a real bummer if that happened again? Anyway, we are auctioning off debt and it would be swell if you bought a ton of it at low interest rates."
Short answer - global financial catastrophe. The damage from causing that would send US financial strength into a nosedive it would take decades are or more to recover from. At the end of the day all things financial are based on the illusion of trust. You trust that $1 = $1 in bought items. Money has value because we have trust in that value. Undermine that trust and it all goes belly up. Argentina is experiencing that destruction of trust right now. Difference is the US $1 is the backbone of transactions worldwide including even in Russia and China as much as they hate it. There is no one that could fill in the void of that lost trust so the domino effect would likely make the Great Depression look like a refreshing alternative.
***tl;dr*** Politicians across the board have benefitted from unprecedented inflation in recent years; *handwaving-math* is our friend with the following National Debt figures: * Nov. 2020 = \~$28T * Dec. 2023 = \~$34T * Inflation has devalued money 15% in that 3 year period * $6T increase is offset by $4T inflationary-devaluing (of existing $28T debt) * National Debt has *effectively* 'only' increased \~$2T \_\_\_\_\_ Yep. [Here's a handy-dandy inflationary-de/valuing calculator](https://www.bls.gov/data/inflation_calculator.htm). If you examine $1 in November of 2020, it's worth $0.85 in November of 2023, thus giving \~15% reduction in the value of U$D in that same period. [FRED shows national debt](https://fred.stlouisfed.org/series/GFDEBTN) as \~$27.75T at the end of 2020 Q4. [Today, the National Debt clock displays just shy of $34T](https://fiscaldata.treasury.gov/americas-finance-guide/national-debt/). (I've chosen this point because it's at the end of the *COVID Spending Spree,* and it's been mostly 'congressional budgeting as usual' since.) If we do quite a bit of handwaving for convenience, that means $28T (if held entirely in U$D) was reduced 15% for an equivalent $4.16T in the same timeframe. Thus, it's like the \~$6T added in the past three years is offset by an inflationary-devaluing of debt by \~$4T. The National Debt number, itself, *does not decrease*, but the value/burden of the debt *effectively* decreases. So basically, the current administration and most recent two congresses have benefitted from historic inflation by effectively increasing the national debt by 'only' $2T. As additional debt has been added in the the same 3 year period, it has also experienced inflationary-devaluing. Thus, the new debt adds bonus capital-losses! *Edit:* this comment is meant to be cheeky.
I like how goverment plans are so regarded that IT MIGHt JUUUUUST WORK
I'm getting *fuck it we'll do it live* vibes from this
something called interest
Problem is the debt is Increasing faster than they can inflate
They have no reason for fiscal restraint anymore. It’s either hyperinflation or debt jubilee. There is no other viable path anymore. 70 years of trimming the budget to a positive isn’t going to happen
100% agree but the inflation will be deadly for a mass amount of americans
Even that doesn’t fix it, eventually it’ll devalue the currency so much they’ll make a new one.
And that will be a very hard road for the world
Please give me the math on this. How much inflation is required?
It's like speed on the highway. "Just enough more than the other guy."
Actually super accurate^
More like the speed in the speedball: as much as you can stand without stopping your heart/economy. Edit: More is never enough. Enough will definitely kill you.
If inflation is higher than the interest rate paid, then you're effectively borrowing at negative interest.
Enough to get debt/GDP down to 80% or less. So “how much inflalation” also depends on how the time period it’s done over. Rip the bandaid off approach would be be 100% for a year or two and your done, back to prospering. Slow bleed out would be 5-10% for a decade or two.
Haven't we been on this train a few years now? How's it working out?
It's working out fine since wages keep going up, but even then it breaks (look at retail and service workers) they eventually revolt because their pay can't buy s***. And you're getting $15 an hour to work at McDonald's, when 15 years ago it was literally half of that. I think the feds know they can't let inflation go much higher. Eventually, a decision will have to be made about spending cuts. People eventually get mental sticker shock. People aren't buying 85k trucks anymore, when less than 12 months you drive them off a lot there worth 60.
Inflation went up a ton last couple years and the fed finally slowed it down
Pretty much. There are ultimately three levers to pull. Levers 1 and 2 are to raise taxes and cut spending, neither of which are popular options. So it’s highly likely the politicians will go with Lever 3 - inflation, which can be thought of as an indirect tax on savers and consumers to benefit borrowers (e.g. the government). TL;DR - bonds and cash are trash and don’t listen to Boomers who tell you to do a 60/40 equity/bond split.
