Is Nobody Concerned about the U.S. Debt?
Posted by Juggernaut111@reddit | AskAnAmerican | View on Reddit | 173 comments
Everywhere I see, nobody seems to care about the proverbial sword of Damocles hanging above our head. It wasn't a big point in the election either. I just wanted to ask if you all seem to care?
DeathToTheFalseGods@reddit
Is this a meme question? Unless you are living under a rock you have to be kidding. Aside from being a massive point during election, it is being talked about all of the time
soap---poisoning@reddit
Yes, but not enough to do anything about it. Voting for higher taxes or reduced government spending doesn’t help a politician get re-elected. Promising to cut taxes or bring home a big chunk of government money to their state/district makes them much more popular.
Maddox121@reddit
We've had debt for a long time lol.
vinyl1earthlink@reddit
Looks like nobody gets it. Why do you think the yield on the 10-year Treasury is up nearly 1% in just 4 months. What will people say when it hits 5%, or 6% or 8%? Are you ready for 10% mortgages?
Juggernaut111@reddit (OP)
Yeah, It's not great...
Middcore@reddit
Conservatives occasionally pretend to be concerned about it.
Juggernaut111@reddit (OP)
I don't really care about party lines. for me. I just find it genuinely concerning. If the U.S. defaults(likely), our economy and the dollar is fucked.
PseudonymIncognito@reddit
The US can't default on its debts unless it chooses to.
Juggernaut111@reddit (OP)
We spent about a trillion on interest payments just this year. We only pull in about 4.4 trillion. We might not have a choice. Interest, not debt, just the interest on the debt that continues to grow.
PseudonymIncognito@reddit
The Treasury can always issue more dollars. It might not be the wisest choice, but since US debts are denominated in dollars, monetizing the debt is always an option.
Juggernaut111@reddit (OP)
Inflation causes a weaker dollar. It's a cycle, not a once off.
MontCoDubV@reddit
Inflation isn't even mostly or even partially driven by increasing the money supply unless we're talking about increasing the supply by historically unprecedented amounts over an incredibly short time span.
In every single historical example of hyperinflation people like to point at to decry increasing the money supply, Weimar Germany, Venezuela, Argentina, Zimbabwe, etc, money printing came after hyperinflation. It didn't cause the inflation. It was a (completely wrong) strategy to try to address the extant inflation.
Tommy_Wisseau_burner@reddit
Also this was when your currency was tied to gold. Gold standard has been gone for over 50 years.
sanesociopath@reddit
Issuing "more dollars" is just cutting the pizza into more slices.
Sure you have more slices but each one is smaller now adding up to the same value.
And your reasoning is just defaulting without technically defaulting. Sure if we intentionally put ourselves into hyperinflation we could print out the dollars our debt is in since we're the world reserve currency but then we still have to deal with the hyperinflation.
If we default while we won't get much for loans and our world reserve currency status might be hurt it won't have direct immediate effects on our dollar, it's just our dollar will have to equal our economic production as every other nation has to
thegreatherper@reddit
Debt doesn’t work like your personal debt.
sanesociopath@reddit
Dude.
Our current highest spending is literally interest on our debt.
It works surprisingly a lot like personal debt
thegreatherper@reddit
It doesn’t at all. The state quite literally prints money and determines its value. It works nothing like your personal debt
Wallawalla1522@reddit
....this isn't how national debt works at all either.
Are you reading books on 'Modern Monetary Theory'?
sanesociopath@reddit
Ah yes because I don't have the ability to use the force of a massive military or the power of a massive government my debt in effect is different sure.
But if they're not just throwing weight around bullying it works similar.
Also this is market manipulation and something years ago we cared massively that China was doing.
And whatever value they "determine" is meaningless. The real value is whatever someone is willing to do/give for it.
thegreatherper@reddit
Also how that works.
Just stop yapping and read a book on economics or google it’s a common question. You’ve allowed political propaganda to affect you too much. Yes republicans have been screaming about the debt they constantly raise for decades. It’s bullshit. Stop eating it your breath stinks.
OhThrowed@reddit
Who's going to collect?
sanesociopath@reddit
At this point there's no way out of debt without defaulting.
Luckily for us we have amazing geography and the best military in the world so whether we do or just keep increasing the debt and then if so when is entirely our choice.
