Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Will America's debt doom us?

usatoday.com

Post reply on HN
Print view View original

231–240 of 251 posts

Re: Will America's debt doom us?

#231

Post by Corazoor »

PeterStuer wrote: post #166
PeterStuer wrote: post #57

What stands between the USD and the Zimbabwean Dollar is the worlds largest military/intelligence power not just prepared but using it's full strength to enforce the petrodollar.

I don't mind the downvotes, but I would rather see rebuttals that would change my mind.

Since you specifically asked for it: What really stands between the USD and the Zimbabwean Dollar is printing press funded spending.

The Fed is doing something similar with quantitative easing, but at a by far smaller scale, and the money mostly goes to banks anyway. It's injecting printed money into the real economy that spells trouble, and that is currently not happening in the US.

Also, while the military is definitely a boon to the US economy, most of that is indirect via guaranteed jobs and income, not via projected force.

Plus, in case of a hyperinflation, the military would become unmaintainable very quickly, exactly because of it's size.

All that said, your comment had basically nothing to do with the topic (debt), so there is where the downvotes come from.

Re: Will America's debt doom us?

#232

Post by coliveira »

The end of the American empire is determined by the fact that the USA won't be able to pay for the expenses of maintaining its military force. The US is already wasting more than half of its discretionary spending on the military. These military expenses already account for 89% of the federal government deficit, which will be $1.101T in 2020 [1]. These expenses are going up faster than GDP growth, and are not expected to go down, since this administration refuses to close the 20-years old wars on Afghanistan and Iraq, and is now actively operating in other fronts of the general war on the Middle East. The US also has to maintain more than 800 military basis in 70 countries. It takes huge amounts of money to keep a military force of this kind, especially when the country is under severe deficits, which is the current situation of the US government. It seems that it will take a few years for the shoe finally drop, but all the bravado of the Trump era is moving the US into a situation in which it cannot afford to maintain its empire.

[1] https://www.thebalance.com/u-s-federal-budget-breakdown-3305...

Re: Will America's debt doom us?

#233

Post by sydhdhd »

marcosdumay wrote: post #177
treis wrote: post #94

Earlier quoted context omitted.

>The government cannot create wealth "for free". It can print more dollars, but in doing so it makes each dollar worth less. No wealth is actually gained. That's the point. The government isn't on the hook for wealth. They are on the hook for dollars. And dollars, to the US government, are "free". >Doing that is impossible, though. Reducing the value of a dollar means that you'll need even more dollars to repay that…

> The amount of debt doesn't go up if the value of the dollar goes down. The interest rate goes up almost instantly when the government prints money. That's not exactly equivalent to increasing the debt value, but it's more than enough to make the "just inflate it away" strategy fail 100% of the times some country tries it.

Quite simply you dont have a clue what you're talking about. It's like you're using a string of words to inflate away your total ignorance.

Re: Will America's debt doom us?

#234

Post by NTDF9 »

pjc50 wrote: post #77
NTDF9 wrote: post #47

Earlier quoted context omitted.

In a recession: People lose jobs Govt pays out more social security benefits Govt earns lesser tax revenue Govt interest payments on bonds are still at pre recession levels So, govt has to issue more bonds Nobody has the money to pay for those bonds Thus, interest rates would naturally rise. The fed could print money to buy bonds causing inflation or the fed could not print money causing rise in interest rates and fu…

True up to "nobody has the money to pay for those bonds": there's often a flight to safety in recessions of people moving money out of the stock market. Plus all the big international investors. Shortage of buyers is a risk but not one we've been close to so far. One lesson of QE seems to be that the Fed can print money in a recession without causing inflation. Or at least only inflation of asset prices, not wage/con…

> One lesson of QE seems to be that the Fed can print money in a recession without causing inflation. Or at least only inflation of asset prices, not wage/consumer goods inflation.

You nailed it. There was inflation with the last QE. We just changed what counts towards inflation.

Re: Will America's debt doom us?

#235

Post by NTDF9 »

AnimalMuppet wrote: post #89
NTDF9 wrote: post #47

Earlier quoted context omitted.