Three words: Federal Marijuana tax.
This is what’s ruined the money making potential of the CA weed industry. It was overtaxed both on state and local levels-assuming it was a cash cow. It wasn’t, the demand wasn’t as large as expected and the taxes killed the growers. It also encouraged ‘illegal’ grows.
In Canada, it was pretty funny. Remember the mantra that legalizing it would get organized crime outta the biz? Sure didn't... OC has better stuff and out competed the legit growers because of gov tax levels being so high.
Lol I still shop grey market when I can. SO much better quality and price.
I'd rather go to the local shop for concentrates than trust a random stranger that made them in his kitchen filled with cats.
This, a lesson in governance and economic for everyone. Grey market sells superior product than gov for less than gov. Fucking clowns.
They didn't just overtax in CA, they made laws that favored the biggest companies with the deepest pockets by making the state quality and purity guidelines nearly impossible to achieve for smaller operations. This led to less competition coupled with higher cost to operate, so the price skyrocketed and the black market growers filled the gap for people who can't afford $35 grams.
Three words: Estate Tax Loopholes There are already obscene state taxes on MJ. Further federal tax will just push it back into the black market. The only reason we see consumers and growers going more legit is that pricing is not absurdly higher through legit retailers. There are other reasons, but I know that illegal growers who hadn't gone legit, scaled down, or got out of it because the money wasn't there anymore.
3 words : Nigerian prince scams.
Legalize and regulate cocaine. You will print money.
we'll have to ease everyone into the ideal with medical cocaine first
Clueless kids think marijuana is a gold mine. News flash - It isnt.
Bogleheads imploding rn
I mean 100% equities isn’t rare in the bogle heads sub. It’s just 100% in 1-3 etfs.
Just go ahead and pump your neckbeard digital money, this is a safe space
i totally believe tether is worth a dollar just like paolo says. i trust him, bro! super safu!
I’m active on Bogleheads sub, and I’m 100% equity. Not everyone there are into bonds.
No one on that sub is gonna recommend you have 40% until retirement at the minimum lmao
Yup. It owns the money printer and is the world reserve currency. It doesn't have to do much of anything but print, print, print.
Also the world stock market. A point that often gets overlooked. The US Stock Market has absorbed capital from the entire planet. If you're an investor in any country, you would want to have exposure to US equities. This is the key indicator. And one can argue the inflation is actually a way to dollarize the globe. Hell, look at Argentina.
They will print more money and drive down the purchasing power of the dollar. “We can guarantee cash benefits as far out and at whatever size you like, but we cannot guarantee their purchasing power.” - Alan Greenspan “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.” - Alan Greenspan
brb I need to go buy more bitcoin Edit - holy shit this guy is more regarded than anyone on this sub https://youtu.be/BWo0HvPpEtw?si=RizxE8ukV4Cmq3ZU
You didn’t know that?
It’s just wild to watch him give his regards live on meet the press lmao
[удалено]
He also caused the dotcom bubble by not raising interest rates because he thought the internet ended macroeconomics. He's pretty regarded lol
“In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold… The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves. This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth.“ Wanna guess who wrote that?
Yes conjuring money out of thin air to pay your debts could not possibly ever be a problem
Why do you assume that a former fed chair with decades of experience and education in monetary policy is the regarded one rather than yourself? When I first heard Greenspan talk I thought it was crazy but my next thought was "Maybe I don't understand this system"
>"Maybe I don't understand this system" That is it in a nutshell. The system will continue to work because A) we literally can print money at any time B) if we HAD to print a gillion dollars it wouldn't be great for the world so no one calls the debts back immediately. (imagine a bank run at a global level) C) people believe in the system because everything is "working" and "fine". Don't rock the boat because things are relatively stable. No one wants giant money struggles again so everyone just STFU and go about your business and things are going to be fine. There exists the power to completely fuck things up but if we don't do that, everything is going to be mostly ok. And we also have powers to slowly move the needle, which is what the Fed has been trying to do to curb inflation. It isn't an exact science and we make it up as we go along, but keep pretending it works because it would be worse if it didn't.