¯\ (ツ)/¯ at this point we might as well modern monetary theory correctly and at least get massive infrastructure investment and some other social things that would let us have a stronger society.
Meeppppsm@reddit
You have no clue what you're talking about. We could literally pay off the entire amount with the stroke of a pen because we borrow and repay in US dollars. It would be stupid to do so, though. Federal borrowing puts money into the economy. Federal taxes take money out. When there's an imbalance, you get inflation. A certain level of inflation is necessary for a healthy economy. Too much or too little creates problems.
TheBimpo@reddit
People have been saying this for decades, the common denominator is that they don't know what they're talking about.
Juggernaut111@reddit (OP)
We already see a problem, though. The rising cost of living? It's not magic.
gogonzogo1005@reddit
That has nothing to do with the national debt. That has to do with major corporations and the top percentage of earners hiding money like dragons!
Juggernaut111@reddit (OP)
Yeah true
DatTomahawk@reddit
It has nothing to do with the national debt, inflation is a worldwide phenomenon that the US is actually handling much better than some countries. The tariffs will change that of course, but when inflation skyrockets because of them it still will have had nothing to do with the national debt
TheBimpo@reddit
Where'd you study macroeconomics?
Dr_Watson349@reddit
Why is it concerning to you? Seriously, why? If your answer is just "debt is bad" well that isn't really a reason.
If the US defaults, who is coming to collect?
Here is who owns the 21 trillion in US debt:
US Investors - 6.89 t
US Government - 5.73 t
Federal Reserve - 2.38 t
Foreign Investors - 6.21 t
So of the 21 trillion, around 70% is held by the government, US investors, and the Fed. Do you think that those groups are going to go to McConnell AFB and repo some KC-135 Stratotankers? (We all agree that would be sick though)
I have been told that US Debt is super duper bad since the 1980s, and if we do not do something about it the world is going to end. Yet, it hasn't. What has happened is we have seen EU nations put in strong austerity measures that kill their economy.
The US government is not a business (yes I know the snark incoming on that statement), and it doesn't have the same goals. Cutting programs that do help society just so the debt number is a little smaller is short sighted and dumb. Never mind the fact that the money saved is never actually saved, and the programs gutted always seems to be positive ones for certain groups of people and oh fuck I got political.
ritchie70@reddit
If the US defaults on its debt, the world is so fucked that the US defaulting on its debt is but a minor concern.
TheLastRulerofMerv@reddit
The US won't default because if it ever came close to that, the Federal Reserve would just buy government bonds by expanding its balance sheet. They already do this, but it would go onto hyper drive if that time came. It would be somewhat similar to what Japan does, or even what Turkey does. The US has quite a bit of latitude because of the US dollar's position as global reserve currency.
The debt does matter. Runaway spending without the revenue to service the debt can lead to some pretty significant inflation if the central bank steps in to pick up the slack. I think there is a bit of a divide in American politics regarding the federal debt and both stem from ignorance:
1) Many conservatives feel that any debt is bad, and that dramatic cuts to government spending (austerity) is the only way to reign it in. Really, a country can balance money creation and debt spending to manage money flows in the economy, achieve optimal employment, etc.
2) Many liberals feel that all government spending is good, and that there can be no such thing as too much debt. There absolutely can be such a thing as too much government debt, and there is such a thing as government bloat.
But really, this whole issue has a lot more to do with monetary policies that the federal government does not directly oversee.
Bat_Shitcrazy@reddit
Do you think someone is just going to call in all our debt at once?
ivandoesnot@reddit
Tough but fair.
machagogo@reddit
It a single person. No one ever talks about raising taxes or cutting spending.
Nope. Never.
Jazzlike-Equipment45@reddit
because raising taxes and cutting spending is how you fix the debt and how you end your political carreer so it never gets done.
machagogo@reddit
Just cut someone else's programs/entitlements and raised someone else's taxes.
Simple!
Maxpowr9@reddit
I 100% expect a crap ton of social programs to be cut for next FY and a lot of teachers on strike.
vinyl1earthlink@reddit
Forget future generations, the problem is right now. The interest is 14% of Federal spending. What happens when it hits 20%? 30%?
SkiingAway@reddit
I don't care about "paying back" the debt, nor do I think there's a specific magic number that it can't exceed.
I do care a bit about continually running a deficit that significantly exceeds the long-term rate of GDP growth without a good reason. We should probably reign that in a little bit (primarily through reversing some tax cuts, not spending cuts).
