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> it misses the obligation to pay the principal But you never really have to do that. You can just keep rolling them. If we could keep the debt at the same
by JackFr 7y ago
> it misses the obligation to pay the principal
But you never really have to do that. You can just keep rolling them. If we could keep the debt at the same absolute level inflation and productivity increases would drive it into insignificance.
Of course the idea of keeping it at the same level is a fantasy.
- mrfredward 7y agoWhile the government will almost certainly never pay down it's debt completely, looking at the effort needed to pay off the debt is a useful way to ground the discussion of debt when future interest rates are unknown. In the last 40 years, the 30 year treasury bond has gone for rates of less than 2% and more than 14%. The interest as a percent of tax revenue metric would have predicted the death of America in the 1980s, while oppositely making it look like things will be forever rosy today. Neither of those perspectives accurately characterizes the debt burden.
- abecedarius 7y agoI wonder how people reconcile how it's OK to rely on progress to grow our way out of a debt burden but also incredibly irresponsible to expect progress to cope with our carbon problem. Both seem defensible to me but like they kind of need an adaptor to fit in the same worldview.
- electricviolet 7y agoMaybe it's because of the difference in what's at stake: If the USA falls into a debt crisis the result will be global economic disruption. If the world falls into runaway climate change the result will be the extinction of the human race and possibly all life on earth. Personally I'm more comfortable with the possibility of the first than of the second.
- marcosdumay 7y agoThere may not be much difference. Extinction of the human race is an exaggerated prediction, but more importantly, what do you expect the consequences of global economic disruption (to the level of taking the US down) to be? Take a look at history if you may.
- deleted 7y ago[deleted]
- electricviolet 7y agoNot trying to minimize the human cost of global economic disruption, but it's almost certainly less than total extinction.
- marcosdumay 7y agoA global nuclear winter is very likely much more impacting than global warming.
- TeMPOraL 7y agoThe second actually involves the first, and this is the point we lose. If we could have runaway climate change somehow not disrupt global economy, we could eventually tech our way out of it. But the game over point is when the economy stops, and humanity no longer has capability to slow down and mitigate the effects of warming. At that point there isn't much left of humanity anyway.
- ethbro 7y agoI wondered if this was part of the great extraterrestrial life filter: that there were so many "only in this window" chances that a civilization gets. E.g. how easy would it be for us to bootstrap back to space capabilities after a catastrophic war wiped out a large portion of world economic capability?
- TeMPOraL 7y agoMany, many thousands of years, I believe. If something pulled the plug on our economy, all the technology we have today would disappear in few years to decades. Devices wearing out with no way of repairing them or producing new ones. We'd regress to medieval times, because that would be the most advanced things available energy sources would support. The industrial revolution happened because we had easy access to high-density energy source in the form of coal. Maybe, given enough time, some survivors would figure out how to do a new industrial revolution without it, though I'm not having high hopes. So whatever is left of humanity would have to wait until the Earth recycles enough living matter to create new deposits of high-energy something.
- mikeash 7y agoHistorically, progress has resulted in more environmental damage and CO2 emissions. Relying on progress to fix these things is counting on a fundamental shift to happen. By comparison, progress historically has always increased GDP, so counting on progress to grow away our debt is just expecting the historical trend to continue.
- Someone 7y ago”You can just keep rolling them” Only if you can find people or institutions willing to buy the new bonds. _if_ those cannot be found, the ‘easy’ (easy because all it’s debts are in US dollars) way out for the USA is to print money, but a country that has to print money because nobody wants to lend it money will find it hard to buy stuff from other countries.
- ethbro 7y agoI think the zero sum nature is what trips up most people about state finance. Ultimately, what is and isn't possible for a state to do stems from the vagaries of what all other states are currently doing. It's somewhat rooted in economic output, but there are a lot of other independent variables in the pot.