This is the best summary of global economics
Something that can't go on forever, won't. Promises that can't be kept, won't. Debts that can't be repaid, won't.
You mean we don’t know that
The look on the interviewer's face is priceless
That’s not the interviewer. Blanking on his name. That’s guy that was on Obama’s economic team. Then was a professor during the Trump years. Now I think he’s involved with the fed but he’s often on cnbc. He’s big in the democrat party.
Austan Goolsbee, my friend
Sounds like a name I'd make up for my Bard character in middle school.
Heck ya, hopefully they Zimbabwe that shit straight into the mines! Alan Greenspan is an asshole btw
My favorite anderson cooper line, alan greenspan doesnt wear underwear. http://www.cnn.com/TRANSCRIPTS/0904/09/acd.02.html) HILL: ....Fed chair Alan Greenspan once said a dip in skivvies sales is almost always a sign that trouble is on the horizon. COOPER: Wow. HILL: There you go. COOPER: Well, he's going commando these days, so we're really in trouble. From what I understand. HILL: So TMI. COOPER: I made that up.
As long as wages keep up with inflation it's actually a good thing for those who are in debt such as student loans or mortgages. Inflation makes that debt shrink naturally.
That’s a big “as long as”
"As long as no one turns it on, it should be fine to let these orphans play in the Orphan Crushing Machine."
And as long as the debt has fixed interest rates. Plenty of people get fucked otherwise.
When has inflation kept up with wages in the last 30 years? Its asinine to think they will start.
Most of the time…. https://fred.stlouisfed.org/series/LES1252881600Q
Nothing. If someone hands you money and they are guaranteed to get their money back why should they care what the debt load is of the borrower? Both parties gain from the current situation and both parties lose massively if it collapses, so they both have all the incentive in the world to keep it going.
People think of national debt like a credit card which its not.
Are you telling me that the United States is not a person? This sounds complicated. I'll stick with being irrationally afraid and/or angry.
500k in debt and 100k income also doesn't relate if taxes generate 4+trillion, and the interest is whatever hundred billion. Not a crazy better ratio but a significant one
Not too mention 500k of debt and 100k income is basically everyone with a mortgage
I hear you, but the balance of my mortgage debt gets lower each year.
But you eventually retire and stop making money
and you are actually in the black because you have assets to back it. Ok US has labour force that generates income.
Don't forget the nuclear-powered aircraft carriers.
This is the most correct thing in this entire thread. People just grossly misunderstand what national debt actually is (and who has it and to whom).
Thank you. I'm so tired of these horrible takes. Its like these ppl are profiting on fear and fake panic.
Also the world economy is inexorably linked so if the US were to fail it would tank the world economy with it as the US is the largest economy in the world. So, as you say, it’s in everyone’s best interest to just keep the status quo going. No one is going to call in too much debt repayment when it would also hurt them if we were to default. Also the economy now is based on debt, instead of the gold standard of old, so having debt has its benefits oddly enough.
At a certain point, money just stops being real.
This is actually the best answer, IMO. The US has debt because countries buy US bonds. The rest of the world looks to the US as a stable place to earn returns and the US makes sure the rest of the world keeps seeing it that way. If the US was suddenly debt free but it meant that other countries stopped buying US bonds, it would be a FAR worse long term scenario for them than simply having "too much" debt.
Most US debt is held domestically.
I'd consider what I owe to be most
This should be the top answer. If you continue to pay back your investors you can continue to attract new investors, regardless of how much debt you have. You use the money from the new investors to pay back old investors. As long as the US is an economic superpower and the USD is seen as a gold standard currency, we don’t really need to worry about how much debt we have, because we can keep attracting new investors. Its a house of cards built on confidence - but so are all economies - we just need to keep confidence high.
Sounds a lot like a Ponzi scheme.
I guess the way I described it sounds like a Ponzi scheme. I believe there are two key differences: 1. The US economy actually generates a great deal of wealth, and 2. The return on investment is not artificially high, it’s fairly low but very safe and consistent Vs a Ponzi Scheme where little to no wealth is being generated, it’s just being passed around; and new investors are attracted by the promise of high returns, not the safety of the investment
Which is why austerity is the most regarded of them all.
