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I try to post this everywhere people want to start yelling about federal debt (which correlates much more closely to the thing the government wants to borrow fo

I try to post this everywhere people want to start yelling about federal debt (which correlates much more closely to the thing the government wants to borrow for than the actual size of the debt): Interest as Percent of Gross Domestic Product (essentially: how much money do we need to pay for our spending habits): https://fred.stlouisfed.org/series/FYOIGDA188S https://fred.stlouisfed.org/series/FYOIGDA188S We are nowhere near the peaks that we saw in the 80's and early 90's. All those 30-year bonds issued at the start of the Reagan revolution matured and were paid off, no one seemed to notice, and none of the rhetoric seems to have changed at all. This just isn't a problem in the modern economy. Interest rates have been sitting at or very near GDP growth for four decades now, which means that money is as close to "free" as it is possible to get (that is, if the US borrows $4 and spends it, it sees a $4 increase in GDP). That doesn't mean that serious argument about sustainable spending can't be made in good faith, but it does mean that almost all arguments of the form "we can't afford it" are not. This is triply so if the argument includes a credit card metaphor.

deleted 6y ago
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trident5000 6y ago
Buddy, the interest as a percent of gdp matches the 80's and 90's because rates are near 0%. Real yields are negative in europe. Its not even close to the same situation. "Interest rates have been sitting at or very near GDP growth for four decades now" thats short-sighted and not really true: https://fred.stlouisfed.org/series/fedfunds https://fred.stlouisfed.org/series/fedfunds Theres no free lunch, you don't get to just print unlimited money and have no consequences.
- pessimizer 6y ago
  > Theres no free lunch, you don't get to just print unlimited money and have no consequences. I think you're arguing the opposite. We are printing money, yet inflation stays stubbornly low. We borrow money, but don't have to offer any interest; in fact, in some circumstances people pay us to loan us money. That's the definition of a free lunch.
  - trident5000 6y ago
    Inflation is not low, have you checked stock market lately? Have you seen home prices up 15% yoy? Education costs rising, auto, etc. There is a left and right tail of the inflation bell curve. High impact items are increasing in price rapidly while things like flat screen tv's stay low from certain market dynamics. Also because wages are not rising, inflation is rising faster than people understand even on left tail items.
    - throw0101a 6y ago
      Please see the article "Inflation Truthers" * https://awealthofcommonsense.com/2021/01/inflation-truthers/ https://awealthofcommonsense.com/2021/01/inflation-truthers/ * https://news.ycombinator.com/item?id=25644580 https://news.ycombinator.com/item?id=25644580 Inflation is low.
    - newacct583 6y ago
      Asset price increases and inflation are entirely different things. The former represents growth, the latter is a dilution (sort of "good" vs. "bad", but not really, economics is complicated, yada yada). Education costs are indeed part of inflation, as are car prices. And yes, those are rising, but they're being offset on balance by other things (phones, say) getting cheaper. Look, inflation indexes are complicated and there's room for argument about exactly how you want it computed. But statements like "inflation is not low" don't really capture the truth.
      - trident5000 6y ago
        Yes my underwear is going to offset the rising prices of homes, education, healthcare, etc. Also even your example is incorrect, the iphone price keeps rising at a healthy clip. They can now be $1300.
        throw0101a 6y ago
        > the iphone price keeps rising at a healthy clip. They can now be $1300. The iPhone (1) was introduced in 2007 and cost US$ 600 for the 8 GB model. What were its capabilities in 2007? * https://en.wikipedia.org/wiki/IPhone_(1st_generation) https://en.wikipedia.org/wiki/IPhone_(1st_generation) What, for $600, can you get now? And what are the capabilities of a $600 smartphone in 2021? An iPhone 12 mini is $700 [1], an iPhone 11 [2] 64 GB is $600, and a 128 GB for $650. The same number of dollars gets you much more in regards to technology in the past. That's not nothing. [1] https://www.apple.com/shop/buy-iphone/iphone-12 https://www.apple.com/shop/buy-iphone/iphone-12 [2] https://www.apple.com/shop/buy-iphone/iphone-11 https://www.apple.com/shop/buy-iphone/iphone-11
- xxpor 6y ago
  It's not that there are no consequences, it's a question of the trade off of those vs if you don't borrow/print money. The experience from the recovery of the great resession have moved the consensus largely over to the print more money camp.
- throw0101a 6y ago
  > Theres no free lunch, you don't get to just print unlimited money and have no consequences. Japan enters the chat * M1: https://fred.stlouisfed.org/series/MYAGM1JPM189N https://fred.stlouisfed.org/series/MYAGM1JPM189N * Debt: https://fred.stlouisfed.org/series/DEBTTLJPA188A https://fred.stlouisfed.org/series/DEBTTLJPA188A * Interest rate: https://fred.stlouisfed.org/series/INTDSRJPM193N https://fred.stlouisfed.org/series/INTDSRJPM193N * CPI: https://fred.stlouisfed.org/series/FPCPITOTLZGJPN https://fred.stlouisfed.org/series/FPCPITOTLZGJPN The technical explanation why, when rates are zero, increasing the money supply doesn't do anything to inflation: * https://en.wikipedia.org/wiki/Liquidity_trap https://en.wikipedia.org/wiki/Liquidity_trap
baybal2 6y ago
For US to have problems with borrowing will require a decade long downturn at least. The best proof is the fact that Tbills keep flying like hot cookies during major downturns, which means people buying them at least plan for time spans exceeding them.

