Earlier quoted context omitted.
so, 103 years of productivity for the US?
Isn't it 1.03 years?
Yes.
Will America's debt doom us?
21–30 of 251 posts
Re: Will America's debt doom us?
#22Re: Will America's debt doom us?
#23Like the housing bubble, our debt hasn't been a problem and it's not going to be a problem right up until it is a problem. It will be a black swan event and afterward everyone will claim that they saw it coming and "the other guy" ignored it.
In the mean time, are us Americans ever going to get a president that focuses on paying down the debt? How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
There were budget surpluses from 1998 through 2001.
One thing you aren't accounting for is tax receipts going up because the economy grows. It's usually the case that spending goes up at the same time, but it doesn't have to go up.
Re: Will America's debt doom us?
#24> Because debt-to-GDP is apples-to-nonsense. No it's not. Debt is measured in dollars. GDP is dollars per year. Debt/GDP is $/($/yr)=yr This ratio converts debt, a number it's hard to have intuition for, to years. It tells us how many years of productivity we owe. For those of us who don't manage $30 billion in assets years of productivity probably carries more meaning than big numbers with 12 zeros.
It's more nuanced than that. The debt/GDP number is talking about future dollars above the divider, and present dollars below the divider. FutureUS$ / (PresentUS$ / yr) is meaningless.
The government could choose to reduce the productivity value of the debt by reducing the value of the dollar (quantitative easing), or numerous other monetary policy levers it can pull. How many years of "productivity we owe" isn't a sensible metric when it's not to be paid now, and we can manipulate the number between now and maturity.
Re: Will America's debt doom us?
#25The interest rates on US debt are artificially low because their default risk is based on the willingness, not the ability, of the USG to repay them. That's because the ability is a given, since the government can print the currency the debt is denominated in. Corporate bonds are a bad analogy because their risk is mostly in defaulting, whereas if something goes sideways in America, Treasury bonds will fail by causin…
There's a difference. The govt doesn't have this ability to print money and pay debt. The Fed does. Which means that the Fed has been keeping interest rates already artificially low by printing money. It'll take one misstep or one recession for the debt requirements to be so high that the Fed will have to make a choice between keeping rates low, causing massive inflation vs high causing massive drop in gdp and jobs.…
The Treasury can mint new money at the behest of the Executive.
Re: Will America's debt doom us?
#26> Because debt-to-GDP is apples-to-nonsense. No it's not. Debt is measured in dollars. GDP is dollars per year. Debt/GDP is $/($/yr)=yr This ratio converts debt, a number it's hard to have intuition for, to years. It tells us how many years of productivity we owe. For those of us who don't manage $30 billion in assets years of productivity probably carries more meaning than big numbers with 12 zeros.
His proposed alternate metric, interest as a percentage of tax revenue is also deeply flawed- it misses the obligation to pay the principal, which has tripled since the low point in the early 2000s.
I like the finance wonks word for debt- leverage. Taking on debt is like going out further on a lever- the debter is more exposed to swings in the overall economy. While it's worked out fine so far, a high debt to gdp ratio exposes the US to higher risk on the downside.
Re: Will America's debt doom us?
#27“If something cannot go on forever, it will stop.” [Herbert Stein]
Every dollar we spend on interest is not spent on investment.
Re: Will America's debt doom us?
#28Like the housing bubble, our debt hasn't been a problem and it's not going to be a problem right up until it is a problem. It will be a black swan event and afterward everyone will claim that they saw it coming and "the other guy" ignored it.
In the mean time, are us Americans ever going to get a president that focuses on paying down the debt? How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
https://econproph.com/2011/07/14/private-debt-vs-government-...
Government debt is different than private debt.
Re: Will America's debt doom us?
#29Like the housing bubble, our debt hasn't been a problem and it's not going to be a problem right up until it is a problem. It will be a black swan event and afterward everyone will claim that they saw it coming and "the other guy" ignored it.
Why would it possibly be a "black swan" event? All the numbers are public and we see it coming from miles away. Black swan event refer to something that isn't easily predicable because of their rarity. The government makes debt payments and calculations constanty. It's not like people just want up one morning and everything changes. That's not how markets work.
The people who pay these "everything will turn in a dine when people really understand" narratives are usually people who the markets are telling them they are wrong and cannot accept it.
Re: Will America's debt doom us?
#30Like the housing bubble, our debt hasn't been a problem and it's not going to be a problem right up until it is a problem. It will be a black swan event and afterward everyone will claim that they saw it coming and "the other guy" ignored it.
In the mean time, are us Americans ever going to get a president that focuses on paying down the debt? How much would taxes have to go up (because spending can't go down, right?) for citizens to contribute their fair share of paying down the debt?
Bill Clinton accomplished that but at some cost. My father still laments the cancellation of the superconducting supercollider that he had the pleasure to work on.