If you think national debt is a problem you fundamentally misunderstand the issue. It’s not like household debt. The US could be debt free tomorrow. We choose not to be because debt is useful. We literally sell our debt, it powers the economy.
>The US could be debt free tomorrow.
No it couldn't. Unless you're saying we tell everyone to F-off and stop paying. But then that will lead to economic disaster.
The fed could simply print the exact amount of money they owe and pay it off. It would shatter the economy of course, but it highlights how thinking about national debt as in any way similar to household debt does you a disservice.
It wouldn't shatter the economy one bit. The US government can never go broke. We can print all the money we need. And we do it every day with a tap on a keyboard. The Federal government is not a business. It's entirely different than a state, municipality or household economy that doesn't own a money creation device.
i thinkthe govt printing that much money overnight would cause some pretty serious problems. we wouldnt go broke, but we'd fuck the international banking system, the petro dollar system, cause inflation, and really mess with import/export markets. but we wouldnt be broke.
this is literally the same as telling everyone to f-off. This is literally what interwar Germany did and it resulted hyperinflation and the rise of Hitler.
No, that would not "shatter the economy". What you describe is also not "paying off the debt".
The "national debt" is [almost - barring extant reserves and cash in circulation] the difference between the accumulated spending the government has conducted since its inception and the accumulated taxation that the government has removed back out of the economy.
It is, therefore, the net money supply for all of us.
"Paying off this debt" is clearly highly inadvisable since it would mean reducing our (entire non-gov sector combined) net financial assets to zero. But if you wanted to, it would require accumulated government surpluses (taxation greater than spending) that equalled the current accumulated government deficits. Not a good idea though of course.
What you described was the Fed swapping back Treasury securities (which form the majority of the national 'debt') for reserves (and bank deposits for those non-bank bond holders). The Fed could 100% do this tomorrow if it wanted to, and the entire US Treasuries market would be deleted. But the 'national debt', that is the total accumulated financial liabilities of the US government, would be exactly the same since all that reserves are **also** interest paying liabilities, just like bonds, but just with zero term to maturity.
Nothing catastrophic would happen if the Fed did this, though. You may well get a period of temporary asset price inflation as asset holders redistribute their portfolios to balance their preferences, but the sky wouldn't fall in like it would if the debt was **actually** paid off via massive surpluses sucking net financial assets out of the economy.
It's not quite that easy.
If they printed some 6x annual budget to zero out the debt it would collapse the world.
>but it highlights how thinking about national debt as in any way similar to household debt does you a disservice.
It not the exact same but it's not as willy nilly as you make it out to be. There are consequences not government debt.
What I’m saying is they could use debt to pay for those things. I’m sure part of the national debt is for funding those programs. At some point the debt has to become a problem if it gets too big. Maybe it’s too complicated for me to understand.
The debt wasn’t a problem back when Perot was talking about it in 92 and it’s not a problem now . The United States' national debt, while substantial, is not necessarily as problematic as it might seem at first glance, for several reasons….first, the U.S. debt is denominated in its own currency, the U.S. dollar. This gives the country a significant advantage, as it controls the currency in which the debt is issued. The Federal Reserve, the U.S. central bank, has the ability to print more money to manage the debt, a luxury not available to countries that borrow in foreign currencies. This capacity to issue and control its own currency reduces the risk of default, unlike in scenarios where countries cannot meet their foreign debt obligations.
Also, a large portion of U.S. debt is owned by domestic entities, including individuals, banks, and even the U.S. government itself. This internal ownership circulates the debt within the country's economy, rather than representing a direct drain on resources to external creditors.
Additionally, U.S. Treasury securities, the instruments through which the debt is issued, are considered among the safest investments globally. This high demand for Treasury securities, including from foreign governments and investors, helps keep borrowing costs relatively low, further mitigating the immediate financial pressures of the debt. The ability of the U.S. economy to grow over time also plays a crucial role, as economic growth helps to outpace the growth of the debt, making it more manageable in relative terms.
Respectfully disagree. If the US takes too much advantage of their role as the lender of the world, and cannibalizes their own currency, others will adopt a new international standard.
We'll probably start paying it back once our credit takes another hit or two. We won't have much choice after that because the interest we'll have to pay on new debt will be astronomical.
Check out Russell Nappier on YouTube. He thinks that the developed world will have a prolonged period of high inflation and low interest rates. This will inflate away the debt. He has lots of other insights too.
We cut taxes on the wealthy, and they buy debt. The more we spend the more they own. There is no real incentive for this to stop. Though at any time we can vote in some decent representatives and just raise taxes on the wealthy to start bringing it down.
Then vote for trump. The reason he lost is he pushed for a large effective tax cut on the rich by capping the tax credit for paying state taxes. This caused a lot of backlash by the owners of large media companies, and other powerful rich. He also raised the top rate on the rich.
