Of course it won't. Worst case scenario, if the economy tumbles, the government prints money to pay debt, inflation happens, confidence is shaken and the economy slows. But at the end of the day, an economy is characterised by its ability to produce things and keep people busy (working). Money is simply the value of labour and production shifting hands. The nominal value doesn't matter as much as the real value (ie. the shit that's actually being produced).
Will America's debt doom us?
61–70 of 251 posts
Re: Will America's debt doom us?
#62It's always great to see an extremely intelligent person try to rationalize a core belief that's at direct odds with the cold, hard, and unforgiving reality they live in. The amount of mental gymnastics done here are Olympian, and this guy deserves a gold medal. However, even the fanciest mental tricks are never going to change the fundamental laws of reality. In the entire article he dances around second order effec…
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Re: Will America's debt doom us?
#63Earlier quoted context omitted.
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?
Since most candidates are running on a platform of promising more free things, it doesn't seem likely.
Forget the candidates, what about our current president. He seems plenty happy spending away. Billions in Agriculture subsides to prop up his trade war, just as a start.
Re: Will America's debt doom us?
#64It's always great to see an extremely intelligent person try to rationalize a core belief that's at direct odds with the cold, hard, and unforgiving reality they live in. The amount of mental gymnastics done here are Olympian, and this guy deserves a gold medal. However, even the fanciest mental tricks are never going to change the fundamental laws of reality. In the entire article he dances around second order effec…
On the other hand, top marginal tax rates are a fraction of what they were at their peak last century. We could double tax revenue at the drop of a hat, paying down our debt and ameliorating toxic wealth inequality simultaneously.
Re: Will America's debt doom us?
#65Earlier quoted context omitted.
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.
Worth noting is that Clinton was president during the dot com bubble, which enabled that surplus... until the economy came crashing down a short while later. Also worth noting is that some of the policy changes of the Clinton white house + Greenspan federal reserve enabled the housing crash as well. I personally feel like we got a surplus only by taking out a mortgage on the next ~15 years of America.
Rather, President George W. Bush used the existence of the surplus as a reason to enact two tax cuts. Those tax cuts, their extension (mostly) by Obama, the Trump tax cuts, the wars in Iraq and Afghanistan, and sizable increases in the defense budget are the major contributors to the budget deficit and hence the accumulation of debt since 2001.
Re: Will America's debt doom us?
#66Earlier quoted context omitted.
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.
Worth noting is that Clinton was president during the dot com bubble, which enabled that surplus... until the economy came crashing down a short while later. Also worth noting is that some of the policy changes of the Clinton white house + Greenspan federal reserve enabled the housing crash as well. I personally feel like we got a surplus only by taking out a mortgage on the next ~15 years of America.
A massive tax cut and a few wars also had to do with the deficit during the Bush Jr. years.
Re: Will America's debt doom us?
#67Low rates are a result of boomeres all over the world saving for retirement (+ CB manipulation). As soon as they start using that savings, instead of accumulating them both inflation and yields will tend to naturally raise again. More people to care for, less people to do the work -> inflation. Inflation expectation -> higher yields. That $175T wealth figure is measured at the peak of everything bubble in the US. Rea…
>Low rates are a result of boomeres all over the world saving for retirement [citation needed] How did you come to that conclusion?
There is 70M of Boomers in US. (Generally) about to end a decade or two of their most productive years: highest skills, highest level jobs, house paid off, kids out, etc. - trying to save and invest enough to give themselves a good retirement. Just yesterday I was listening to some YT podcast and boomers own ~74% of all US economical activity. Many of them accepted low salaries, for the promise of pensions and so on. Paid taxes but were promised medicare and other benefits that they expect to eventually get. They are (in great part) the savings glut: https://www.brookings.edu/blog/ben-bernanke/2015/04/01/why-a...
How else would your explain negative interest rates? That have not happened in the recorded history before and doesn't really make sense. There is a certain CB manipulation involved, sure, but generally - it's the result of many people competing to preserve and invest their savings. This trend will reverse - and then... wow... these Boomers are in for a surprise when it turns out we've spent their money on stuff like WeWork and other huge startups with no positive cash-flow, and rest was spent by the government.
Re: Will America's debt doom us?
#68Earlier quoted context omitted.
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.
Clinton ran a current account surplus, but overall debt grew because Medicare and Social Security were still losing money at the time. Not to mention that it wasn't all Clinton, some of it was the opposition Congress.
This is a dumb unrelated question on my end but are the returns of Social Security very bad?
If you put 6.2% (12.4% total with employer contribution) of your income away into index funds that grew at 7% per year, at $100k/yr gross salary ($12.4k/yr) from ages 25 - 65 (40 years), you would end up with $2.6m (in today's dollars).
$2.6m converted into dividend funds with a 3% yield would be $6.6k/mo.
I don't know anybody getting $6.6k/mo from Social Security...
Re: Will America's debt doom us?
#69I no longer know how to view these concerns. The only mechanism I now know of that creates money in modern economies in order to purchase goods and services directly, without obtaining funds from circulation from other businesses, is debt created from financial institutions. In order to have healthy economies and create money and move capital, you must therefore have debt.
How did western economies function prior to this? I wish I was educated on the matter. I've not found good reading for this topic outside of the enclave of academia.
Re: Will America's debt doom us?
#70This is some SERIOUS misrepresentation of the facts. Just as an example: "One-third of the debt is money the government owes to itself". To itself? And whom might that be? Oh right, THAT'S US.
That money is owed to the people, and they're probably doing to need it. Especially considering that Social Security, Medicare, and Medicaid account for 36% of the federal budget - which is....let me do the math - one third.
https://www.thebalance.com/u-s-federal-budget-breakdown-3305...