6 ms·

This title is completely wrong. The article estimates the US has accumulated around $2 trillion in war debt as of 2020. It goes on to estimate interest payments

This title is completely wrong. The article estimates the US has accumulated around $2 trillion in war debt as of 2020. It goes on to estimate interest payments will equal $2 trillion by 2030 and $6.4 trillion by 2050.

OJFord 5y ago
If you buy a house with a mortgage, I think it's reasonable to say you 'spent' the booked value.
- slacktide 5y ago
  It's really not. If you buy a house with a mortgage, and later sell the house before the note is due, you will not owe the full amount of the accrued interest. Unfortunately the resale value of a secondhand war is very low.
  - OJFord 5y ago
    Of course you do, you're just typically rolling it into another mortgage on the next place. Anyway I didn't say and didn't mean it's the only valid interpretation of 'spent', just that it is one.
    - thaumasiotes 5y ago
      No, you don't. You might in a state of nature, but the US has laws against prepayment penalties for mortgages. (Well, against the mortgage originator charging prepayment penalties.) You don't owe interest until it accrues.
      - OJFord 5y ago
        Right, you 'owe the full amount of accrued interest'... Which is not as much as the amount that would've accrued if held to term. I think this is rather beside the point anyway!
        deleted 5y ago
        [deleted]
  - finnh 5y ago
    > you will not owe the full amount of the accrued interest Yes, you will. "accrued interest" is "unpaid interest as of the time of ___"; at the moment you sell the house you will have paid all of the interest up to that moment. There's no early-payment penalty on mortgages, as of the last many decades; maybe that's what you mean?
    - liketochill 5y ago
      I have early payment penalties on my mortgage. Would love it if there weren’t. I’m in Canada.
      - finnh 5y ago
        ugh. sorry to hear it - didn't realize that Canada was still up to those tricks
  - ineedasername 5y ago
    the resale value of a secondhand war is very low. "20 Year old slow-burn war available for reasonable price. Population w/ low morale, lots of growth potential! Motivated buyers only please."
    - toast0 5y ago
      Maybe we should see if the first owner wants to buy it back?
      - ineedasername 5y ago
        I guess that's true, the war was owned by Russia before the US purchased it at a very steep markup, while the Russians probably got a good deal on it from the Brits after it sat on a shelf for a century or so. I'm hopeful, though not at all optimistic in the short term, that it will now be EOL'ed. Unfortunately, as a product class these things tend to be very durable, and families can pass them down for generations as a curiosity until someone decides to put it back in the market. Or some new startup sees a chance to innovate while moving fast and breaking things.
  - epistasis 5y ago
    I don't think there's any clause in US bonds that lets the US pay back the debt to avoid future coupon payments, like there is with a mortgage. However, since there's an open market for t bills, the treasury could buy back a certain number of bonds that people are willing to sell. However it's not quite the same. The only reason that problem don't calculate the cost of the mortgage over time is that they are more concerned with asset values, not because it's better accounting.
  - jonnydubowsky 5y ago
    "The resale value of a second-hand war" is a fantastic phrase! It sounds like a Neil Young lyric. Nicely done.
- nostrademons 5y ago
  Most people wouldn't say that. If I buy a $500K home with a $400K mortgage and the mortgage ends up costing me $600K over the next 30 years, I don't know anyone who'd claim that I spent $700K. Most would say I spent $500K; a few would say I spent $100K and borrowed $400K. Among various things that could happen: I might pay off the $400K next year and pay a grand total of $411K in interest. I might sell the house for $700K and book a $200K profit on my $100K cash. I might lose my job, get foreclosed upon, and then be out $100K plus whatever payments I've already made. I might have had $500K in cash to begin with, but wanted to invest $400K in Ethereum, see it moon for a 20x return, and make a cool $8M profit on top of the house. Or I could carry the mortgage to term, and then I really will have spent $700K.
- throwthere 5y ago
  By that measure, the US federal government has 'spent' $8.4T and the title is still wrong.
zeckalpha 5y ago
> This total omits many other expenses, such as […] future interest on war borrowing
epistasis 5y ago
The US prints two kinds of money: 1) dollars, which are subject to inflation and decrease in value over time, and 2) bonds, which accumulate in dollar value over time, usually in front of inflation. So because we spent bonds instead of spending dollars, we can not take their dollar value as the cost, because that's most definitely not what we printed for these.
- User23 5y ago
  Not exactly. The Federal Reserve and the US Treasury do a dance where the Treasury tells the Fed how many dollars it needs and then creates notes, bills, and bonds in the desired amount. It then performs a simple asset swap with the Fed to receive reserves in exchange for those bonds. This is slightly obfuscated by the primary dealer auction process, but in extremis the Fed can and will just buy the bonds itself. This never happens because for some reason the private banks that are primary dealers don't choose to give away free seigniorage money.
  - curation 5y ago
    Thank you! The money printer goes brrr meme is dangerously wrong.
    - epistasis 5y ago
      User23 is directly describing how the money printer's gears turn in detail, but the gears go brrrr all the same.
      - curation 5y ago
        No, they do not. The banks are not loaning anything; thus there is zero brrring.
  - epistasis 5y ago
    You say "not exactly," but I don't see anything that conflicts with what's described in my comment. I do appreciate the details though, as it does help people understand the way that we have set up these institutions, which in turn points to what we might want to change to make the process better.