Anyway, since complicated explanations of this from others don't seem to be working for you, so I'll try a simple one:
Japan's debt to GDP ratio is 251%. Do you ever hear anyone concerned about Japan being able to handle it's debts?
The US's is 121%.
Current_Poster@reddit
National debt isn't like personal debt, so while I want us to honor our debts (for diplomatic reasons) I'm not actually worried.
An_Awesome_Name@reddit
From a comment of mine over a year ago:
ivandoesnot@reddit
It's never a bubble until the bubble bursts.
P.S. There's no free lunch.
Educational-Sundae32@reddit
But if a different situation when the debt holder also produces the curry on which that debt is based
ivandoesnot@reddit
Right, so they'll just devalue the currency, rendering it worthless.
Easy peasy.
(And people thought Inflation was bad; wait til they see debasement.)
P.S. There's no free lunch.
Educational-Sundae32@reddit
There’s no free lunch, but the US won’t default
ivandoesnot@reddit
No, it'll just debase.
Same difference.
Educational-Sundae32@reddit
Big difference, one is the collapse of the world financial system, the other is the money having less buying power per unit.
tirednsleepyyy@reddit
The bubble is 300 years old.
Ranger_Prick@reddit
It's technically about 190 years old since the government paid down the entire amount of interest-bearing debt in 1835-36 when Andrew Jackson was president, largely by dissolving the Second National Bank.
(Of course, this was almost immediately followed by a financial crisis and depression, so you gotta take the bad with the good.)
MontCoDubV@reddit
Except there was no "good". It was only bad. Jackson had no idea how federal debt worked. He was just thinking of it as personal debt. He hated banks because he had no clue how they worked, either.
The financial crisis and depression of the late 1830s-1840s was directly caused by Jackson's economic policies. It was all bad. There was nothing good about it.
Ranger_Prick@reddit
I was going to put it in air quotes, but I didn't want to start a flame war.
ivandoesnot@reddit
Bubbles burst.
Some take longer to burst than others.
ballrus_walsack@reddit
We haven’t missed a debt payment so far. There’s an incoming president who has suggested stiffing bond holders. Who knows if he can do it.
baalroo@reddit
I think we're now in a situation where what a president "can do" is no longer a question with much meaning. The new question is "what is the president willing to do?" It's quite clear the incoming administration isn't interested in precedent, decorum, or adhering to "the norms" of the office.
I expect to see a lot of "heeeeey, you're not supposed to doooo that!" coming from the democrats and a lot of "yeah? Well, we're doing it anyway, fuck you." coming from the executive branch.
amcjkelly@reddit
When the interest payments exceed the defense budget it is likely people will freak out.
That, or when they have a debt issue and they don't all sell.
It is really hard to get elected saying you want to cut spending and raise taxes though.
Wallawalla1522@reddit
This is why interest as a percent of GDP is a much better indicator.
BTW - we're still lower than the 90's
https://fred.stlouisfed.org/series/FYOIGDA188S
sanesociopath@reddit
This happened earlier this year btw
amcjkelly@reddit
Looks like we won't do anything until they have a bond issue and they don't all sell.
That is going to be really ugly.
sanesociopath@reddit
That's not allowed to happen.
We'd get a full economic collapse before the fed would let banks not buy the bonds that aren't selling.
rawbface@reddit
What's funny is that I had a really good and engaging 8th grade social studies teacher that first introduced us to trade deficits and the national debt. He was absolutely incredulous about the fact that at the time, our national debt was in the hundreds of millions and would soon surpass one trillion dollars.
I have to imagine he's passed by now, but he'd roll in his grave if he found out what the national debt is today.
Juggernaut111@reddit (OP)
It's wild.
thegreatherper@reddit
None of you understand what debt for national states means. It’s not like your personal debt.
Suitable_Tomorrow_71@reddit
Wow man, calm down! Don't do anything drastic like explain!
Meeppppsm@reddit
For starters, the US repays it's loans in US dollars. They can literally print their own money. That's a pretty significant difference than personal debt.
Wallawalla1522@reddit
While that is certainly a significant difference, and monetary policy can be a lever to pull, it is not how debt for nation states works.