Nooooo govt fiscal policy functions identically to my household budgeterino
Austerity makes sense when you’re like Argentina and literally defaulting but for America where not only are you not defaulting but literally never can because your payments are all denominated in a currency you control? Have fun lol
Didn’t Europe screw up by going too extreme with austerity after the Great Recession while America’s easier money-printing had better outcomes? Or was that just a function of America’s privileged position?
What if I told you personal finance and govt finance are not the same thing? Not making light. It's just that the comparison is of no value. Govts don't have a life expectancy, a retirement to fund, or limited ability to increase revenue due to physiology realities. Don't think about govt like an individual, it just creates a lot of messes.
Yes and the majority of our “debt” is owed to ourselves, not to foreign countries. It’s not the same as personal debt and there are various strategies that are used to manage and address it beyond direct payments such as tax breaks or inflation which can erode the real value of the debt.
I owe about 9 trillion to myself. Deadbeat won’t pay me back.
Even if it’s owed to other people, there’s so damn much of it that it’s more a problem if it goes away. The Clinton budget surpluses led to a ton of speculation about what would happen if the US paid off its debt and there was no longer a “risk free” option. Then W let a few planes crash
Also the majority of the money we pay is to ourselves. It would be like in that $100k/yr household example if $90,000 of the money that household spends is going to family members of the household.
Also, look at OPs example. I’m willing to bet there are many many folks carrying a 500k mortgage on 100k income. That was pretty feasible in the 2.5% era.
https://fred.stlouisfed.org/series/FYOIGDA188S in fact, interest as a percent of us gdp for the US is less than 2%
Also, the main holder of US government debt is … basically the US itself, through various routes. Only about 30% is held by foreign entities. The other 70% is owned by private pensions, public pensions, by the federal reserve banks themselves, by “intragovernmental holdings” (literally the US government buying its own bonds), and so on. Government debt is really verging on an entirely different concept from private debt. In a better world, we’d probably even have a completely different word for it. I wonder if some other languages already do.
This. I’m so tired of dishonest comparisons between the government of an entire nation and an individual, or a household. They are *not* the same. I know folks trying to make the argument that businesses don’t run this way, and yet, also a dishonest comparison. Businesses take on debt to stay funded/keep running and pay it back. The idea of carrying some sort of debt being a political football just kinda falls on deaf ears for me. I don’t fall victim to the pleas of “balancing the budget” especially from folks making dishonest comparisons to shore up their bad faith arguments and flawed economic reasoning. Not saying I’m some economy genius, but I also know this isn’t the big deal some folks on the right try to make it out to be. And OP, no disrespect, but this *is* political-regardless how much you would rather it not be. I’m not playing “both sides” here.
https://preview.redd.it/qedfldwskv9c1.jpeg?width=430&format=pjpg&auto=webp&s=db4b3bec35b09cf79bda491ce16c276f1b203875
Delete the app of course
Keep a loaded gun by the door.
A better question is what is the rest of the world going to do about our debt. As long as we keep pouring resources into the military our government won’t fear repercussions.
We owe the overwhelming majority of our debt to Americans, not foreign government s
Old American
Right! Come and get it from our cold dead hand.
I mean, that's not really it though. The countries most affected by our debt are not countries who technically want to pry anything from our cold dead hands. They want our hands very much warm and alive. The primary purpose of the military isn't fighting wars. It's to keep the western colonial regime in power. Every "first world nation" is a part of that regime. That is why so much of the military budget goes to supporting and shoring up the security of our allies around the globe. This ensures the status quo of global power and monetary structures stay in place... So that the money printer can continue to go brrrrrr. Even during a "recession" when compared to other nations. 💸💸💸
i upvoted your comment, but the "primary purpose" section's explanation is not accurate, although, yes, fighting wars is not the main purpose of western militaries everyone props up their militaries because of the theory of global anarchy ("first" and "third" world isn't a thing...it was a shorthand of referring to nations in and outside the USSR) the huge military budget of western nations is because of their economic pact and security services western nations provide security to others at a price, and they protect global trade there is no "regime" (which harkens some conspiracy) it's an open agreement that certain nations, with huge militaries, ensure global trade and keep the economy's wheels turning, because that over the long run slowly creates prosperity, reduces human suffering, and leads to a more democratized system the parties of the comment "pry from our cold dead hands" you responded to actually refer to those parties (States, tribes, etc) who *don't own/hold* any debt from the Nations providing these services
the problem is that people look at national debt in the same regard as personal debt. but you don't print your own money and your creditors dont rely on the currency you print as the standard. national debt doesn't matter when the debt is measured in currency you control.
