Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
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Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
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Re: Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
#2It seems pretty clear that this debt will never be repaid, and will just keep growing - how big can it grow before it just doesn't get to grow any more?
Re: Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
#3It seems pretty clear that this debt will never be repaid, and will just keep growing - how big can it grow before it just doesn't get to grow any more?
Judging by Japan's example, a lot more. Though you never really know. It's like trying to predict just how much snow will cause an avalanche. All you can really do is look at it and say 'that looks dangerous.'
Re: Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
#4But higher than in 2007? Seems like a cherry-picked comparison.
Re: Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
#5But higher than in 2007? Seems like a cherry-picked comparison.
The peak was in 2008, as was the start of the Global Financial Crisis
Re: Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
#6It seems pretty clear that this debt will never be repaid, and will just keep growing - how big can it grow before it just doesn't get to grow any more?
There is upper limit. Cost of servicing debt cannot exceed tax revenue. But that's in theory.
The U.S. spent $450 billion in interest payment to its debt, on tax revenue of about $2.5 trillion That's 18% of revenue.
Can it go to 30%? Sure, but there will be cuts made to services.
Japan gets panned for overspending, but they're in line with what the U.S. spends in debt servicing cost in relation to revenue.
https://data.worldbank.org/indicator/GC.XPN.INTP.RV.ZS?locat...
Re: Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
#7Well, we shouldn't have bailed out all those big banks.
Re: Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
#8It seems pretty clear that this debt will never be repaid, and will just keep growing - how big can it grow before it just doesn't get to grow any more?
First: that debt will be repaid. The people who own those T-bonds will redeem them and get their money. This is an important distinction; you buy T-bonds because you know they’ll be paid back.
The total value of the debt is an almost meaningless number. As long as people keep buying US debt, we’ll have the money to pay the debt off. (Strictly the US could just print the money it needs to pay the debt right now - the question is whether the resulting inflation would be worth it).
The rest cost of the debt is interest payments. As long as those stay at a manageable fraction of GDP the US is just fine. If GDP increase 10% but debt servicing only increases 5% then the servicing payments are effectively 4.5% smaller.
In the next decade our problem is less likely to be total quantity of debt than increasing interest rates (which are very low right now).
Re: Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
#9That is an amazing amount of public and private debt. It's an interesting thought that I have had $0 of private debt for at least 10 years, which means someone else is picking up a lot of slack for me. Reminds me of an old Square One TV episode that talked about the average number of donuts eaten by Americans -- and I concluded that someone (or multiple someones) must have seriously been picking up my slack there as well :p.
Re: Total US Debt Is over $75T; Debt-to-GDP Lower Than in 2008
#10It seems pretty clear that this debt will never be repaid, and will just keep growing - how big can it grow before it just doesn't get to grow any more?
First: that debt will be repaid. The people who own those T-bonds will redeem them and get their money. This is an important distinction; you buy T-bonds because you know they’ll be paid back. The total value of the debt is an almost meaningless number. As long as people keep buying US debt, we’ll have the money to pay the debt off. (Strictly the US could just print the money it needs to pay the debt right now - the…
Let's just say something breaks and we're in a recession (declining GDP, declining immigrants, declining production, declining population).
What happens then?