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The National Debt: Why Fret Over Something That Doesn't Exist? https://realmoney.thestreet.com/articles/10/25/2016/national-debt-why-fret-over-something-doesnt

by nsnick 9y ago

The National Debt: Why Fret Over Something That Doesn't Exist? https://realmoney.thestreet.com/articles/10/25/2016/national-debt-why-fret-over-something-doesnt-exist https://realmoney.thestreet.com/articles/10/25/2016/national...

liberte82 9y ago
Didn’t Stalin declare all debt with the USSR null and void? I wouldn’t be shocked to see Trump do something like this one day.
- ska 9y ago
  That would be a pretty good way to crash the economy, it's not a move to pull unless you are already in bad shape. Also bear in mind a lot of that debt is held by Americans...
  - liberte82 9y ago
    Yeah I don’t mean it’d happen tomorrow, but if things in the world continued to get a lot crazier.
- btilly 9y ago
  Under Obama the idea was floated of creating very large amounts of money to fund the federal government. See https://en.wikipedia.org/wiki/Trillion_dollar_coin https://en.wikipedia.org/wiki/Trillion_dollar_coin for details.
  - gowld 9y ago
    That was an legal/accounting gimmick, underscored by the fiscal/economic point that minting a coin is fiscally equivalent to issuing debt.
    - btilly 9y ago
      The point of the gimmick is that doing it would reduce the net debt that the United States Government had, thereby keeping us away from the debt ceiling. In any case a fundamental problem is that we have rather more debt than we have any feasible way to pay. A very large part of that debt is held in the form of Treasury bonds issued to Social Security. Which leads to Social Security being financially solvent on paper for many decades to come. In fact it looks like once the Baby Boom retires, either Social Security is solvent or the US government is solvent, but not both.
- jacquesm 9y ago
  The Ruble wasn't exactly the reserve currency and the major trading currency of the world at that point in time. If Trump did this 1929 would look good by comparison. You'd be buying bread with a wheelbarrow the week after.
shmolyneaux 9y ago
This article seems to claim the there is no national debt because the debt is owed to the American people. This is wrong since it doesn't take into account other governments and entities outside of the US that hold treasury securities.
- maxerickson 9y ago
  The thing that really matters is whether the US can continue to borrow money at reasonable rates. That's the harbinger of doom, when treasury bond rates start to act weird, no one knows what level of debt that will happen at so the hand wringing over X trillions is kind of silly.
rhacker 9y ago
It's a method of figuring out how a yenn, yuan, ruble, rupee, stack up against the dollar. As US dollars become cheaper, people in other countries end up buying large swathes of land in the US (and vice versa). That or bonds. It IS a real thing.
- gowld 9y ago
  Yes, it is real. But a debt dollar is not a fixed object like if for example I borrowed your screwdriver and have to return it. It's easy to reduce the value of (fiat) debt by devaluing dollars (inflating the money supply).

by nsnick 9y ago

liberte82 9y ago

Didn’t Stalin declare all debt with the USSR null and void? I wouldn’t be shocked to see Trump do something like this one day.

ska 9y ago
That would be a pretty good way to crash the economy, it's not a move to pull unless you are already in bad shape. Also bear in mind a lot of that debt is held by Americans...
- liberte82 9y ago
  Yeah I don’t mean it’d happen tomorrow, but if things in the world continued to get a lot crazier.
btilly 9y ago
Under Obama the idea was floated of creating very large amounts of money to fund the federal government. See https://en.wikipedia.org/wiki/Trillion_dollar_coin https://en.wikipedia.org/wiki/Trillion_dollar_coin for details.
- gowld 9y ago
  That was an legal/accounting gimmick, underscored by the fiscal/economic point that minting a coin is fiscally equivalent to issuing debt.
  - btilly 9y ago
    The point of the gimmick is that doing it would reduce the net debt that the United States Government had, thereby keeping us away from the debt ceiling. In any case a fundamental problem is that we have rather more debt than we have any feasible way to pay. A very large part of that debt is held in the form of Treasury bonds issued to Social Security. Which leads to Social Security being financially solvent on paper for many decades to come. In fact it looks like once the Baby Boom retires, either Social Security is solvent or the US government is solvent, but not both.
jacquesm 9y ago
The Ruble wasn't exactly the reserve currency and the major trading currency of the world at that point in time. If Trump did this 1929 would look good by comparison. You'd be buying bread with a wheelbarrow the week after.

shmolyneaux 9y ago

This article seems to claim the there is no national debt because the debt is owed to the American people. This is wrong since it doesn't take into account other governments and entities outside of the US that hold treasury securities.

maxerickson 9y ago
The thing that really matters is whether the US can continue to borrow money at reasonable rates. That's the harbinger of doom, when treasury bond rates start to act weird, no one knows what level of debt that will happen at so the hand wringing over X trillions is kind of silly.

rhacker 9y ago

It's a method of figuring out how a yenn, yuan, ruble, rupee, stack up against the dollar. As US dollars become cheaper, people in other countries end up buying large swathes of land in the US (and vice versa). That or bonds. It IS a real thing.

gowld 9y ago
Yes, it is real. But a debt dollar is not a fixed object like if for example I borrowed your screwdriver and have to return it. It's easy to reduce the value of (fiat) debt by devaluing dollars (inflating the money supply).