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

How will the US debt situation play out?

news.ycombinator.com

Post reply on HN
Print view View original

21–30 of 51 posts

Re: How will the US debt situation play out?

#21

Post by giantg2 »

AnimalMuppet wrote: post #10
jf22 wrote: post #8

Earlier quoted context omitted.

I've heard the US has been due for immediate hyperinflation since the early 2000s.

I must be older. I've been hearing it since the 1970s. (Note well: I do not believe that the level of US government debt is benign. I don't think it is. But existence of this level of debt, even if it's growing, does not necessarily mean that hyperinflation is just around the corner. It makes it more possible, but it is very far from a certainty.)

I have a feeling it won't happen due to the way the assets are. A lot of this money is unrealized, and can't be realized in practical terms. What we end up with are massively wealthy individuals holding companies (fiat assets) rather than real assets like land. Part of what drives inflation is the demand. If most people have relatively low incomes because most of the money creation goes to a few, then there won't be increased competition for the masses. Basically the wealthy people are in a different market in many cases and the inflation of securities wouldn't be accounted for in the CPI.

These are just my own thoughts.

Re: How will the US debt situation play out?

#22

Post by GoldenMonkey »

What I never hear with our unprecedented US debt. Currently at 120% of US GDP. Is how much wealth and assets the federal government owns.

Just in land assets - The Federal government owns 640 million acres of land. Including 47% of all the land in the west. 60% of Alaska is owned.

For example, if an individual owes 120% of their year income. Is it that bad, when that individual owns assets valued at 5-10x that?

Would the US sell off these assets? Probably not. But, it is an option. And they could sell some of these to US citizens or to the states.

But, the Federal government is incredibly asset wealthy in comparison to a simple debt vs GDP ratio.

Re: How will the US debt situation play out?

#23

Post by Jensson »

GoldenMonkey wrote: post #22

What I never hear with our unprecedented US debt. Currently at 120% of US GDP. Is how much wealth and assets the federal government owns. Just in land assets - The Federal government owns 640 million acres of land. Including 47% of all the land in the west. 60% of Alaska is owned. For example, if an individual owes 120% of their year income. Is it that bad, when that individual owns assets valued at 5-10x that? Would…

> For example, if an individual owes 120% of their year income

The government doesn't have GDP as income like an individual. An individual can easily cut down on spending without impacting their income, they can eat cheaper, consume less, move to a smaller place and still keep the same job. The same doesn't apply to countries, if the US government starts to cut down on expenses you will see that GDP figure go down a ton as well causing a massive economic crash.

Re: How will the US debt situation play out?

#25

Post by aristofun »

It can play out anyway short term because of the numbers things and all sorts of financial manipulations gone wrong,

But long term USA is still #1 producer of value overall.

Whatever happens- us is in the better position then the rest of the world.

Long term. As long as democracy works, private property is respected and entrepreneurs are encouraged.

Re: How will the US debt situation play out?

#26

Post by bhag2066 »

Jensson wrote: post #23
GoldenMonkey wrote: post #22

What I never hear with our unprecedented US debt. Currently at 120% of US GDP. Is how much wealth and assets the federal government owns. Just in land assets - The Federal government owns 640 million acres of land. Including 47% of all the land in the west. 60% of Alaska is owned. For example, if an individual owes 120% of their year income. Is it that bad, when that individual owns assets valued at 5-10x that? Would…

> For example, if an individual owes 120% of their year income The government doesn't have GDP as income like an individual. An individual can easily cut down on spending without impacting their income, they can eat cheaper, consume less, move to a smaller place and still keep the same job. The same doesn't apply to countries, if the US government starts to cut down on expenses you will see that GDP figure go down a…

Was about to say the same thing. If you wanted to make this comment a better but not perfect comparison is the US federal budget which was $6.2 trillion in 2023. Debt is $34 trillion making the ratio 550%.

Of course the US government can't spend their entire budget on debt servicing and repayment, just like a household.

Re: How will the US debt situation play out?

#27

Post by palmfacehn »

skhunted wrote: post #6
palmfacehn wrote: post #5

Earlier quoted context omitted.

