5 ms·

First order answer: GDP is about $20tn, debt is about $30tn, so if everybody put half their income towards paying down the debt, it would be paid off in about 3

by jl6 5y ago

First order answer: GDP is about $20tn, debt is about $30tn, so if everybody put half their income towards paying down the debt, it would be paid off in about 3 years.

rwmj 5y ago
Assuming you could get every American to agree to that (good luck!) the economy would be massively transformed while everyone stopped spending on every luxury and most necessities. I guess this would require enormous government intervention to prevent all the out of work shopworkers and manufacturers from starving, which might require taking on a bit more debt. (The serious answer to the original poster's question is that the US economy is not like a household and the debt does not to be paid off, nor will it ever be paid off.)
- jl6 5y ago
  Quite, hence “first order” - although every dollar paid back needs to be paid back to someone, and as the article points out, the majority of the debt is held by US taxpayers, so that money is still likely to be participating in the US economy, just flowing through different hands.
- JackFr 5y ago
  People investing in treasuries do not want your cash. Thayer had cash and spent it on treasuries. They want cash in the future to match their future liabilities. There is a real utility to having a vehicle for investing free of credit risk.
  - rwmj 5y ago
    Pensions are another investment where you need somewhere safe to "store" the money. Government bonds are one of those safe places. A quick search says US pension funds alone invest about $32 trillion (not all in bonds of course).
annoyingnoob 5y ago
> if everybody put half their income towards paying down the debt You realize how unrealistic that is right?
- Jxl180 5y ago
  Yeah, what a dummy. If everybody put 100% of their income toward paying the debt, we’d be debt free in 1.5 years!
  - 6510 5y ago
    1.5 without eating? I think people would be debt free much faster.
sp332 5y ago
GDP doesn't measure people's income. It measures capital expenditures and consumption. So it would be a 50% sales tax and 50% tax on capital spending.
- jl6 5y ago
  That’s just another method for estimating the same thing: https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/methodologies/nationalaccounts https://www.ons.gov.uk/economy/nationalaccounts/uksectoracco...
  - sp332 5y ago
    Ok but it still includes corporate income. It's not just 50% of people's paychecks.
stephen_g 5y ago
That's not how it works at all though. It's not really something that is "paid off", it's a stock of bonds that eventually come due, and can be rolled over into new bonds basically forever. The actual constraints to the issuance of the bonds or money is 1) available natural resources, 2) available labour resources, and 3) inflation (which is usually a result of money issuance or velocity outstripping (1) or (2)).

by jl6 5y ago

First order answer: GDP is about $20tn, debt is about $30tn, so if everybody put half their income towards paying down the debt, it would be paid off in about 3 years.

rwmj 5y ago

Assuming you could get every American to agree to that (good luck!) the economy would be massively transformed while everyone stopped spending on every luxury and most necessities. I guess this would require enormous government intervention to prevent all the out of work shopworkers and manufacturers from starving, which might require taking on a bit more debt. (The serious answer to the original poster's question is that the US economy is not like a household and the debt does not to be paid off, nor will it ever be paid off.)

jl6 5y ago
Quite, hence “first order” - although every dollar paid back needs to be paid back to someone, and as the article points out, the majority of the debt is held by US taxpayers, so that money is still likely to be participating in the US economy, just flowing through different hands.
JackFr 5y ago
People investing in treasuries do not want your cash. Thayer had cash and spent it on treasuries. They want cash in the future to match their future liabilities. There is a real utility to having a vehicle for investing free of credit risk.
- rwmj 5y ago
  Pensions are another investment where you need somewhere safe to "store" the money. Government bonds are one of those safe places. A quick search says US pension funds alone invest about $32 trillion (not all in bonds of course).

annoyingnoob 5y ago

> if everybody put half their income towards paying down the debt You realize how unrealistic that is right?

Jxl180 5y ago
Yeah, what a dummy. If everybody put 100% of their income toward paying the debt, we’d be debt free in 1.5 years!
- 6510 5y ago
  1.5 without eating? I think people would be debt free much faster.

sp332 5y ago

GDP doesn't measure people's income. It measures capital expenditures and consumption. So it would be a 50% sales tax and 50% tax on capital spending.

jl6 5y ago
That’s just another method for estimating the same thing: https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/methodologies/nationalaccounts https://www.ons.gov.uk/economy/nationalaccounts/uksectoracco...
- sp332 5y ago
  Ok but it still includes corporate income. It's not just 50% of people's paychecks.

stephen_g 5y ago

That's not how it works at all though. It's not really something that is "paid off", it's a stock of bonds that eventually come due, and can be rolled over into new bonds basically forever. The actual constraints to the issuance of the bonds or money is 1) available natural resources, 2) available labour resources, and 3) inflation (which is usually a result of money issuance or velocity outstripping (1) or (2)).