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This will be solved by taxes, inflation, war, or a combination of the three, sadly.

deleted 4y ago
[deleted]
throwaway5959 4y ago
I doubt it will be solved by taxes. Americans would rather have their currency devalued than pay higher taxes. (Yes I know the dollar is strong now, but what does that say about other currencies?) We’re screwing future generations and ourselves due to the greediness of the ruling class and the stupidity of the working class that keeps voting with the ruling class. Edit: I’m surprised people were able to even read this post before they downvoted it. I don’t mind downvotes, but at least comment why I’m wrong please.
- jjoonathan 4y ago
  Currency devaluation pumps exports and dumps assets/services, so it's not necessarily a bad thing. It promotes a diversified economy that builds real things. Many countries seek it out as a matter of policy. Currency appreciation dumps exports and pumps assets/services. You know how "we used to make shit in this country, build shit. Now we just stick our hand in the next guy's pocket"? Yeah, that's what currency appreciation does (or, more specifically: reserve currency status where we can/must run a current account deficit without seeing the usual depreciation). Economists call it "Dutch Disease" because they first described it in the Dutch empire, but it happened to the British and American empires too. Think of it like a resource curse, but the resource is finance. It's good for people with fat brokerage accounts, it's good for Wall St, but if you earn your money by building regular shit for regular people, it's bad news for you. I agree with your conclusion -- our taxation and monetary policy is run for the benefit of wealthy Americans at the expense of poor Americans -- I just think you have the particular issue of currency devaluation a bit backwards. I didn't downvote, but I imagine this is why someone else did.
- zuminator 4y ago
  For one, you can't explain away a problem with your argument but just saying, "I know." You toss out "I know the dollar is strong now" as if it's an inconsequential objection to your main point, when it effectively contradicts your entire contention that a high debt is tantamount to a debased currency. If you're unwilling to interrogate your own beliefs, that makes them come off as shallow. We've all heard fiscally conservative talking heads prattle on about the debt. What we want is insight as to the accuracy or coherence of these ideas, not just a rote regurgitation. What effective control does the working class have over the national debt if both major parties have continued to raise it no matter what candidate is put foward? And anyway, how does it benefit the cash-strapped working poor to vote to raise its own taxes so that the debt held by rich bondholders can be paid off. I'm not even saying you're wrong, I'm just saying, make it make sense. Or don't, it's not your obligation to do so. But don't be surprised by downvotes in that case.
deleted 4y ago
[deleted]
baron816 4y ago
What’s the problem here that needs to be “solved”?
- ARandomerDude 4y ago
  When you have debt you have to make payments. If you don't (can't) make the payments, the people you owe money to get upset. If you didn't make the payments because you were just irresponsible, people are less likely to lend you money in the future. That's a big problem if you depend on people loaning you money.
  - foobarian 4y ago
    When you control the currency the debt is denominated in you can just devalue it until the debt is no longer a problem. Ordinary debtors don't have that option. The comparison is far from apples to apples but sadly too tempting to make due to similar words, and the opportunity to moralize.
    - throwaway5959 4y ago
      And how likely do you think it is that people will continue loaning money to a country whose currency is constantly being devalued? Eventually the dumb money will run out.
      - bobkazamakis 4y ago
        >how likely do you think it is that people will continue loaning money to a country whose currency is constantly being devalued? as long as those assets continue to outgain the cost of inflation.
      - throwaway98797 4y ago
        countless countries have defaulted on their debt and still get $ see greece, latin america, russia, etc etc
matai_kolila 4y ago
What is there to solve? As long as we keep paying our debts on these low interest loans (to ourselves mostly, btw), there isn't a problem. In the future, continuing to spend as rates go up would be progressively less wise as the rates increase, but "solving" debt spending is not nearly the crisis some people seem to think it is. The US is not operating under the same rules as your personal finances.
- foobarian 4y ago
  I wish I had a better mental model for thinking about national debt. Absent that, it's too easy to pattern-match it to personal debt, and automatically you get all the usual judgments and moralizing along with it.
  - ericmay 4y ago
    The first rule here absent all others is to understand that the national debt does not function like household debt and so you can't draw comparisons directly. Some of the comparisons are truthy but not necessarily correct. Another rule to use is that not all spending is treated equally. The country going in to debt to fund projects that boost economic activity (typically measured as GDP) is not the same as the country going in to debt for a different class of projects, for example. Often times we look at national debt but we don't have a great mechanism for evaluating return on that debt.
  - yazaddaruvala 4y ago
    > It’s hard to relate national finances to personal People keep saying this and it’s not really true. Even MMT really can be translated to personal finances. Here is the simple explanation: Households and individuals consume the goods they buy. Some excess goes towards investments. Governments do not consume. Building a road/bridge/building/dam is an investment to “have the nation make more money”. Even when government spends money on “dumb things” a F35 while over paying significantly, it’s an investment. Even if this project doesn’t become “something” itself it can still be a huge national investment. 1. The people who worked on it will spend the money they earned. 2. The people got training that was useful. 3. Technology likely progressed in many small ways that aren’t the end product (eg better wind tunnel simulation, or better GPS chips) and even by learning “what not to do next time”. That said, obviously the government should always aim for better investments rather than worse investments. Imagine a household that kept taking debt to buy houses and renting those out. As long as the ratio of TotalRent:TotalDebt was healthy at N-1 houses, then the same TotalRent:TotalDebt ratio for N houses continues to be healthy. No money ever spent on consumption, only on investment. Therefore NationalGDP:NationalDebt is the ratio to watch for. That is how you understand national finances and relate it back to your experience. Additionally, the household could only have 5 houses in the same neighborhood. So a financial shock could hit it badly. The nation has X TT of investments that are all distributed across city centers, rural areas, and even digital. It’s not just diversified, it is the whole pie. A large enough shock to cause a destabilization of the NationalGDP:NationalDebt for a country as large as the USA is roughly enumerated as: an extinction event (or close enough), a second US civil war, or a declaration of active war against the USA on US soil. It could also happen because of terribly large scale corruption but it’s unlikely at the scale of the USA.
dougmwne 4y ago
Keep an eye on Japan. Their debt ratio is twice as high. If they belly flop, then start sweating.
- dr-detroit 4y ago

