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Don’t we pay a small fortune in interest every year on our national deficit? Interest rates are historically low. Wait until they go to 6 or 7%.

arcticbull 7y ago
You know the fed can print money to pay off that debt right? That's the difference between you being personally $1T in the hole every year and the government. That's also why nobody really cares. At this point it's easier to do that than to find $1T in annual cuts the folks in office can agree on. Not that it's a good thing, of course.
- RhodesianHunter 7y ago
  This would cause inflation, increasing interest rates, exacerbating the problem and spiraling out of control. QE is not "printing money".
  - JDiculous 7y ago
    QE is money printing to buy financial securities. It is money printing.
  - aphextron 7y ago
    >This would cause inflation, increasing interest rates, exacerbating the problem and spiraling out of control. So you would think from Econ 101, but that empirically has not been the case. We're in uncharted waters at this point.
    - TylerE 7y ago
      Owe the bank $100,000? The bank owns you. Owe the bank $1,000,000,000,000? You own the bank.
    - neural_thing 7y ago
      Not uncharted, just takes some persistence to find a precedent. See John Law.
- deleted 7y ago
  [deleted]
- sandoooo 7y ago
  You can print an unknown but finite amount of money before hyperinflation sets in. It's not actually free money, just another finite resource that can be drawn - the credibility of the US government's promise to pay. And like every other finite resource that doesn't come with an accurate accounting system, it is being overexploited, and will come back and bite us all eventually.
- throw_m239339 7y ago
  > You know the fed can print money to pay off that debt right? No they can't, and they won't, unless you want the fed to crash the dollar and make it worthless. The money supply is a very tricky thing in that you want enough liquidity so that the market continues working, but too much money supply would make the dollar as worthless as seashells.
  - ohithereyou 7y ago
    The fed expanded its balance sheet from less than $1 trillion in 2008 to over $4 trillion in 2016, practically dumping $3 trillion into the economy for all intents and purposes. What was the effect of that on crashing the dollar/making it worthless[0]? [0] https://www.cnbc.com/2017/11/24/the-fed-launched-qe-nine-years-ago--these-four-charts-show-its-impact.html https://www.cnbc.com/2017/11/24/the-fed-launched-qe-nine-yea...
    - snowwrestler 7y ago
      There was extraordinary demand for liquidity during and following the financial crisis. Because the Fed was expanding its balance sheet to meet market demand, it did not crash the value of the dollar.
      - deleted 7y ago
        [deleted]
  - selectodude 7y ago
    >but too much money supply would make the dollar as worthless as seashells. Sure, but what is the number that constitutes "too much"? Right now the M3 money supply is 15.3 trillion dollars and the CPI inflation has been below 4 percent since 1991. In that period the money supply has grown by 12 trillion. If quintupling the money supply in the same period that GDP only doubled doesn't not only not tank the value of the dollar but doesn't even cause serious inflation, I'm curious what would? That's a serious question, by the way - I have a background in economics. This is unprecedented.
  - 7y ago
usaar333 7y ago
Under what scenario will interest rates go up that high? In general the trend in developed countries is them going lower, not higher.

arcticbull 7y ago

You know the fed can print money to pay off that debt right? That's the difference between you being personally $1T in the hole every year and the government. That's also why nobody really cares. At this point it's easier to do that than to find $1T in annual cuts the folks in office can agree on. Not that it's a good thing, of course.

RhodesianHunter 7y ago
This would cause inflation, increasing interest rates, exacerbating the problem and spiraling out of control. QE is not "printing money".
- JDiculous 7y ago
  QE is money printing to buy financial securities. It is money printing.
- aphextron 7y ago
  >This would cause inflation, increasing interest rates, exacerbating the problem and spiraling out of control. So you would think from Econ 101, but that empirically has not been the case. We're in uncharted waters at this point.
  - TylerE 7y ago
    Owe the bank $100,000? The bank owns you. Owe the bank $1,000,000,000,000? You own the bank.
  - neural_thing 7y ago
    Not uncharted, just takes some persistence to find a precedent. See John Law.
deleted 7y ago
[deleted]
sandoooo 7y ago
You can print an unknown but finite amount of money before hyperinflation sets in. It's not actually free money, just another finite resource that can be drawn - the credibility of the US government's promise to pay. And like every other finite resource that doesn't come with an accurate accounting system, it is being overexploited, and will come back and bite us all eventually.
throw_m239339 7y ago
> You know the fed can print money to pay off that debt right? No they can't, and they won't, unless you want the fed to crash the dollar and make it worthless. The money supply is a very tricky thing in that you want enough liquidity so that the market continues working, but too much money supply would make the dollar as worthless as seashells.
- ohithereyou 7y ago
  The fed expanded its balance sheet from less than $1 trillion in 2008 to over $4 trillion in 2016, practically dumping $3 trillion into the economy for all intents and purposes. What was the effect of that on crashing the dollar/making it worthless[0]? [0] https://www.cnbc.com/2017/11/24/the-fed-launched-qe-nine-years-ago--these-four-charts-show-its-impact.html https://www.cnbc.com/2017/11/24/the-fed-launched-qe-nine-yea...
  - snowwrestler 7y ago
    There was extraordinary demand for liquidity during and following the financial crisis. Because the Fed was expanding its balance sheet to meet market demand, it did not crash the value of the dollar.
    - deleted 7y ago
      [deleted]
- selectodude 7y ago
  >but too much money supply would make the dollar as worthless as seashells. Sure, but what is the number that constitutes "too much"? Right now the M3 money supply is 15.3 trillion dollars and the CPI inflation has been below 4 percent since 1991. In that period the money supply has grown by 12 trillion. If quintupling the money supply in the same period that GDP only doubled doesn't not only not tank the value of the dollar but doesn't even cause serious inflation, I'm curious what would? That's a serious question, by the way - I have a background in economics. This is unprecedented.
- 7y ago

usaar333 7y ago

Under what scenario will interest rates go up that high? In general the trend in developed countries is them going lower, not higher.