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Read 'The Deficit Myth' by Stephanie Kelton. TLDR; It's not the US Debt Clock, it's the US Savings Clock.
by mempko 6y ago
Read 'The Deficit Myth' by Stephanie Kelton.
TLDR; It's not the US Debt Clock, it's the US Savings Clock.
- webinvest 6y agoHow much debt did Greece have before it finally went bankrupt?
- mempko 6y agoGreece isn't a sovereign state. It's part of the EU. Very different than the USA which controls it's own currency. US debt in the form of treasury bonds just provides the private sector (usually wealthy) with an interest bearing checking account. US doesn't even have to sell bonds. In fact, it spends first and THEN sells bonds.
- djohnston 6y agoYeah this was one of the main points of the book IIRC. If you have a sovereign currency the idea of balancing your budget like a household isn't an apt analogy. If you belong to the EU, then you need to think like that. Makes the UK seem smart for insisting on maintaining the GBP, though personally I think Brexit wasn't a good move.
- webinvest 6y agoSure, maybe Greece’s debt was denominated in Euros and Greece can’t print Euros. But the US is in a different position because it has the world’s reserve currency. It maintains that position by simply depreciating less than all of the other major world currencies. If it looses that position, it would have disastrous effects on the purchasing power of the US relative to other counties.
- mempko 6y agoWhat about UK, or Japan, or China, which don't have reserve currencies right? They run deficits just like the US. It turns out, if your economy has productive capacity, it isn't really a problem to print your own currency. Economies that have trouble are those that are strapped for HARD resources (real stuff).
- scsilver 6y agoGreece specifically does not have the worlds reserve currency and cant print more raffle tickets.
- valuearb 6y agoIt wasn't debt, it was savings!
- giantg2 6y agoWhat's your point?
- jfengel 6y agoThe point is that the US Government is more like a bank than a consumer. You put your money in, and expect to get your money back out. Your bank isn't in debt just because it owes its customers so much money. In fact a bank will owe customers more money than it has cash on hand, but it's not bankrupt. The analogy is imperfect (as are all analogies), but it compensates for a lot of the issues that cause so much hand-wringing about the deficit. The more important observation is that inflation is low and so is the interest that the US government pays on new bonds (i.e. "deposits"). That means both that the situation is stable and that it's expected to remain stable for the foreseeable future. There are more stabilizing steps to be taken in the future, and ideally they'll help lower the deficit and then the debt. But the OP's point is that it's not a crisis.
- giantg2 6y agoIt's not a crisis, but it's also not a myth. That book is debated. The revenue generation (or savings) through that process is limited to about 4% GDP, but also causes inflation.
- everybodyknows 6y agoNot entirely so. See the counter at bottom left: “US Debt Held by Foreigners”. About 25% of the total. This is debt that can “come home” — as happened in the 70s: https://en.wikipedia.org/wiki/Eurodollar https://en.wikipedia.org/wiki/Eurodollar