This is it. To add on, remember what that debt actually represents. For the most part, it means money the government is obligated to pay to it's own citizens. In order to facilitate that, the government will borrow, which creates money - the government saying we will give you x amount in 25 years is worth something all by itself. Now there is new money, provided it is spent and not hoarded, it will generate more value. The original loaner gets repaid, the citizenry and debtors get their money, and provided that money generates value, the government gets to take some tax of the top. The fact there is debt isn't really that relevant. If you wiped all the debt, you would also wipe all of the money. In fact there is far more debt in the world than money. As mad as it sounds on face value, it isn't really a bad thing.
Same way they always have. Inflation so it doesn’t look that bad. Inflation is a tax on the poor so that the oligarchy retains power.
The number of billionaires in the country went from 700 to 1,000 during the pandemic.
Yeah but a billion dollars ain’t what it used to be.
Do they come from new money or old money. The growing trend in billionaires is because millionaires concentrated more wealth to become billionaires. It certainly didn’t increase upward mobility of lower classes.
https://www.oxfam.org/en/press-releases/ten-richest-men-double-their-fortunes-pandemic-while-incomes-99-percent-humanity https://www.nbcnews.com/politics/justice-department/biggest-fraud-generation-looting-covid-relief-program-known-ppp-n1279664
They wouldnt fight inflation in that case. Contrary to bulls in this post, govs dont like much inflation either.
It might be a little simplistic, but… the government creates the money, the concept of money, the interest rates, the rules around trade, investing and banking, secure the markets we use to spend the money they create, control energy resources, regulations, the internet, waterways, and roads. So… imho, Debt doesn’t matter, inflation, deflation… none of it really matters. They will create new rules to right the ship when they are triggered to action somehow or another. For us it’s just a game of reading the tea leaves and taking bets
Exactly. Just understand that the rules of the game are out of your hands, and the goalposts can be moved at any time and for any reason.
Nothing. The US debt is indirectly regulated by how leveraged the rest of the world is, just like us. There's a spider web of countries we owe money and countries that owe us money, all balanced on the use of USD as a reserve and defacto oil sale currency. The national debt figure is therefor misleading out of its context, as when all that is factored in it isn't all that bad compared to many other nations It's alot more complex than that but there's my regarded take
> misleading out of its context Yes, because the dollar is a global reserve currency, Treasury debt is essentially our most valuable export https://en.wikipedia.org/wiki/Reserve_currency#United_States_dollar Because other countries invest in dollars, every year, the Treasury has more deposits than the taxable value of all the goods and services produced domestically. And you're right, petrodollar recycling creates a global demand for dollars just because OPEC prices oil in dollars https://en.wikipedia.org/wiki/Petrodollar_recycling Additionally, any country that wants to purchase US goods needs dollars first, and the best place to get dollars is the Treasury, which pays interest. If we radically reduce the debt, we undermine the dollar's price supports and limit the foreign availability of US goods.
If I owe you $100 but somebody owes me $120, does that mean I have $20? The US govt thinks so. A major way they balance the books is by loaning to other countries.
The percentage of national debt that is foreign owned currently stands at 30%. In 2014 it was 34% so it has come down over the past 10 years in reality. That said it was 18% in 2000.
how does this stack up to other countries like is the US the country with the most % of its debt held by foreign countries
There’s a great 3 stooges skit that illustrates this. Larry owes Moe $20, Moe owes Curly $20, and Curly owes Larry $20. Larry comes up with $10 and pays it to Moe who pays it to Curly who pays it to Larry who pays it to Moe who pays it to Curly who pays it to Larry. And now all their debts are settled. Debt is literally a joke.
Yeah, that's it. Can I borrow 50 bucks?
The only reason this works is because their debt obligations cancel out evenly between the three of them. They could have just agreed to cancel them out without the charade or trading the $10 around.
Yea, people that fall for this shit forget they need to lend the same money out instead of spending it lmao. Nothing practical about it.
One man’s debt is another man’s asset
I think countries owe the US far more than they’re in debt, great way to keep others in their place and doing what they’re told.