People who suggest that a nation can print their way out of debt usually subscribe to a junk economic 'theory' called "Modern Monetary Theory"
thegreatherper@reddit
On my lunch break. Do I need to explain why 2+2=4 as well? The time you spent typing this could have been spent finding the answer on your own.
I charge to teach so break out the cash app if you want me to teach you why this is a ridiculous topic.
Suitable_Tomorrow_71@reddit
Oh, so you can't explain. Okay.
thegreatherper@reddit
Can’t and won’t are two different things.
ivandoesnot@reddit
Debtholders don't expect to be paid back?
In Inflation adjusted dollars?
Since when?
Meeppppsm@reddit
They aren't paid back in inflation adjusted dollars. They're paid back on a schedule with a defined interest rate.
ivandoesnot@reddit
Since the interest rate is FIXED, the PRICE of the bond fluctuates.
Creating a de facto interest rate.
cbrooks97@reddit
Thank you for that careful explanation of your view. /s
messenja@reddit
The interest and payments on it sure are!
thegreatherper@reddit
Also no.
sanesociopath@reddit
You need to talk to some economists
thegreatherper@reddit
That is what you need to do along with some reading. Not all economist are created equal. As you’re likely go to look at the one person who disagrees with the thing 9/10 economists recommend.
GhostOfJamesStrang@reddit
Most of the US debt is to ourselves.
While I am all for adjusting our tax and spending habits, people genuinely do not understand what the US debt actually is. It is not the same as you or I oweing money to the bank for a car or a mortgage.
We can and probably should balance the budget like we had in the 90s, but it isn't a Sword of Damocles as you describe.
Meeppppsm@reddit
Balancing the federal budget would be asinine. I cannot believe how economically illiterate people are.
MontCoDubV@reddit
We absolutely should NOT "balance" the budget like in the 90s. That was an absolute disaster that drained the economy of its primary stable savings vehicle. This meant that when the dot com bubble burst and people pulled money out of the stock market, they didn't have the T Notes available to move savings into as usual. Instead they sunk it into real estate, which helped cause the real estate bubble that caused the Great Recession.
GhostOfJamesStrang@reddit
The Real Estate Bubble had additional factors involved as well.
Terrible lending practices was a large part of it.
I understand the irony of bringing up unhinged borrowing of money in this discussion....but still.
MontCoDubV@reddit
Yes. That's why I said, "helped cause".
A big part of why those terrible lending practices proliferated so much, though, is because so many people were looking for safe places to stash their money when the dot com bubble burst. Since T Notes had become so scarce due to the "balanced" budget of the late 90s, the ROI for T Notes had plummeted. They were not seen as a good investment option, and people were pushed into real estate instead.
A bunch of people showed up at the banks looking to invest in real estate because they were told that's the safe place to park money. The banks fully recognized that for most of these people real estate was a terrible option, but they also saw gobs of cash being thrust in their face, and greed won out (as it always does). They said, "let's take their money and worry about the fact they can't pay back mortgages later." That's what all the credit default swaps and shit were about: the banks trying to find ways to make the toxic loans they'd issued someone else's problem.
The housing bubble probably would have happened without the 90s-era "balanced" budgets, but it wouldn't have been nearly as big, and the recession caused by that bubble bursting wouldn't have been nearly as deep or long lasting.
OhThrowed@reddit
People freak out about China owning a lot of it, often talking about China calling them due or something.
It's 3-6 percent. Let them call it.
GhostOfJamesStrang@reddit
Right. It feels like a HLC video. "The Great China will call your debt and bring fascist America to its knees."
"Yeah, ok.....so Poland, how you doing?"
Porcupineemu@reddit
What makes you think the sword is over our head? The sword is over the heads of those to whom the debt is owed.
Which is mostly ourselves.
Juggernaut111@reddit (OP)
...?
Porcupineemu@reddit
If we don’t make the payments who is screwed, us or the people we owe the money to?
Juggernaut111@reddit (OP)
Both cause we owe the money to ourselves
Porcupineemu@reddit
I guess it depends on what you mean by “our” then. If you mean the US as a country, then it’s really not a problem. If you mean the people who live there then yeah pretty big problem if we stop paying but we haven’t missed a payment yet, so that’s why nobody worries yet.
Juggernaut111@reddit (OP)
Out of the 20 trillion owed to ourselves(as of today), only about 5 trillion does the government owe to itself. They rest is owned by investors and businesses. Not counting the 11T owed to foreign debtors. I'm not worried about the debt at the current time, but in 10 years? Who knows?