deleted 4y ago

[deleted]

I doubt it will be solved by taxes. Americans would rather have their currency devalued than pay higher taxes. (Yes I know the dollar is strong now, but what does that say about other currencies?) We’re screwing future generations and ourselves due to the greediness of the ruling class and the stupidity of the working class that keeps voting with the ruling class. Edit: I’m surprised people were able to even read this post before they downvoted it. I don’t mind downvotes, but at least comment why I’m wrong please.

jjoonathan 4y ago
Currency devaluation pumps exports and dumps assets/services, so it's not necessarily a bad thing. It promotes a diversified economy that builds real things. Many countries seek it out as a matter of policy. Currency appreciation dumps exports and pumps assets/services. You know how "we used to make shit in this country, build shit. Now we just stick our hand in the next guy's pocket"? Yeah, that's what currency appreciation does (or, more specifically: reserve currency status where we can/must run a current account deficit without seeing the usual depreciation). Economists call it "Dutch Disease" because they first described it in the Dutch empire, but it happened to the British and American empires too. Think of it like a resource curse, but the resource is finance. It's good for people with fat brokerage accounts, it's good for Wall St, but if you earn your money by building regular shit for regular people, it's bad news for you. I agree with your conclusion -- our taxation and monetary policy is run for the benefit of wealthy Americans at the expense of poor Americans -- I just think you have the particular issue of currency devaluation a bit backwards. I didn't downvote, but I imagine this is why someone else did.
zuminator 4y ago
For one, you can't explain away a problem with your argument but just saying, "I know." You toss out "I know the dollar is strong now" as if it's an inconsequential objection to your main point, when it effectively contradicts your entire contention that a high debt is tantamount to a debased currency. If you're unwilling to interrogate your own beliefs, that makes them come off as shallow. We've all heard fiscally conservative talking heads prattle on about the debt. What we want is insight as to the accuracy or coherence of these ideas, not just a rote regurgitation. What effective control does the working class have over the national debt if both major parties have continued to raise it no matter what candidate is put foward? And anyway, how does it benefit the cash-strapped working poor to vote to raise its own taxes so that the debt held by rich bondholders can be paid off. I'm not even saying you're wrong, I'm just saying, make it make sense. Or don't, it's not your obligation to do so. But don't be surprised by downvotes in that case.

deleted 4y ago

[deleted]

baron816 4y ago

What’s the problem here that needs to be “solved”?