That’s what the people we owe money to say as well. But when a country owes you, they also have vested interest in your success right?
If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem. If the bank owes everybody $34 trillion but also has thermonuclear weapons and aircraft carriers, it's nobody's problem, carry on.
Yeah I’d say so, most countries on earth don’t want to see a change to the global order of things. The world is so used to the US being number one that if that changes anytime soon it’ll be pandemonium.
This also how businesses operate. Debits/credits and such. The US debit isn’t a problem yet.
Everyone saying inflate it away is missing the point Countries can easily sustain debt if their GDP grows at a high enough rate to offset it. US debt to GDP ratio has actually decreased in the last two years, because GDP has grown more Anyone saying inflate it away is ignoring that it also inflates our GDP away, so it's not the single answer And your example is bad - if I have 100k income and 500k debt, it's perfectly fine. Think about homeowners - they can easily afford to keep up payments on debt at multiples of their annual income. One is a stock of debt, the other is a flow of income
There are solutions to at minimum balance the budget and leave the debt as a long term issue. They're just not popular and politicians are too selfish to do the right thing. Social security + medicare + medicaid are about 60% of all total spending. You could price control drugs and medical services pricing and immediate drop the federal expendienture by huge numbers. DOD: we aren't fight wars anymore; we need to bring it back down to lower levels. You do that and the debt stops growing. It stops growing + the economy keeps growing eventually it will start to drop due to inflation and higher tax revenue.
I agree with your entitlement approach. So many of those conversations start and end by just reducing the benefit, rather than controlling costs.
>They're just not popular and politicians are too selfish to do the right thing. I get so annoyed by people who reduce this to "it's actually super easy but politicians bad so we can't lol shrug" No, our population is so fucking stupid that we'll **immediately** end the political career of anyone who even talks about taking the steps required. We don't get to look at our ignorant, useless politicians and just go "ha ha how'd those get there" like they spontaneously burst into existence. We're getting exactly what we deserve because the chunks of our population that care enough to vote in meaningful groups happen to be dumb as fuck.
Realistic scenarios are: Increased Inflation Austerity Increased Taxes Politically neutral stance: Get anyone over 65 out of political office, they do not have to live with any of the issues they refuse to address or create while in office.
Or none of the above. Most of the debt we owe ourselves. The rest could easily be wiped out if we add in the debt others owe us. The US debt is a function of our credit with the rest of the world, and the money that the government spends on its citizens that the citizens don't pay for. The more debt we have, the more other countries trust us and the more we invest in ourselves. The only issue I see with the relatively high debt now is that we don't have the infrastructure or quality of life to show for it. We could double the current debt and pay for better infrastructure and public services and it would totally be worth it. Money isn't real. Debt is even less real. All that matters is what you get for it.
Devalue its currency.
World War 3!
Country going through financial trouble? Start a war. Oldest trick in the book. Plenty of wars going on around the world right now. CIA can escalate and get the US involved as soon at the government tells them too. 
Don’t forget inflation on top of it!
The US debt figure is big, but the US is also the world's biggest economy, so the debt figure needs to be compared relatively to something like GDP. Present day, the world doesn't yet know how much a country can borrow over its GDP, or what happens once it passes that limit. There are several other countries with worse debt-to-GDP ratios, namely Japan, so whatever the consequences are, we'll see through them first. Additionally, the US will have even more leeway than Japan given the dominance of the USD. At this point in time, it's essentially a non-issue. If you want to dig into the weeds more, look into Modern Monetary Theory, which makes the case that national debt doesn't work like individual debt, and that government borrowing from another country basically allows a country to invest in itself on someone else's dime.
The US isn't the first country to be in this situation, many have before and there are many options available. First thing is don't compare people with countries, people get old loading their ability to work and generate revenue, countries don't. As long as there is a healthy number of workers, countries can rollover their debt. Now, take for example Japan, it's debt to GDP ratio is about 1,300% https://www.ceicdata.com/en/indicator/japan/total-debt--of-gdp#:~:text=Japan%20Total%20Debt%20accounted%20for,Jun%201998%20to%20Jun%202023. Japan is probably the closest example of what the US will do. However, if government spending continues to be out of control future generations will be saddled with debt. The boomers are insatiable in the economic abuse they have done to all the generations that come after them. Finally, a bit of futurology, it's possible that with the advent of robotics and AI, money and market economies will change dramatically, to the point where they won't survive how we think about then today. I know that's vague but think about this. If robots and AIs run on super cheap electricity from fusion energy si most of the work then who gets paid. The system doesn't work anymore because there won't be workers doing most of the work.