Porcupineemu@reddit
Well, you’ve answered your own question. Most people don’t think about 10 years from now.
Juggernaut111@reddit (OP)
Touché
cpyf@reddit
I was hoping Trump’s 2017 - 2020 presidency could hopefully reduce the deficit by a significant portion. That didn’t happen but I’ll hope he’ll try again this time around
TsundereLoliDragon@reddit
lol
Juggernaut111@reddit (OP)
It's nice to see people concerned. I'm fairly young, so I will be paying this off most of my life.
Pinwurm@reddit
Accountant here.
I'll keep it simple: the size of the debt doesn’t matter. Like, at all. It never has. What matters is the ability to make payments on that debt.
This is typically reflected by a credit rating. The United States currently holds an AA+ long-term and A-1+ short-term rating per S&P Global Ratings - meaning we’re really stable and trustworthy.
Think of it like this: if you make $10/hour and borrow $10, that debt represents an hour of your time. It's a significant amount and may be hard to pay off. But if you make $100/hour and borrow $20, that’s double the debt, yet it only represents 1/5 of your hour. It's easier to pay off.
Now scale that up to the vast wealth the U.S. generates. The size of the debt is way less important than the proportion it represents compared to the country’s earnings. It’s all about context!
In fact, taking on debt is a good thing. It shows that civilians, banks, businesses, and foreign entities trust us to invest funds wisely and repay them. It informs economic confidence and encourages folks to do business with us.
The bigger discussion is whether raising the national debt ceiling every few years is healthy. That’s an ongoing debate among economists, with plenty of arguments on both sides.
Chad_Tachanka@reddit
The US dollar is backed by the US military
Juggernaut111@reddit (OP)
Which is, in turn, backed by the dollar. Good luck using that military in a major war. They are expensive.
MakeHarlemBlackAgain@reddit
I don’t personally owe the money. So I don’t care.
Juggernaut111@reddit (OP)
You do, though. About 200k per taxpayer https://www.usdebtclock.org/about.html
Suitable_Tomorrow_71@reddit
Is there anything that I, personally, can do about it?
No?
Then there's no point worrying about it, is there?
Juggernaut111@reddit (OP)
I never thought about it like that.
huhwhat90@reddit
Everyone acts concerned about it until they get into power and then that concern magically goes away.
Juggernaut111@reddit (OP)
I ain't going into power. I have to deal with this shit for the rest of my life(austerity)
sociapathictendences@reddit
I do
ivandoesnot@reddit
I'm concerned that there's a proverbial sword of Damocles hanging above our head.
There's no free lunch.
It's a bubble.
The thing about bubbles is it's hard to predict when they'll burst.
Juggernaut111@reddit (OP)
I give it 10-15 years. We already pay almost 1/5 of our total revenue per year towards interest payments. That's money that isn't used.
NomadLexicon@reddit
What I find amusing is people are dismissive about the debt but freak out over inflation.
Pretty much the only way that we get out of our mounting debt is high inflation. This is much better than the alternative (adopting austerity measures and economically stagnating under increasingly crippling interest payments like Greece was forced to do with the Euro) but it is going to be very painful process for a lot of people.
Juggernaut111@reddit (OP)
Exactly! I get we owe the debt mostly to ourselves. If we can't pay that debt(default). We practically zap money away.
Bat_Shitcrazy@reddit
There’s not like a magic number of debt that if we hit it, we’ll go back to being an English colony or something. It’s not good, but we have bigger fish to fry right now than a theoretical bad thing. Also, it’s not like we owe China 35 trillion dollars and they can just ask us to pay up one dua
Debts only bad if you cannot pay it back, and at least for right now, we’re paying back debt as well as taking on more. Obviously, it’s going heavy on one direction, but you can’t look at one number and assumes that tells you the whole story of the economy
Juggernaut111@reddit (OP)
The problem is that we aren't paying it back.
WrongJohnSilver@reddit
We are. Bonds mature all the time.
If you're worried that the size of the debt isn't decreasing over time, that's a separate issue, but as long as the debt is serviced, no one cares very much.
The real question is, how much does it need to be before the government has trouble servicing it?
sanesociopath@reddit
We're effectively paying off debt with credit cards.