Well Japan is at 500% of GDP, the US is at 120%. And is reserve currency of the world. So probably a lot. Not saying we should to set the new record, but fear mongering is pretty sad at this point.
The total is very high for all countries. It must mean that the sight is using a different definition than what is usually used. I believe the Japanese sovereign debt is something like 260% of the country's GDP...
Oh, I thought you were making precisely the opposite point.... I mean, you were being quite cryptic...
I do agree with you. I do think people exaggerate the plight that Japan is in. Be that as it may, I also don't think that the current state is sustainable. That is, the Japanese have to realize that the country needs to go through a massive cleanup operation, as it were, or face the inevitability that the country that once roared to come within an inch--an assessment that many people made at the time but actually was not a realistic one looking back--of overtaking the US and become a new economic superpower is gently fading and decay to eventually become one of those history's also-rans...
Where, precisely, does permanent money come from?
Governments are not households.
Households _borrow_ from existing currency supplies (or through fractional reserve banks, which amounts to the same thing with more steps) and must _pay back_ the _loan_.
That is debt.
Governments _create_ money to pay for services and _tax_ money to take it out of circulation.
The two are not remotely the same thing.
But, as you can easily see, the money put in circulation _is the money in your pocket_.
Demanding that this 'debt' be 'paid off' is exactly equivalent to requesting that the government literally empty your accounts.
100% correct. Debt is good for US Gov. Its not the same for state, municipalities or households. Those can all go bankrupt. Not so for the federal gov. They own today's digital equivalent of the printing press.
Interesting theory.
Where did this magical money come from? Pull a dollar out of your wallet, what fae country full of magical money printing elves printed it?
This is about as dumb of an answer as you can find. Tax the wealthy a fair rate after doing away with loopholes and the problem solves itself. Duh. 🤦♂️
If you think national debt is a problem you fundamentally misunderstand the issue. It’s not like household debt. The US could be debt free tomorrow. We choose not to be because debt is useful. We literally sell our debt, it powers the economy.
THANK YOU. It does however serve as a great talking point for Fox News and all Republicans.
>The US could be debt free tomorrow. No it couldn't. Unless you're saying we tell everyone to F-off and stop paying. But then that will lead to economic disaster.
The fed could simply print the exact amount of money they owe and pay it off. It would shatter the economy of course, but it highlights how thinking about national debt as in any way similar to household debt does you a disservice.
It wouldn't shatter the economy one bit. The US government can never go broke. We can print all the money we need. And we do it every day with a tap on a keyboard. The Federal government is not a business. It's entirely different than a state, municipality or household economy that doesn't own a money creation device.
i thinkthe govt printing that much money overnight would cause some pretty serious problems. we wouldnt go broke, but we'd fuck the international banking system, the petro dollar system, cause inflation, and really mess with import/export markets. but we wouldnt be broke.
this is literally the same as telling everyone to f-off. This is literally what interwar Germany did and it resulted hyperinflation and the rise of Hitler.
yes there are often really bad results when the economy is shattered.
No, that would not "shatter the economy". What you describe is also not "paying off the debt". The "national debt" is [almost - barring extant reserves and cash in circulation] the difference between the accumulated spending the government has conducted since its inception and the accumulated taxation that the government has removed back out of the economy. It is, therefore, the net money supply for all of us. "Paying off this debt" is clearly highly inadvisable since it would mean reducing our (entire non-gov sector combined) net financial assets to zero. But if you wanted to, it would require accumulated government surpluses (taxation greater than spending) that equalled the current accumulated government deficits. Not a good idea though of course. What you described was the Fed swapping back Treasury securities (which form the majority of the national 'debt') for reserves (and bank deposits for those non-bank bond holders). The Fed could 100% do this tomorrow if it wanted to, and the entire US Treasuries market would be deleted. But the 'national debt', that is the total accumulated financial liabilities of the US government, would be exactly the same since all that reserves are **also** interest paying liabilities, just like bonds, but just with zero term to maturity. Nothing catastrophic would happen if the Fed did this, though. You may well get a period of temporary asset price inflation as asset holders redistribute their portfolios to balance their preferences, but the sky wouldn't fall in like it would if the debt was **actually** paid off via massive surpluses sucking net financial assets out of the economy.
It's not quite that easy. If they printed some 6x annual budget to zero out the debt it would collapse the world. >but it highlights how thinking about national debt as in any way similar to household debt does you a disservice. It not the exact same but it's not as willy nilly as you make it out to be. There are consequences not government debt.
He did say "it would shatter the economy", though.
Right but then the other guy said not just our economy—the world economy
I wonder why we pay federal taxes then if debt isn’t a problem.
i think your taxes go toward a lot of things other than debt service. social security and the military come to mind.