deleted 6y ago

[deleted]

trident5000 6y ago

Buddy, the interest as a percent of gdp matches the 80's and 90's because rates are near 0%. Real yields are negative in europe. Its not even close to the same situation. "Interest rates have been sitting at or very near GDP growth for four decades now" thats short-sighted and not really true: https://fred.stlouisfed.org/series/fedfunds https://fred.stlouisfed.org/series/fedfunds Theres no free lunch, you don't get to just print unlimited money and have no consequences.

pessimizer 6y ago
> Theres no free lunch, you don't get to just print unlimited money and have no consequences. I think you're arguing the opposite. We are printing money, yet inflation stays stubbornly low. We borrow money, but don't have to offer any interest; in fact, in some circumstances people pay us to loan us money. That's the definition of a free lunch.
- trident5000 6y ago
  Inflation is not low, have you checked stock market lately? Have you seen home prices up 15% yoy? Education costs rising, auto, etc. There is a left and right tail of the inflation bell curve. High impact items are increasing in price rapidly while things like flat screen tv's stay low from certain market dynamics. Also because wages are not rising, inflation is rising faster than people understand even on left tail items.
  - throw0101a 6y ago
    Please see the article "Inflation Truthers" * https://awealthofcommonsense.com/2021/01/inflation-truthers/ https://awealthofcommonsense.com/2021/01/inflation-truthers/ * https://news.ycombinator.com/item?id=25644580 https://news.ycombinator.com/item?id=25644580 Inflation is low.
  - newacct583 6y ago
    Asset price increases and inflation are entirely different things. The former represents growth, the latter is a dilution (sort of "good" vs. "bad", but not really, economics is complicated, yada yada). Education costs are indeed part of inflation, as are car prices. And yes, those are rising, but they're being offset on balance by other things (phones, say) getting cheaper. Look, inflation indexes are complicated and there's room for argument about exactly how you want it computed. But statements like "inflation is not low" don't really capture the truth.
    - trident5000 6y ago
      Yes my underwear is going to offset the rising prices of homes, education, healthcare, etc. Also even your example is incorrect, the iphone price keeps rising at a healthy clip. They can now be $1300.
      - throw0101a 6y ago
        > the iphone price keeps rising at a healthy clip. They can now be $1300. The iPhone (1) was introduced in 2007 and cost US$ 600 for the 8 GB model. What were its capabilities in 2007? * https://en.wikipedia.org/wiki/IPhone_(1st_generation) https://en.wikipedia.org/wiki/IPhone_(1st_generation) What, for $600, can you get now? And what are the capabilities of a $600 smartphone in 2021? An iPhone 12 mini is $700 [1], an iPhone 11 [2] 64 GB is $600, and a 128 GB for $650. The same number of dollars gets you much more in regards to technology in the past. That's not nothing. [1] https://www.apple.com/shop/buy-iphone/iphone-12 https://www.apple.com/shop/buy-iphone/iphone-12 [2] https://www.apple.com/shop/buy-iphone/iphone-11 https://www.apple.com/shop/buy-iphone/iphone-11
xxpor 6y ago
It's not that there are no consequences, it's a question of the trade off of those vs if you don't borrow/print money. The experience from the recovery of the great resession have moved the consensus largely over to the print more money camp.
throw0101a 6y ago
> Theres no free lunch, you don't get to just print unlimited money and have no consequences. Japan enters the chat * M1: https://fred.stlouisfed.org/series/MYAGM1JPM189N https://fred.stlouisfed.org/series/MYAGM1JPM189N * Debt: https://fred.stlouisfed.org/series/DEBTTLJPA188A https://fred.stlouisfed.org/series/DEBTTLJPA188A * Interest rate: https://fred.stlouisfed.org/series/INTDSRJPM193N https://fred.stlouisfed.org/series/INTDSRJPM193N * CPI: https://fred.stlouisfed.org/series/FPCPITOTLZGJPN https://fred.stlouisfed.org/series/FPCPITOTLZGJPN The technical explanation why, when rates are zero, increasing the money supply doesn't do anything to inflation: * https://en.wikipedia.org/wiki/Liquidity_trap https://en.wikipedia.org/wiki/Liquidity_trap

baybal2 6y ago

For US to have problems with borrowing will require a decade long downturn at least. The best proof is the fact that Tbills keep flying like hot cookies during major downturns, which means people buying them at least plan for time spans exceeding them.