Sure the debtors are getting paid but the debt is still rising
Ok_Gas5386@reddit
Government finance and personal finance are fundamentally different. This isn’t 1:1 but the scenario with the government is basically like this; you (the federal government) have a large debt, but the banker (the federal reserve bank) is your friend and will lend you as much money as you ever need.
It only ever becomes an issue if your banker friend also runs out of money, and no one can say when that will be until it happens.
obtusername@reddit
We are paying it back. If we didn’t, we’d be in default, which hasn’t “technically” occurred since 1979, and USD wouldn’t be global currency and the economy would be beat to shit.
https://www.axios.com/2023/05/16/us-history-debt-default
Juggernaut111@reddit (OP)
Fair enough, but what happens when we can't?
TheBimpo@reddit
Sigh
Juggernaut111@reddit (OP)
I feel like I'm trying to convince people of climate change.
dtb1987@reddit
It's not the problem that you think it is, it also isn't all that simple to explain.
obtusername@reddit
I just said; possibly destabilizes position of USD as world trade reserve currency and negative economic outlook. Bad news bears. But as of this time, all we can do is speculate.
Juggernaut111@reddit (OP)
I agree with you cause that is what I've been trying to say.
MontCoDubV@reddit
Yes we are. That's what happens every time someone exchanges a T-Note for cash. (Unless they're selling it on the secondary market.)
GhostOfJamesStrang@reddit
Yes we are.
terryaugiesaws@reddit
No, not unless there intends to be a total societal collapse in my lifetime
StevenSaguaro@reddit
It's politically inconvenient. It's not a problem till it is, then it'll be too late.
Juggernaut111@reddit (OP)
Too true, Noby wants to cut military or social security spending.
osteologation@reddit
I’m too lazy to look it up but I remember reading that like 2/3 of our military budget is the VA system. Might be tricky to cut that.
reminder_to_have_fun@reddit
VA cuts are high on the DOGE to-do list. It'll be terrible.
https://www.the-independent.com/news/world/americas/us-politics/vivek-ramaswamy-doge-veteran-healthcare-funding-b2647484.html
I'm not looking forward to process or the consequences. I am looking forward to the nation's veterans turning on Trump, though.
TheBimpo@reddit
Good, because we shouldn't do that.
GhostOfJamesStrang@reddit
You don't want that either.
Mildars@reddit
People talk about caring about the debt, but no one cares enough to do anything about it. The reality is that to shrink the US deficit to a manageable level the US government would need to cut spending by about 8% and raise revenues by about 8%, which doesn’t sound like much in theory, but in practice would be political suicide.
The situation is only going to get worse now that the Republican Party has realized that they can win more votes by ignoring the debt than they can by screaming about it.
Both parties are going to keep kicking the can down the road until they reach where the sidewalk ends.
Juggernaut111@reddit (OP)
I genuinely think about this a lot. You can use hyperinflation to pay it off, but the downside is a really weak dollar that no one wants to use. That in-turn causes a weaker dollar.
Mildars@reddit
I think hyper-inflation is the most-likely long term solution, since the other two solutions (default or austerity) would be economic or political suicide, respectively.
Juggernaut111@reddit (OP)
I don't think the Weimar Republic solution is the best.
Mildars@reddit
Obviously the best solution is to close the deficit to manageable levels now. But that won’t happen. So the remaining options are:
Hyperinflation, which will degrade the US’s standard of living and global standing.
Default, which will instantly blow up the US economy, cause a global financial crisis, and probably kick off another Great Depression, or
Austerity, which won’t happen now, when we can make relatively small cuts, so I doubt it will happen down the road when the types of cuts that need to be made are much bigger.
Of the 3 remaining options I think we are going to go with 1, since it gives sitting politicians the greatest ability to avoid losing office in the short term, even if it’s not best for the country in the long term (that’s austerity).
Juggernaut111@reddit (OP)
I fully agree with you. It's just hard to convince other that it is a problem
sanesociopath@reddit
current US debt for anyone who's interested
Ok_Gas5386@reddit
It’s a weird sort of abstract problem. It’s not like a debt to the bank where they’ll foreclose on the country, it’s only really an issue if the currency weakens or if the government doesn’t service the debt. As long as we practice sound governance and counter cyclical fiscal policy, we’ll be fine.
That said, yes, I’m pretty worried about it becoming a problem in my lifetime. Because I don’t have faith that we’ll elect serious people.
