U.S. on Track to Add $19T in New Debt over 10 Years • Hacker News Board

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#21

Post by jononomo » Thu, Feb 23, 2023, 6:47 PM UTC

MuffinFlavored wrote: post #3

I wish I knew the truth on which camp is "right". You've got camp 1 saying "you can go to 300% Gross Federal Debt to GDP without side effects/it's a new paradigm that history can't guide us on/there are no downsides to printed funny money/everything is fine/there's no risk of the US defaulting/spending 7% of tax revenue a year on interest on the debt" and the other camp says it's going to lead to our demise, etc. Wil…

Go with the camp that doesn't immediately change their tune when a Republican is elected president.

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#22

Post by sfe22 » Thu, Feb 23, 2023, 6:51 PM UTC

avalys wrote: post #20

In discussions like this, it's worth reviewing where total government spending in the US actually goes. This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html . In summary: 17% to pension programs (e.g. social security) 23% to healthcare 19% to education 12% to defense 7% to welfare 3.6% to police/fire/prisons 4% to transportation…

Isn’t this how empires fall?

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#23

Post by Axien » Thu, Feb 23, 2023, 6:54 PM UTC

avalys wrote: post #20

In discussions like this, it's worth reviewing where total government spending in the US actually goes. This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html . In summary: 17% to pension programs (e.g. social security) 23% to healthcare 19% to education 12% to defense 7% to welfare 3.6% to police/fire/prisons 4% to transportation…

What is our defense relative to GDP?

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#24

Post by Axien » Thu, Feb 23, 2023, 6:54 PM UTC

sfe22 wrote: post #22

avalys wrote: post #20

In discussions like this, it's worth reviewing where total government spending in the US actually goes. This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html . In summary: 17% to pension programs (e.g. social security) 23% to healthcare 19% to education 12% to defense 7% to welfare 3.6% to police/fire/prisons 4% to transportation…

Isn’t this how empires fall?

But it’s how politicians get elected.

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#25

Post by [deleted] » Thu, Feb 23, 2023, 6:55 PM UTC

sashu123 wrote: post #6

MuffinFlavored wrote: post #3

I wish I knew the truth on which camp is "right". You've got camp 1 saying "you can go to 300% Gross Federal Debt to GDP without side effects/it's a new paradigm that history can't guide us on/there are no downsides to printed funny money/everything is fine/there's no risk of the US defaulting/spending 7% of tax revenue a year on interest on the debt" and the other camp says it's going to lead to our demise, etc. Wil…

The simple answer is we are debasing our currency in a very complex way, that we cannot measure how much we debased it. In the past kings printed new coins to fund their wars or whatever and it was easier to track how much the currency lost value. In the present because economies have gotten complex + tools to debase have gotten complex we cannot estimate how much we have actually debased our currency by. If it’s 100…

[deleted]

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#26

Post by arrosenberg » Thu, Feb 23, 2023, 6:57 PM UTC

sashu123 wrote: post #6

MuffinFlavored wrote: post #3

I wish I knew the truth on which camp is "right". You've got camp 1 saying "you can go to 300% Gross Federal Debt to GDP without side effects/it's a new paradigm that history can't guide us on/there are no downsides to printed funny money/everything is fine/there's no risk of the US defaulting/spending 7% of tax revenue a year on interest on the debt" and the other camp says it's going to lead to our demise, etc. Wil…

The simple answer is we are debasing our currency in a very complex way, that we cannot measure how much we debased it. In the past kings printed new coins to fund their wars or whatever and it was easier to track how much the currency lost value. In the present because economies have gotten complex + tools to debase have gotten complex we cannot estimate how much we have actually debased our currency by. If it’s 100…

You don't debase fiat currency, since there isn't a limited supply. Markets are distorted because of a poor distribution of money (too much where demand is low, too little where demand is high), because the Fed handed out money to the wealthy (who hoard it in the form of assets) and Congress refuses to tax it back and redistribute it to the working class who can't currently pay their rent.

