3 ms·

Are you suggesting that Ireland, Italy, Greece, Japan, Germany, Austria, Finland, New Zealand, Australia, and Canada are really that comparable to a country tha

by Cacti 11y ago

Are you suggesting that Ireland, Italy, Greece, Japan, Germany, Austria, Finland, New Zealand, Australia, and Canada are really that comparable to a country that is the sole super power, has the strongest military in history, provides the majority of its energy consumption, and denominates it's debt in its own currency?! I mean, come on. No, it will not continue indefinitely, but that is not the point. The rate of change and the feedback loops matter far more here than the sheer amount of "debt."

Lazare 11y ago
I was replying to someone who claimed that the American debt-to-GDP ratio was average among developed nations. This is factually inaccurate. You are making a very, very different argument. Albeit one which is also pretty silly. The US is reliant on other countries providing it with very cheap finance, China most of all. The American military is strong, but it's not strong enough to force China to provide 0% loans. And that assumes that China even has the funds to do so; if China's economy has a major hiccup, then what? And you can't print your way out of a primary deficit, even if your debt is denominated in your own currency. This is very basic economics. > The rate of change and the feedback loops matter far more here than the sheer amount of "debt." Exactly. Hence the concern. Because if the US starts paying anything approaching its historical cost of debt for future borrowing, the feedback loop vicious. The only way for those feedback loops not to be activated is to argue that the US will continue to be offered ~0% loans indefinitely, which as you admit, they will not. I'm open to the argument that the US's position is economically strong enough to weather the coming storm; I might even agree. But suggesting that there is no storm to weather (or that their debt-to-GDP ratio is not a source of weakness) is simply silly.
- jgeada 11y ago
  I'd like to point out that most of US debt is held by America, not foreigners or the Chinese. http://useconomy.about.com/od/monetarypolicy/f/Who-Owns-US-National-Debt.htm http://useconomy.about.com/od/monetarypolicy/f/Who-Owns-US-N...
  - Lazare 11y ago
    Um...yes? Not sure what point you're making. China's ongoing purchases of US debt are certainly significant, and the US does rely on them (among many, many others) to finance their ongoing deficit. It's certainly true that Americans in general (and the US pension system in particular) hold a significantly larger share of US debt than, eg, China, but what of it? That makes the problem worse not better, because unlike Chinese citizens, American retirees can vote in US elections. :) The cold reality is that 1) the US has a lot of debt relative to the size of the economy, 2) the debt continues to pile up, and 3) contrary to Cacti's argument, the US military is not a solution to this problem.

by Cacti 11y ago

Lazare 11y ago

I was replying to someone who claimed that the American debt-to-GDP ratio was average among developed nations. This is factually inaccurate. You are making a very, very different argument. Albeit one which is also pretty silly. The US is reliant on other countries providing it with very cheap finance, China most of all. The American military is strong, but it's not strong enough to force China to provide 0% loans. And that assumes that China even has the funds to do so; if China's economy has a major hiccup, then what? And you can't print your way out of a primary deficit, even if your debt is denominated in your own currency. This is very basic economics. > The rate of change and the feedback loops matter far more here than the sheer amount of "debt." Exactly. Hence the concern. Because if the US starts paying anything approaching its historical cost of debt for future borrowing, the feedback loop vicious. The only way for those feedback loops not to be activated is to argue that the US will continue to be offered ~0% loans indefinitely, which as you admit, they will not. I'm open to the argument that the US's position is economically strong enough to weather the coming storm; I might even agree. But suggesting that there is no storm to weather (or that their debt-to-GDP ratio is not a source of weakness) is simply silly.

jgeada 11y ago
I'd like to point out that most of US debt is held by America, not foreigners or the Chinese. http://useconomy.about.com/od/monetarypolicy/f/Who-Owns-US-National-Debt.htm http://useconomy.about.com/od/monetarypolicy/f/Who-Owns-US-N...
- Lazare 11y ago
  Um...yes? Not sure what point you're making. China's ongoing purchases of US debt are certainly significant, and the US does rely on them (among many, many others) to finance their ongoing deficit. It's certainly true that Americans in general (and the US pension system in particular) hold a significantly larger share of US debt than, eg, China, but what of it? That makes the problem worse not better, because unlike Chinese citizens, American retirees can vote in US elections. :) The cold reality is that 1) the US has a lot of debt relative to the size of the economy, 2) the debt continues to pile up, and 3) contrary to Cacti's argument, the US military is not a solution to this problem.