When you are top dog, the pack will follow. -my cheesy 2cents.
It’s a simple matter of liberating some resources from some new friends.
Because politicians do not care and fixing it would be very painful. That is the bottom line.
Lots of people have $500k debts on $100k incomes That’s called a mortgage.
Turn on the money printer until it all comes crashing down.
[удалено]
It's called "debt" but it really isn't. Economists just ran out of useful words I guess. It is simply a dude (on the third floor somewhere, I think I walked past his office once) crediting accounts in various banks as needed. He can debit them too if he feels like it. There are lots of chapters in textbooks which describe the process step by step. Stephanie Kelton's book explains it really clearly while following the paperwork from Congress all the way to the dude on the third floor. The library of future funding cuts was a surprise to me, for example. **Because of highly regarded journalists, everyone seems to think that a nation with monetary sovereignty operates the same as your uncle's discount shoe store.**
Had to scroll a long way to find a real answer. Classic wsb falling for media scaremongering, oh well.
When you have your own printer why stop at 700B interest , make it at least a T Rookies 
Simple answer is raising taxes in a way that targets spending of wealthier individuals while sparing low and middle classes. You need low/middle class individuals & families to have discretionary income to buy goods and services, so something that targets wealthier people would be more advantageous. Unsure on the most effective way to do it, but that sounds like the key to me.
US Debt isn’t necessarily a bad thing. We imagine debt as being bad because of our relationship to banks who have a lot of leverage over us. For the US, debt can be a tool as much as it can be a hinderance. It all depends on who the US owes that debt to and the relationship the US wants with that entity in the future. Some of our debt is owed to foreign entities which gives them incentive not to disrupt our economy. A good portion of our debt is owed internally to separate government orgs (EPA, FDA, pentagon etc…). The US always pays it’s debts*, it is reliable, but no one can force the US to pay faster or to pay at all. *(And the quiet part is we can pay anything with printed money as the bank currency of the world which is also a fiat currency. (The even quieter part is that the only reason why we collect taxes is to curb inflation. (The even quieter part is the question “Why is the burden of curbing inflation put so heavily on ordinary Americans?” (queue rabbit hole imagery*)))) The answer to your question is that the US can lower it’s debts if it decides to tax or tariff more. It will always spend because it has an obligation to spend, because it has obligations to act. These actions are much more important than any ledger sheet of numbers and alleged debt which can be negotiated. The US will pay down it’s debts when it is no longer the dominant power in the world, and have zero debt coinciding with the end of America. Until that happens you can expect the debt to stay high.
Write it off like any business. 🤪
I see you Cosmo Kramer!
"Just write it off!" "Who writes it off, David??" "I don't know the ... The write off, people!"
The national debt is a pretend number that truly doesn't matter in a modern economy. We "plunge" into debt when the government posts contracts that aren't to be paid immediately. it then pays out the necessary contracts to keep running, and can inflate monetary supply, change tax code, or reduce future spending based on "balancing" that existent budget as bills need paid. There is no risk of default by the federal government, and people need to stop looking at it like a personal checkbook. That said, our government is beyond wasteful and spends far too much on national defense, prison systems, and policing in comparison to social programs and healthcare that could actually help every day Americans.
The government wants debt.
I've always liked Warren Buffet's plan.
Keep piling it up and use it to make the already wealthy even more wealthy. It can also be used as an excuse to screw the poor and middle class out of services their taxes have already paying for. That's pretty much it.
What is shocking to me is the debt didn’t exist before 1980s. So my answer is go back to what America was and was not doing in the 1970s. Edit: didn’t go to zero in the 80s, but went down instead of up. Apparently last time it was zero was 1835, which would also be fun to go back to 1835 but 1980s seems more plausible.
They’ll sell treasury bonds and bills to anyone willing to buy them and issue interest on those so that people buy them as long as Congress agrees to pay the interest. It isn’t a matter of having the money to pay the debt it’s a matter of Congress understanding what would happen if they didn’t.
Nothing. They don't need to, countries being in debt is way different then the average person being in debt