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U.S. debt-to-GDP ratio reaches 123%

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Re: U.S. debt-to-GDP ratio reaches 123%

#201

Post by buttercraft »

ericmay wrote: post #179
dahart wrote: post #122

Earlier quoted context omitted.

The broad point above by @bilsbie is wrong. Fake made up items completely undermine the point’s credibility, and science spending in the U.S. provides a return on investment, it’s not losing money. That is pure political propaganda and not truth. Your new items have a touch more validity than top comment, but you’re making vast assumptions and stating opinions not shared by all, and not accounting for the economic co…

Sorry, I don't agree with you at all and continuing to argue about it just makes me more convinced the OP was right to point out those specific items. I'm not interested in complaints about the GDP to debt ratio being too high if when someone points out wasteful expense, regardless of how minor, they and others are met with derision and arguments. At that point yea spend whatever who cares about the debt?

> someone points out wasteful expense

This is the very thing under question in this thread! You have drawn a conclusion and are using your conclusion as an argument in a circular manner rather than engaging with what other people are arguing.

"Other people disagree with me, therefore I am right" is the dumbest thing ever.

Re: U.S. debt-to-GDP ratio reaches 123%

#202

Post by pydry »

hvb2 wrote: post #198
pydry wrote: post #196

Earlier quoted context omitted.

neither of those countries owed money in their own currency. when I said "monetarily sovereign" I think you probably didnt understand what that meant.

That is a valid point, however if you look at Germany you will see that as soon as your money is worthless people will want payment in something else. If a country ever decides to use your 'monetary sovereignty' they might as well just stop playing their debts as any holder of the debt will see that as the same thing. They're not getting their money back, or when they do they get it in a currency now worth a lot less…

Search for the phrase "gold marks" in your link. This is the key. Gold denominated debts != paper denominated debts and Weimar debts were always gold denominated.

It might seem like a minor distinction but it's actually very important. Gold can't be printed, whereas currency can be, so insolvency when your debts are denominated in gold is very possible.

Argentina is also another example of a country that suffered hyperinflation because it had debts denominated in something it could not print (dollars).

Whereas Japan had even higher debt / GDP than Argentina and got deflation instead.

Re: U.S. debt-to-GDP ratio reaches 123%

#203

Post by frm88 »

hvb2 wrote: post #181
ericmay wrote: post #135

Earlier quoted context omitted.

> I didn't do anything, that wasn't me. Ok you're defending it. > I don't claim anything, but if this isn't overspending then I think we agree to disagree. Ok if it's over-spending then let's cut the programs that align with my ideology instead of cutting military spending. > You want to solve that with weapons?? That'll only make everyone drop the dollar, as simple as that. Not worried at all - those dollars become…

> Ok if it's over-spending then let's cut the programs that align with my ideology instead of cutting military spending. Yes, I think the question of whether or not the US is living above its means is settled. Where you cut is a political decision. I certainly think the US can reduce its military spending, with an emphasis on reduce. > The strength of the dollar is because of the actual physical reality and capabilit…

Just remember how pissed off America was when egg prices went up because of avian flu.

Tangent: The high egg prices were only partly because of avian flu, a significantly higher impact on the prices was price collusion between producers which ended with a small settlement for the culprits: https://apnews.com/article/egg-prices-collusion-settlement-d...

Re: U.S. debt-to-GDP ratio reaches 123%

#204

Post by UncleMeat »

rayiner wrote: post #150
bhelkey wrote: post #148

Earlier quoted context omitted.

The US spends $2 Trillion dollars on Medicare + Medicaid a year [1][2]. Given that the US has a population of 342.7 million people [3], those two trillion dollars divides out to $5800 per resident per year. The UK's universal healthcare system costs ~$4700 per person per year (~£3,500)[4]. If we could spend healthcare dollars as efficiently as the UK, the current government spending in the US is enough to support a s…

> Given that the US has a population of 342.7 million people [3], we could have single payer healthcare for every resident without raising taxes if it cost less than $5800 per person per year. The UK's universal healthcare system costs ~$4700 per person per year (~£3,500)[4]. Except we couldn't. For the same reason our public schools can't get Finland's test scores while spending $3,000 less per student pear year tha…

Can you explain this reason in detail?!

Re: U.S. debt-to-GDP ratio reaches 123%

#205

Post by hvb2 »

pydry wrote: post #202
hvb2 wrote: post #198

Earlier quoted context omitted.

That is a valid point, however if you look at Germany you will see that as soon as your money is worthless people will want payment in something else. If a country ever decides to use your 'monetary sovereignty' they might as well just stop playing their debts as any holder of the debt will see that as the same thing. They're not getting their money back, or when they do they get it in a currency now worth a lot less…

Search for the phrase "gold marks" in your link. This is the key. Gold denominated debts != paper denominated debts and Weimar debts were always gold denominated. It might seem like a minor distinction but it's actually very important. Gold can't be printed, whereas currency can be, so insolvency when your debts are denominated in gold is very possible. Argentina is also another example of a country that suffered hyp…

I understand your distinction, and I reiterate that this is a valid point.