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#27

Post by legitster » Thu, Feb 23, 2023, 7:05 PM UTC

avalys wrote: post #20

In discussions like this, it's worth reviewing where total government spending in the US actually goes. This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html . In summary: 17% to pension programs (e.g. social security) 23% to healthcare 19% to education 12% to defense 7% to welfare 3.6% to police/fire/prisons 4% to transportation…

This is a bit misleading though as it includes state spending as well. For the purpose of federal debt, we really only have three sources of spending that can move the needle:

- Health Care 28%

- Pensions 24%

- Defense 20%

Defense seems like an easy cut, but we are not currently in any major conflicts anyway. And our allies might not take to kindly if we start pulling bases from around the world.

Pensions are entitlements and we can't really touch those.

I think though that we are underrating the effectiveness of efficiency reforms around our healthcare system. For both private patients and taxpayers.

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#28

Post by MuffinFlavored » Thu, Feb 23, 2023, 7:20 PM UTC

avalys wrote: post #20

In discussions like this, it's worth reviewing where total government spending in the US actually goes. This is actually not the easiest thing to pin down, but the best analysis I've seen is at https://www.usgovernmentspending.com/year2022_0.html . In summary: 17% to pension programs (e.g. social security) 23% to healthcare 19% to education 12% to defense 7% to welfare 3.6% to police/fire/prisons 4% to transportation…

> it's worth reviewing where total government spending in the US actually goes.

Is it also worth reviewing

1. are we likely to ever increase incoming tax revenue (which loopholes stand to benefit the country's income the most without hurting it's citizens/economy/the businesses (and its employees who are basically the citizens) inside of it) enough to offset the debt-GDP ratio

2. if we are (or even if we aren't) going to increase taxation, are we going to lower spending in a significant manner or can we count on spending to pretty much stay the same or grow to offset the debt-GDP ratio

so far in the past like, 15 years, we've shown we're going to keep taxes roughly the same and keep spending roughly the same (continue to grow it year over year)

therefore we have no indication that we're headed towards anything but a debt/GDP ratio of 120-150% next 10 years, correct?

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#29

Post by gitfan86 » Thu, Feb 23, 2023, 7:26 PM UTC

legitster wrote: post #16

I encourage people interested in this topic to read up on the Fiscal Theory of the Price Level. I flippantly refer to it as "MMT without the magic". But it really did a good job of explaining our current situation. When you have a long-term fixed rate mortgage, only some of the value is paid off by principal payments. The rest is being paid off naturally by inflation. Imagine paying off a mortgage made in 2003 dollar…

This is what the bitcoin people got right. The dollar is going down A LOT. This is also what the bitcoin people got wrong. You don't want to to denominate your asset in dollars. Yes BTC will hit 100k some day. But 100k will only buy a crappy used car at that point.

Re: U.S. on Track to Add $19T in New Debt over 10 Years

#30

Post by mijamo » Thu, Feb 23, 2023, 8:00 PM UTC

gizmondo wrote: post #5

MuffinFlavored wrote: post #3

I wish I knew the truth on which camp is "right". You've got camp 1 saying "you can go to 300% Gross Federal Debt to GDP without side effects/it's a new paradigm that history can't guide us on/there are no downsides to printed funny money/everything is fine/there's no risk of the US defaulting/spending 7% of tax revenue a year on interest on the debt" and the other camp says it's going to lead to our demise, etc. Wil…

I wonder how the first camp reconcile their views with the current struggle Italy has with their debt caused by excessive deficit spending in the past.

Mostly by saying this is Italy's fault for being in the Eurozone and thus not being able to print its own money.

Also the USA is in a unique situation in the world due to the status of the dollar, so comparison with other countries have very little validity. If argentina prints money it just loses value immediately and triggers crazy inflation. If the US prints money it is still not that big of a deal compared to all the dollars used everywhere in the world so the negative effects are much lower.