Juggernaut111@reddit (OP)
Our government is the opposite of sound. I am thinking of this on a country-wide scale. The problem is that we already have too much debt.
Ok_Gas5386@reddit
The dollar is still strong relative to global currencies so I’ll have to disagree there. It might be higher than you or I want it to be, but there’s not an objective basis by which you could say it’s too high. The federal reserve bank will always finance the government, and as long as those dollars are worth something any level of debt is sustainable.
The thing is, we won’t know the debt is unsustainable until it is. That’s why caution and prudent counter cyclical policy is so important. During a period of high inflation and full employment like we experienced the past few years, the federal government should collaborate its fiscal policy with the central bank’s monetary policy. As the central bank raises rates, the federal government should raise taxes and cut spending, both because borrowing has become more expensive and because those policies will have an additional contractionary effect in support of the central bank’s efforts. Similarly, during a recession when the central bank cuts rates to stimulate the economy, the federal government can allow deficits to increase because borrowing is cheaper and those policies will also boost growth.
What makes me worried is no one seems to understand this anymore.
TheDuckFarm@reddit
Much of it is owed to Americans. The foreign held debt helps keep countries from attacking us.
Say for example China decided to go war with the US, China would lose $850 billion a year in interest payments.
TheOwlMarble@reddit
Debt is only a problem if you don't use it to put yourself in a position to pay it back before it comes due. In the case of a country, that means investing in the economy so that you can repay it with future taxes.
That's what a lot of our debt goes toward, either directly or indirectly (eg the US Navy is very good at maintaining shipping lane stability).
So yes, it's a concern, and we should absolutely look into ways to improve efficiency and raise taxes.
We have a few generations to solve this before our own demographics mirror Japan and the taxable population shrinks substantially, barring radical demographic shifts we have no reason to expect.
Juggernaut111@reddit (OP)
We aren't, though. I can not physically see a way that we would pay it back without a drastic outcome. Such as defaulting or hyperinflation.
TheOwlMarble@reddit
We aren't what, exactly? Investing in the economy?
brookish@reddit
Nope. It has literally never caused an issue other than conservatives telling us it’s going to ruin us as an excuse to cut spending on stuff they don’t like.
ameis314@reddit
What should I worry about? What can i possibly do about it?
Tommy_Wisseau_burner@reddit
People really need to learn basic economics and what the debt actually means.
75-80% of the debt is owned by American citizens. Unless, for some dumb reason, everyone needs all 80%, which consists of social security and other future bonds the US will never have to pay anywhere remotely close to what it owes. On top of that the USD is a world currency and there’s almost 0 risk involved. Moreover if it were a real threat the US would’ve stopped handing out loans and forgiving them. We gave Britain a 90% discount on lend lease for ww2. They just paid off their 90% reduced rate from ww1. If it really were a problem other countries would be absolutely fucked beyond belief
NArcadia11@reddit
I'm not going to pretend to understand it, but the debt has been growing pretty much every election cycle in my memory and it never makes a difference to my life. As far as I can tell it doesn't actually change anything.
dupontred@reddit
Republicans only care about it when they can use it as a scare tactic when nothing else is working. The rest of the time, they're busy running it up thanks to bad economic policies.
Juggernaut111@reddit (OP)
Democrats run it up, too. Historically, the Dems spend more on social security, etc.
CapitalFill4@reddit
There is nothing inherently wrong with debt, so I’m only concerned about the debt to the degree it’s not helping people. Debt is good if you get a return on it (like supporting people who then spend the money). The problem is when that money gets hoarded by corporations and individuals and it’s not circulating.
MontCoDubV@reddit
I don't care because it's not negatively affecting anything and it never has. Quite the opposite, in fact, the US debt has been enormously beneficial to the US economy. Every time we've tried to dramatically reduce the debt or "balance the budget" we've triggered either a recession or (more often) a depression.
The US federal debt is not only a good thing, it's essential to the economy operating well. The only people who are concerned with it are fear mongers who have no clue how the economy works or how sovereign debt works.
dangleicious13@reddit
I don't really care about the national debt.
joepierson123@reddit
Nobody's going to win an election proposing to cut spending and increase taxes (income), which is what a normal household would do to reduce its debt.