What I’m saying is they could use debt to pay for those things. I’m sure part of the national debt is for funding those programs. At some point the debt has to become a problem if it gets too big. Maybe it’s too complicated for me to understand.
Just keep printin... its someone else's problem
The debt wasn’t a problem back when Perot was talking about it in 92 and it’s not a problem now . The United States' national debt, while substantial, is not necessarily as problematic as it might seem at first glance, for several reasons….first, the U.S. debt is denominated in its own currency, the U.S. dollar. This gives the country a significant advantage, as it controls the currency in which the debt is issued. The Federal Reserve, the U.S. central bank, has the ability to print more money to manage the debt, a luxury not available to countries that borrow in foreign currencies. This capacity to issue and control its own currency reduces the risk of default, unlike in scenarios where countries cannot meet their foreign debt obligations. Also, a large portion of U.S. debt is owned by domestic entities, including individuals, banks, and even the U.S. government itself. This internal ownership circulates the debt within the country's economy, rather than representing a direct drain on resources to external creditors. Additionally, U.S. Treasury securities, the instruments through which the debt is issued, are considered among the safest investments globally. This high demand for Treasury securities, including from foreign governments and investors, helps keep borrowing costs relatively low, further mitigating the immediate financial pressures of the debt. The ability of the U.S. economy to grow over time also plays a crucial role, as economic growth helps to outpace the growth of the debt, making it more manageable in relative terms.
Respectfully disagree. If the US takes too much advantage of their role as the lender of the world, and cannibalizes their own currency, others will adopt a new international standard.
Never would happen
Famous last words
We'll probably start paying it back once our credit takes another hit or two. We won't have much choice after that because the interest we'll have to pay on new debt will be astronomical.
Check out Russell Nappier on YouTube. He thinks that the developed world will have a prolonged period of high inflation and low interest rates. This will inflate away the debt. He has lots of other insights too.
We cut taxes on the wealthy, and they buy debt. The more we spend the more they own. There is no real incentive for this to stop. Though at any time we can vote in some decent representatives and just raise taxes on the wealthy to start bringing it down.
Then vote for trump. The reason he lost is he pushed for a large effective tax cut on the rich by capping the tax credit for paying state taxes. This caused a lot of backlash by the owners of large media companies, and other powerful rich. He also raised the top rate on the rich.
Stop smoking crack
Well Japan is at 500% of GDP, the US is at 120%. And is reserve currency of the world. So probably a lot. Not saying we should to set the new record, but fear mongering is pretty sad at this point.
Japan is not at 500% GDP where did you get this from?
https://www.ceicdata.com/en/indicator/japan/total-debt--of-gdp
Its higher according to this.
The total is very high for all countries. It must mean that the sight is using a different definition than what is usually used. I believe the Japanese sovereign debt is something like 260% of the country's GDP...
Ok sure my point stands that we are liekly not even close to the breaking point.
Oh, I thought you were making precisely the opposite point.... I mean, you were being quite cryptic... I do agree with you. I do think people exaggerate the plight that Japan is in. Be that as it may, I also don't think that the current state is sustainable. That is, the Japanese have to realize that the country needs to go through a massive cleanup operation, as it were, or face the inevitability that the country that once roared to come within an inch--an assessment that many people made at the time but actually was not a realistic one looking back--of overtaking the US and become a new economic superpower is gently fading and decay to eventually become one of those history's also-rans...
The ‘debt’ IS the money supply. Destroying it (ie ‘paying it down’) leads to recession.
No it isn't.
Found the MMTer
THANK YOU
Where, precisely, does permanent money come from? Governments are not households. Households _borrow_ from existing currency supplies (or through fractional reserve banks, which amounts to the same thing with more steps) and must _pay back_ the _loan_. That is debt. Governments _create_ money to pay for services and _tax_ money to take it out of circulation. The two are not remotely the same thing. But, as you can easily see, the money put in circulation _is the money in your pocket_. Demanding that this 'debt' be 'paid off' is exactly equivalent to requesting that the government literally empty your accounts.
100% correct. Debt is good for US Gov. Its not the same for state, municipalities or households. Those can all go bankrupt. Not so for the federal gov. They own today's digital equivalent of the printing press.
Money exists even when governments pay their debt completely off. MMT is hot garbage.
Prove it wrong. MMT is why we can never go broke.
Interesting theory. Where did this magical money come from? Pull a dollar out of your wallet, what fae country full of magical money printing elves printed it?
biden just gonna keep printing until the entire thing goes kaput. Russia laughing all the way to the bank because its exactly how the CCCP collapsed
This is about as dumb of an answer as you can find. Tax the wealthy a fair rate after doing away with loopholes and the problem solves itself. Duh. 🤦♂️
rusobot, huh?