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The problem is that our growth ( the good times ) is fueled by debt. If the debt stops, then growth stops. Then politicians get blamed and we can't have that. S
by liftbigweights 8y ago
The problem is that our growth ( the good times ) is fueled by debt. If the debt stops, then growth stops. Then politicians get blamed and we can't have that. So back to debt we go.
And it's not a partisan issues. Both democrats and republicans love debt, just like they love defense spending. It's politically expedient.
Obama increased the debt tremendously. And now Trump is doing the same. Our debt went from around $10 trillion to $21 trillion in 10 years.
https://fred.stlouisfed.org/series/GFDEBTN https://fred.stlouisfed.org/series/GFDEBTN
Think interest rates are going to increase much anytime soon? Yeah me neither.
- NTDF9 8y agoWhat happens if there is too much debt (as assets) on the Fed's balance sheet? Can they just write them off?
- mpax 8y agoThey can just sit there in perpetuality, there’s no swat team going to bust in the door because one leg of government lent to the other.
- NTDF9 8y agoDoes that erode trust in currency and cause hyper inflation? I suspect no.
- tabtab 8y agoThe biggest downside is that if there is a big slump, the gov't doesn't have spending money for a stimulus. We could then get stuck in a protracted rut or deflationary spiral. In the longer term, GDP growth can make the debt moot (if more is not added), but if we have a big slump sooner, we are screwed.
- acct1771 8y agoCalling the Federal Reserve an arm of the government is misleading at best.