In a recession: People lose jobs Govt pays out more social security benefits Govt earns lesser tax revenue Govt interest payments on bonds are still at pre recession levels So, govt has to issue more bonds Nobody has the money to pay for those bonds Thus, interest rates would naturally rise. The fed could print money to buy bonds causing inflation or the fed could not print money causing rise in interest rates and fu…

Historically, recessions have not played out the way you describe. (Never, IIRC.) So I think your theory is flawed.

You need to look at other countries that have had inflation to see how this goes. US is not an island and economics works the same everywhere.

Re: Will America's debt doom us?

#236

Post by xyzzyz »

jmull wrote: post #224
xyzzyz wrote: post #197

Earlier quoted context omitted.

Our government already spends more on its healthcare programs (Medicare and Medicaid) than Germany and UK, and they don’t even cover half of the people. I don’t see how paying for everyone would save any money at all. It might make the per capita costs a bit lower, but total tax expenditure will certainly be higher.

The world abounds with concrete examples of systems that provide healthcare at a cost that would allow us to cover all our citizens at less than we're paying now, over all. E.g., https://www.healthsystemtracker.org/chart-collection/health-... (BTW, when talking about the overall cost, it doesn't make sense not to count the costs of employer-provided plans.) The real question is how to we transition from the broken, h…

Right, but it doesn't necessarily mean that it is possible to have such system here. World also abounds with countries building cheap rail, but when we attempt this, it's very expensive. Just because it can be done, doesn't mean that it will end up happening the way you wish it to happen.

I think it would be worthwhile to have a pilot program of it here, say with a single small state introducing it. It could show us how it would end up working in practice.

Re: Will America's debt doom us?

#237

Post by maxerickson »

xyzzyz wrote: post #236
jmull wrote: post #224

Earlier quoted context omitted.

The world abounds with concrete examples of systems that provide healthcare at a cost that would allow us to cover all our citizens at less than we're paying now, over all. E.g., https://www.healthsystemtracker.org/chart-collection/health-... (BTW, when talking about the overall cost, it doesn't make sense not to count the costs of employer-provided plans.) The real question is how to we transition from the broken, h…

Right, but it doesn't necessarily mean that it is possible to have such system here. World also abounds with countries building cheap rail, but when we attempt this, it's very expensive. Just because it can be done, doesn't mean that it will end up happening the way you wish it to happen. I think it would be worthwhile to have a pilot program of it here, say with a single small state introducing it. It could show us…

The problem with a single small state is that providers will leave when you cut their pay.

The thing to do is to encourage many more people to do primary care.

Re: Will America's debt doom us?

#239

Post by wang_li »

Retric wrote: post #223
wang_li wrote: post #104

Earlier quoted context omitted.

It's a surprise to plenty of people who think that their $70,000/yr income makes them a net tax payer when it actually doesn't. And it's relevant because people will reduce their marginal income, or relocate to more favorable tax jurisdictions, when the tax burden of that income is excessive. It's also relevant because, at a certain point, the productive portion of the population will fall below that necessary to mak…

70k is in the top ~16% so by your description they are net contributors to the tax base. https://graphics.wsj.com/what-percent/ The cutoff for top 40% is around 40k/year. PS: Numbers are 5 years old but should be a good ballpark.

According to google te median 2019 household income is $63k. And according to the CBO the median income of the middle quintile of households filing tax returns was $72k. That seems to disagree with your wsj link.

Re: Will America's debt doom us?

#240

Post by neilwilson »

AnimalMuppet wrote: post #118
neilwilson wrote: post #96

The US debt is a problem in the same way that the earth constantly falling into the sun is a problem. You've missed a velocity vector in your analysis. Ask yourself this: if you get dollars for your maturing Treasury, where do those dollars end up in aggregate? They are either taxed away due to them circulating past tax points as they are spent and respent, which eliminates the need for a bond, or they are saved whic…

If your velocity enables you to stay in orbit, there's no problem. If not, then you're just falling, which is also fine... until you hit the ground. As for your analysis of what happens when you receive payment for a bond, you seem to be saying that the government gets the money back, either by taxing spending or by you buying a new bond. I don't buy that analysis, for two reasons. First, I could receive payment for…

"First, I could receive payment for a Treasury, and buy some other investment with it."

You could. But that is just an asset swap. The person who gets your cash is then faced with the same choice you were - spend it (which will result in taxation) or save the money (which ends up with a bond purchase).

Always remember that money doesn't stop at the first use.

Post reply on HN