However, it's a bit moot in my opinion. When the US owes me $100B and they pay that by 'creating' $100B through the central bank, in terms of value of the currency that's bad because there value of that payment dropped.

You can do this, it's what the quantitative easing policy did, but only in very limited amounts. If you were to do it because you were no longer solvent I would expect it to be the end of the trust and value of your currency. So in a sense it's not very different.

Re: U.S. debt-to-GDP ratio reaches 123%

#206

Post by eigenspace »

itsyonas wrote: post #175
eigenspace wrote: post #84

Earlier quoted context omitted.

This is a fantasy. Do you really think lenders would just not notice if America inflated its currency away to get rid of its debts, and they'd just say "aw shucks you got us. Anyways, here's a new loan at the same terms as last time." ? And what about the American public? Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% monthly inflation…

> This is a fantasy. How so. > Do you really think lenders A government with its own sovereign currency doesn't need lenders. In fact, it is the government that allows lenders to lend money - not the other way around. > Anyways, here's a new loan at the same terms as last time." ? Why would they need to get a loan for from a lender? > How do you think Americans would respond to 30% monthly inflation like in Argentina…

So you think the bond market is not important to the USA government?

> Printing money only causes inflation if it is spend in a way exceeds the capacity of the market.

Yes? So you acknowledge that the market has a capacity?

Re: U.S. debt-to-GDP ratio reaches 123%

#207

Post by eigenspace »

hvb2 wrote: post #189
torginus wrote: post #88

Why is this a meaningful figure? It's not debt that matters its how much it costs to finance it. It's Finance 101 that if you manage to borrow below inflation rate, and you have the luck that what you paid for appreciates, then your debt will disappear over time. On the contrary, trivial amounts of money with usury can ruin you financially.

> It's Finance 101 that if you manage to borrow below inflation rate And when was the last time that happened? Pretty much only during inflation spikes. The vast majority of time, inflation is around 2% or maybe 3 or 4 recently, 10 year Treasury yields is well above 4.5%. So maybe you have 40T USD lying around, and you're willing to lend it all to uncle Sam for inflation -.1%. if that's not the case then it's finance…

While I also disagree with the person you're responding to, there's more leeway than just borrowing below inflation.

Roughly, so long as a government can borrow cheaper than nominal GDP growth (assuming a relatively constant ability to tax that growth), then the debt burden doesn't really grow, because your ability to finance the debt grows faster than the debt.

But the problem is that the USA hasn't even cleared this bar, and its debt burden is growing, and there's also the additional risk that if borrowing costs go up due to a lack of confidence in the US government or global instability, even the current debt pile could be unmanageable.

Re: U.S. debt-to-GDP ratio reaches 123%

#208

Post by kingleopold »

sph wrote: post #171
kingleopold wrote: post #27

Earlier quoted context omitted.

end is probably ww btw. so are you all ready? last time it did work and lost of war debt was paid

That only works if you are on the winning side.

does not matter, world would lose big in a new ww. Supply chains now make billions rely on food and others today.

Re: U.S. debt-to-GDP ratio reaches 123%

#209

Post by torginus »

eigenspace wrote: post #117
torginus wrote: post #88

Why is this a meaningful figure? It's not debt that matters its how much it costs to finance it. It's Finance 101 that if you manage to borrow below inflation rate, and you have the luck that what you paid for appreciates, then your debt will disappear over time. On the contrary, trivial amounts of money with usury can ruin you financially.

This Finance 101 perspective is too clever by half. Sounds like a great idea, right? But what if something out of your control[1] happens, and average interest rates on the debt burden go up from 2% to 14%? The USA can't afford to just pay off all of its debts. It must continuallly roll over it's old debts to new debts, and could easily find itself in a situation where debt servicing costs go up by an order of magnit…

Not a finance person, but my understanding is that the US govt is indebted via bonds which pay according to their issued yields.

So the interest rates are the yield rates of said bonds, and if the dollar were undergo hyperinflation, then said debt would inflate away.

Sure, that would mean getting future financing would be difficult and expensive for the US, but that's a problem down the line, and goes beyond just the current debt.

For the record, I do not agree with current US foreign or domestic policy, but I wouldn't say it doesn't serve current US financial interests.

Re: U.S. debt-to-GDP ratio reaches 123%

#210

Post by _DeadFred_ »

juujian wrote: post #3

Upsetting how we are reaching these lows while the administration is accusing everyone else of wasting taxpayer money except for themselves. At least under previous administrations you would get something for your money, like science funding and healthcare for the needy, not just bombing runs and posturing.

The Republicans have ran on 'starve the beast' and intentional breaking of our government/programs/etc in order to meet their philosophical aims for 40 years. Republicans actively try to damage our country and do bad fiscal policy because they put their agenda over the the health of the nation.

It's not surprising they don't care because they literally have policy to do damage like this and their explicit goal has been this exact outcome.

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