I don't own a crystal ball, but Brent Johnson's "Dollar Milkshake" feels like a reasonable take on this. https://www.youtube.com/watch?v=da6hMy5sp1M

It’s easy to make such a convincing video. Convincing to those with no expertise in the subject. But in 5 years when it hasn’t come to fruition will you remember how wrong he (and by extension you) are? Another conman will take his place and come up with a nice sounding theory that also boils down to: gold!

I think I follow what your intended point was, but from where I stand you appear to be tilting at an imagined opponent. Maybe you can clarify by elaborating on what you imagined the 5 year prediction to be?

The "Dollar Milkshake" theory is simply something I found to be a plausible response to the inflation doom predictions of the 2008 cycle.

I did look for a concise text summary before posting the video. They didn't capture the full concept. Here's Google's infobox:

>The milkshake theory basically holds that there simply aren't enough US dollars created to keep up with the rising demand. And when the greenback rises high enough and fast enough to lead to defaults abroad, the demand for dollars swirls up and its supply shrinks, leading to an epic squeeze higher.

Re: How will the US debt situation play out?

#28

Post by palmfacehn »

gymbeaux wrote: post #15
palmfacehn wrote: post #5

Earlier quoted context omitted.

I don't own a crystal ball, but Brent Johnson's "Dollar Milkshake" feels like a reasonable take on this. https://www.youtube.com/watch?v=da6hMy5sp1M

I can find YouTube videos and podcasts all day long talking about the “imminent” housing crash, and while I think these discussions are important and interesting to have, they’re little more than hypotheticals or thought experiments. I’m not saying “Brent Johnson” is a quack, but I would trust Warren Buffett over him.

You'd have to actually watch it to find that it isn't saying the things you've projected into it.

Re: How will the US debt situation play out?

#29

Post by gymbeaux »

seanmcdirmid wrote: post #18
gymbeaux wrote: post #16

Earlier quoted context omitted.

Social Security was a great idea in post-depression times. I don’t think it would ever pass today- one, because so many Americans lack empathy(1) and two, because there are better systems that have been proven to work over time in countries like Sweden. The problem, as is so often the case these days, is that Republicans run their excellent propaganda machine to try to strike down social security retirement, Medicare…

SS is easy to fix by just lifting the income cap on it and making it more progressive. But Republicans aren't going to do that, I guess. Even today if you retire on SS alone, that's basically welfare that you paid for, it isn't really enough to live but might prevent you from starving to death. Thankfully, our life expectancies aren't rising so fast anymore (and actually falling a bit), or we would have a huge proble…

I max out my 401k each year and would give my left nut to be able to opt out of SS. I know for a fact I will have that money in retirement if I’m allowed to keep it and stash it away, but will the welfare slush fund even exist by 2050- or will my years of paying into SS only hurt me? I realize it’s kind of a meme to say “SS won’t exist by the time I retire” but I think it’s fair to worry when politicians at the federal level have recently tried to nerf it (eg raising retirement age). I have no doubt in my mind that Republicans would eliminate SS entirely if they thought they could get away with it.

Re: How will the US debt situation play out?

#30

Post by gymbeaux »

giantg2 wrote: post #19
gymbeaux wrote: post #16

Earlier quoted context omitted.

Social Security was a great idea in post-depression times. I don’t think it would ever pass today- one, because so many Americans lack empathy(1) and two, because there are better systems that have been proven to work over time in countries like Sweden. The problem, as is so often the case these days, is that Republicans run their excellent propaganda machine to try to strike down social security retirement, Medicare…

What makes Swedish pensions a better system?

They have three tiers of pensions- the government pension, the employer/union pension, and the private pension. The government (“public”) pension is the primary one that everyone gets, whereas the US counterpart (SS) is more “break glass in case of emergency” (by design, anyway). ChatGPT estimates if this system were in the U.S., I’d be getting around $7,000/month as a retiree, from the public and employer pensions. Private is essentially our 401k/IRA system so it could be 0, or could be substantial. Social Security pays about half that best-case, and that’s before we factor in the private pension. I like that one’s retirement is funded by both the government and the employer, and optionally by the individual. It’s clear that Americans cannot be trusted to set aside money for retirement.

I also like that Sweden looks at the highest 15 years of employment income, while US Social Security looks at the highest 35 years. I won’t have 35 years of employment if I retire at 59 1/2 (which I guess is a pipe dream anyway) so there will be 0’s for purposes of calculating average annual income, hurting my monthly SS benefit amount.

Post reply on HN