ARandomerDude 4y ago
When you have debt you have to make payments. If you don't (can't) make the payments, the people you owe money to get upset. If you didn't make the payments because you were just irresponsible, people are less likely to lend you money in the future. That's a big problem if you depend on people loaning you money.
- foobarian 4y ago
  When you control the currency the debt is denominated in you can just devalue it until the debt is no longer a problem. Ordinary debtors don't have that option. The comparison is far from apples to apples but sadly too tempting to make due to similar words, and the opportunity to moralize.
  - throwaway5959 4y ago
    And how likely do you think it is that people will continue loaning money to a country whose currency is constantly being devalued? Eventually the dumb money will run out.
    - bobkazamakis 4y ago
      >how likely do you think it is that people will continue loaning money to a country whose currency is constantly being devalued? as long as those assets continue to outgain the cost of inflation.
    - throwaway98797 4y ago
      countless countries have defaulted on their debt and still get $ see greece, latin america, russia, etc etc

matai_kolila 4y ago

What is there to solve? As long as we keep paying our debts on these low interest loans (to ourselves mostly, btw), there isn't a problem. In the future, continuing to spend as rates go up would be progressively less wise as the rates increase, but "solving" debt spending is not nearly the crisis some people seem to think it is. The US is not operating under the same rules as your personal finances.

foobarian 4y ago
I wish I had a better mental model for thinking about national debt. Absent that, it's too easy to pattern-match it to personal debt, and automatically you get all the usual judgments and moralizing along with it.
- ericmay 4y ago
  The first rule here absent all others is to understand that the national debt does not function like household debt and so you can't draw comparisons directly. Some of the comparisons are truthy but not necessarily correct. Another rule to use is that not all spending is treated equally. The country going in to debt to fund projects that boost economic activity (typically measured as GDP) is not the same as the country going in to debt for a different class of projects, for example. Often times we look at national debt but we don't have a great mechanism for evaluating return on that debt.
- yazaddaruvala 4y ago
  > It’s hard to relate national finances to personal People keep saying this and it’s not really true. Even MMT really can be translated to personal finances. Here is the simple explanation: Households and individuals consume the goods they buy. Some excess goes towards investments. Governments do not consume. Building a road/bridge/building/dam is an investment to “have the nation make more money”. Even when government spends money on “dumb things” a F35 while over paying significantly, it’s an investment. Even if this project doesn’t become “something” itself it can still be a huge national investment. 1. The people who worked on it will spend the money they earned. 2. The people got training that was useful. 3. Technology likely progressed in many small ways that aren’t the end product (eg better wind tunnel simulation, or better GPS chips) and even by learning “what not to do next time”. That said, obviously the government should always aim for better investments rather than worse investments. Imagine a household that kept taking debt to buy houses and renting those out. As long as the ratio of TotalRent:TotalDebt was healthy at N-1 houses, then the same TotalRent:TotalDebt ratio for N houses continues to be healthy. No money ever spent on consumption, only on investment. Therefore NationalGDP:NationalDebt is the ratio to watch for. That is how you understand national finances and relate it back to your experience. Additionally, the household could only have 5 houses in the same neighborhood. So a financial shock could hit it badly. The nation has X TT of investments that are all distributed across city centers, rural areas, and even digital. It’s not just diversified, it is the whole pie. A large enough shock to cause a destabilization of the NationalGDP:NationalDebt for a country as large as the USA is roughly enumerated as: an extinction event (or close enough), a second US civil war, or a declaration of active war against the USA on US soil. It could also happen because of terribly large scale corruption but it’s unlikely at the scale of the USA.

dougmwne 4y ago

Keep an eye on Japan. Their debt ratio is twice as high. If they belly flop, then start sweating.

dr-detroit 4y ago