OJFord 5y ago

If you buy a house with a mortgage, I think it's reasonable to say you 'spent' the booked value.

slacktide 5y ago
It's really not. If you buy a house with a mortgage, and later sell the house before the note is due, you will not owe the full amount of the accrued interest. Unfortunately the resale value of a secondhand war is very low.
- OJFord 5y ago
  Of course you do, you're just typically rolling it into another mortgage on the next place. Anyway I didn't say and didn't mean it's the only valid interpretation of 'spent', just that it is one.
  - thaumasiotes 5y ago
    No, you don't. You might in a state of nature, but the US has laws against prepayment penalties for mortgages. (Well, against the mortgage originator charging prepayment penalties.) You don't owe interest until it accrues.
    - OJFord 5y ago
      Right, you 'owe the full amount of accrued interest'... Which is not as much as the amount that would've accrued if held to term. I think this is rather beside the point anyway!
      - deleted 5y ago
        [deleted]
- finnh 5y ago
  > you will not owe the full amount of the accrued interest Yes, you will. "accrued interest" is "unpaid interest as of the time of ___"; at the moment you sell the house you will have paid all of the interest up to that moment. There's no early-payment penalty on mortgages, as of the last many decades; maybe that's what you mean?
  - liketochill 5y ago
    I have early payment penalties on my mortgage. Would love it if there weren’t. I’m in Canada.
    - finnh 5y ago
      ugh. sorry to hear it - didn't realize that Canada was still up to those tricks
- ineedasername 5y ago
  the resale value of a secondhand war is very low. "20 Year old slow-burn war available for reasonable price. Population w/ low morale, lots of growth potential! Motivated buyers only please."
  - toast0 5y ago
    Maybe we should see if the first owner wants to buy it back?
    - ineedasername 5y ago
      I guess that's true, the war was owned by Russia before the US purchased it at a very steep markup, while the Russians probably got a good deal on it from the Brits after it sat on a shelf for a century or so. I'm hopeful, though not at all optimistic in the short term, that it will now be EOL'ed. Unfortunately, as a product class these things tend to be very durable, and families can pass them down for generations as a curiosity until someone decides to put it back in the market. Or some new startup sees a chance to innovate while moving fast and breaking things.
- epistasis 5y ago
  I don't think there's any clause in US bonds that lets the US pay back the debt to avoid future coupon payments, like there is with a mortgage. However, since there's an open market for t bills, the treasury could buy back a certain number of bonds that people are willing to sell. However it's not quite the same. The only reason that problem don't calculate the cost of the mortgage over time is that they are more concerned with asset values, not because it's better accounting.
- jonnydubowsky 5y ago
  "The resale value of a second-hand war" is a fantastic phrase! It sounds like a Neil Young lyric. Nicely done.
nostrademons 5y ago
Most people wouldn't say that. If I buy a $500K home with a $400K mortgage and the mortgage ends up costing me $600K over the next 30 years, I don't know anyone who'd claim that I spent $700K. Most would say I spent $500K; a few would say I spent $100K and borrowed $400K. Among various things that could happen: I might pay off the $400K next year and pay a grand total of $411K in interest. I might sell the house for $700K and book a $200K profit on my $100K cash. I might lose my job, get foreclosed upon, and then be out $100K plus whatever payments I've already made. I might have had $500K in cash to begin with, but wanted to invest $400K in Ethereum, see it moon for a 20x return, and make a cool $8M profit on top of the house. Or I could carry the mortgage to term, and then I really will have spent $700K.
throwthere 5y ago
By that measure, the US federal government has 'spent' $8.4T and the title is still wrong.

zeckalpha 5y ago

> This total omits many other expenses, such as […] future interest on war borrowing

epistasis 5y ago

The US prints two kinds of money: 1) dollars, which are subject to inflation and decrease in value over time, and 2) bonds, which accumulate in dollar value over time, usually in front of inflation. So because we spent bonds instead of spending dollars, we can not take their dollar value as the cost, because that's most definitely not what we printed for these.

User23 5y ago
Not exactly. The Federal Reserve and the US Treasury do a dance where the Treasury tells the Fed how many dollars it needs and then creates notes, bills, and bonds in the desired amount. It then performs a simple asset swap with the Fed to receive reserves in exchange for those bonds. This is slightly obfuscated by the primary dealer auction process, but in extremis the Fed can and will just buy the bonds itself. This never happens because for some reason the private banks that are primary dealers don't choose to give away free seigniorage money.
- curation 5y ago
  Thank you! The money printer goes brrr meme is dangerously wrong.
  - epistasis 5y ago
    User23 is directly describing how the money printer's gears turn in detail, but the gears go brrrr all the same.
    - curation 5y ago
      No, they do not. The banks are not loaning anything; thus there is zero brrring.
- epistasis 5y ago
  You say "not exactly," but I don't see anything that conflicts with what's described in my comment. I do appreciate the details though, as it does help people understand the way that we have set up these institutions, which in turn points to what we might want to change to make the process better.