Juggernaut111@reddit (OP)
I agree. The last time we were in a deficit was 20 years ago in the Clinton administration
Redbubble89@reddit
It's not like a credit card. When the government borrows, it does so by issuing Treasury bonds, which — despite a rise in foreign purchases of U.S. debt — are still mostly bought by American citizens and businesses. We've been in debt for 20 years and even when the economy was good, the debt still grew.
I have more of an issue with our social security we've all paid into and not getting a cent when my generation turns 65. We still need to tax people a fair amount but narrowing the deficit isn't the highest priority. It's making sure we are economically prosperous and have our social safety nets.
CheezitCheeve@reddit
Would you like to be the politician that votes to raise taxes and cut everyone’s social security? Unfortunately, the problem with paying off the debt is that it guarantees you will not be reelected (unless you have an economic miracle like the 90s). When one party makes its identity off cutting taxes and the other desperately wants to incorporate a modern healthcare system, paying the national debt is a priority for neither.
ngyeunjally@reddit
Nobody who understands sovereign debt is concerned about it.
ChemMJW@reddit
No politician of any party cares about the national debt, for two reasons:
Minor reason: Most of them gamble that they will be out of office before the situation becomes a true catastrophe, and it's a pretty safe gamble that they're right. So the blame will fall on sombody else.
Major reason: getting the debt under long-term control will require both significant tax increases and enormous spending cuts. Democrats generally pretend that tax increases alone will solve the problem, while Republicans pretend that the situation can be salvaged by slashing spending alone. In reality, both will be necessary, which means that to tackle the debt, politicians in Congress will have to propose and pass a series of hugely unpopular measures on a bipartisan basis (increase taxes + spending cuts). The chance they will do this is zero, because there's no faster way to lose your next election than to increase people's taxes or cut services they have come to rely on. But to do both would be a political death sentence.
So, basically, to solve the debt problem, we'd need there to be a large number of adults in Congress who are able and willing to make difficult, gut-clinching decisions, knowing that doing so will amount to political suicide even though it's crystal clear that such measures are absolutely necessary.
But there are no adults in Congress.
RoyalInsurance594@reddit
Go away Russkie.
TheBimpo@reddit
The people who show concern about "the debt" tend to be the ones who think "the debt" is the same as paying household bills.
LAW9960@reddit
I mean, Trump ran and won on Elon starting a Dept of Government Efficiency to make drastic cuts
10leej@reddit
The US debt is never a problem when the GOP is in control of things. In case you haven't ever noticed. Since their administrations ate also the ones that tend to add the most to the debt.
ALoungerAtTheClubs@reddit
The national debt is not like personal debt. Per capita, our external national debt is lower than the UK, France, Germany, Canada and many others.
SueNYC1966@reddit
It usually goes higher with the GOP who likes to hand out stimmy checks so I guess not.
FishrNC@reddit
Nobody that can do anything about reducing it seems to be concerned. The rest of us, yeah, we understand economics.
azjza@reddit
I know you are asking about the debt, and not the deficit, but I remember when conservatives bemoaned trillion dollar deficits under Obama and then in 2018 and 2019...before the pandemic I should add...when Trump had trillion dollar deficits due to his tax cuts no one seemed to care.
We didn't even get the promised 3% annual GDP growth (or as Trump said, 4-6% GDP growth). It maxed out at 2.9% in 2018. Then of course they moved the goalposts and started touting Annualized Quarterly GDP growth to show that Trump hit "3% growth", even though that is a completely different statistic than what they used to attack Obama (annual GDP growth, aka a calendar year). Using annualized quarterly GDP growth Obama also had multiple "years" of 3%+ GPD growth.
So the short answer is...no one really gives a fuck unless they can score political points off of it.
OhThrowed@reddit
Last time I asked an economist about it, he laughed.
DOMSdeluise@reddit
I don't because it doesn't matter
iliveonramen@reddit
About 20% of US debt is intergovernmental holdings. That number rises to around 33% when you add Fed Reserve owned Treasuries.
Yes, I’m concerned because the government needs to start bending cost and revenue curves but we have the incoming YOLO President. Nothing is going to get fixed in the next 4 years and if anything, expenditures might increase with a recession
venus_arises@reddit
I'd be concerned about it, but I am a Ukrainian Jew childbearing aged unemployed immigrant married to another immigrant. Frankly, there's too much shit going on that's the debt is just low priority.
sideshow--@reddit
Nah, not really.
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