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55% of the US National Debt Is the Result of Repaying Debt with More Debt

thesoundingline.com

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Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#41

Post by bubbleRefuge »

Articles like this are killing us, because they reinforce a false analogy that the federal government is like a business or a home. This is killing us politically. Its a shame.

This is the way modern monetary systems work (sovereign fiat money). Its healthy and totally normal. Federal debt is not debt that private citizens are liable for. A treasury security is like a CD, or savings account. Since the Federal Government Complex ( including the Federal Reserve Bank) can issue currency to infinity, there is no problem here. When a treasury security expires or is redeemed, they merely changes numbers in a spreadsheet. 99% of the time those "funds" are moved back into a new treasury security. There will always be demand for interest bearing risk free government debt.

go read http://neweconomicperspectives.org/ its all there.

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#42

Post by graedus »

seanmcdirmid wrote: post #8
readhn wrote: post #6

Earlier quoted context omitted.

Consumer debt is at all time high as well. https://www.newyorkfed.org/microeconomics/hhdc.html

With inflation, GDP growth, and population growth, that is generally true at any time.

I briefly searched for inflation-adjusted debt per capita but couldn't find it.

There is the federal debt to GDP ratio, which is 105%. This is at least a 50-year high[0]. FRED's household debt to GDP data doesn't go back very far, but we can see it's off the highs off 2008[1]. (edit: added household debt to GDP)

[0] https://fred.stlouisfed.org/series/gfdegdq188S

[1] https://fred.stlouisfed.org/series/HDTGPDUSQ163N

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#43

Post by rdiddly »

"This interest includes repaying principal."

Stop right there. Something's fishy with the terminology/math/reasoning then, no? If the "interest" includes principal, then what is the interest? It's like saying "Use one cup of flour and water" or "The size of my penis is 6 feet including my height."

Here's what let's do: subtract the principal from the interest. That should leave you with the interest only. Therefore

I - P = I

Subtract I from both sides...

-P = 0

Divide by -P...

1 = 0

This is the axiom of Black Math.

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#45

Post by JumpCrisscross »

bubbleRefuge wrote: post #41

Articles like this are killing us, because they reinforce a false analogy that the federal government is like a business or a home. This is killing us politically. Its a shame. This is the way modern monetary systems work (sovereign fiat money). Its healthy and totally normal. Federal debt is not debt that private citizens are liable for. A treasury security is like a CD, or savings account. Since the Federal Governm…

> Since the Federal Government Complex ( including the Federal Reserve Bank) can issue currency to infinity, there is no problem here

You just broke central bank independence, and with it the political independence of monetary policy. Historically, that leads to rampant inflation. The federal debt isn't like household debt. But it can't be printed into infinity. The U.S. government's debt incurred as a result of fiscal policy (i.e. not including the Federal Reserve's debt, which technically includes every dollar bill) has real consequences in constraining the government's taxing and spending power without tripping up inflation.

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#46

Post by Four_Star »

rdiddly wrote: post #43

"This interest includes repaying principal." Stop right there. Something's fishy with the terminology/math/reasoning then, no? If the "interest" includes principal, then what is the interest? It's like saying "Use one cup of flour and water" or "The size of my penis is 6 feet including my height." Here's what let's do: subtract the principal from the interest. That should leave you with the interest only. Therefore I…

That's the way reporting on the repayment of the national debt is done. The point of the article is unchanged. Those familiar with Treasuries will understand

If I run a deficit of 100 dollars, borrow 100 dollars and I repay the loan by borrowing 100 dollars and the interest on both is 10 dollars, than I owe 220 dollars but I only got 100 dollars of real spending.

That is what the article is saying. of the $21.4 trillion in debt, only $14 trillion funded deficits and half of those deficits were the results of rolling debt over.

No funny math at all

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#47

Post by nerdponx »

rdiddly wrote: post #43

"This interest includes repaying principal." Stop right there. Something's fishy with the terminology/math/reasoning then, no? If the "interest" includes principal, then what is the interest? It's like saying "Use one cup of flour and water" or "The size of my penis is 6 feet including my height." Here's what let's do: subtract the principal from the interest. That should leave you with the interest only. Therefore I…

s/This interest includes/These payments include

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#48

Post by bannable »

5874-4b22-a4e0 wrote: post #30
sp332 wrote: post #21

Earlier quoted context omitted.

The treasury has a one-page breakdown of the kinds of debt. https://www.treasurydirect.gov/govt/reports/pd/mspd/2018/opd... It's not a deep dive but I thought it was a great overview for fitting on one page. (edit: more recent link)

19k could be paid off by a single person, has this increased in the last two years?

Take another look at the table - the values are denominated in millions of dollars, and that second symbol is a comma, not a period, so it's 19 million million.

Re: 55% of the US National Debt Is the Result of Repaying Debt with More Debt

#50

Post by JumpCrisscross »

graedus wrote: post #42
seanmcdirmid wrote: post #8

Earlier quoted context omitted.

With inflation, GDP growth, and population growth, that is generally true at any time.

I briefly searched for inflation-adjusted debt per capita but couldn't find it. There is the federal debt to GDP ratio, which is 105%. This is at least a 50-year high[0]. FRED's household debt to GDP data doesn't go back very far, but we can see it's off the highs off 2008[1]. (edit: added household debt to GDP) [0] https://fred.stlouisfed.org/series/gfdegdq188S [1] https://fred.stlouisfed.org/series/HDTGPDUSQ163N

> I briefly searched for inflation-adjusted debt per capita but couldn't find it

You're looking for household debt to GDP [1]. It is a real (versus nominal) statistic because it's a ratio between two nominal terms. It also communicates financial health better than a per-capita term, since it measures against production.

[1] https://fred.stlouisfed.org/series/HDTGPDUSQ163N

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