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Something interesting I learned recently is that the debt load carried by the US is not anything special (when considered as a percentage of GDP) compared with

Something interesting I learned recently is that the debt load carried by the US is not anything special (when considered as a percentage of GDP) compared with other countries. (e.g. most of Europe is actually worse off, China isn’t far behind.) https://en.m.wikipedia.org/wiki/List_of_countries_by_external_debt https://en.m.wikipedia.org/wiki/List_of_countries_by_externa...

anm89 4y ago
Look at the historical series. These are all "special" values (outliers).
deleted 4y ago
[deleted]
bjornsing 4y ago
True. And the US has one more thing going for it, compared to many European countries: it controls the currency it’s borrowing in. Greece and Italy for example do not.
s_dev 4y ago
Looks at Ireland. 700% GDP! I suspect most of that is private debt though being funneled through the IFSC.
- boole1854 4y ago
  Looks to me like it's just bad data in the table in Wikipedia. Ireland has a GDP of $499 billion [1]. That would mean an external debt of $228 billion would be 46% of GDP, not 700%. I wonder what other numbers are wrong in that table. [1] https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=IE https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?location...
  - kspacewalk2 4y ago
    Another source pitting Ireland's debt to GDP at 56%[1]. This was >100% in 2012, showing how quickly this stat can change when you regain some fiscal discipline and your GDP grows in the meantime. Looks like Ireland actually did proper counter-cyclical fiscal policy[2] during the good times, to help them keep their debt in check during the bad times. How quaint of them. [1] https://tradingeconomics.com/ireland/government-debt-to-gdp https://tradingeconomics.com/ireland/government-debt-to-gdp [2] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Counter-cyclical_fiscal_measures https://ec.europa.eu/eurostat/statistics-explained/index.php...
PKop 4y ago
UK is nearly having a currency crisis. Part of issue for US is having twin deficits, trade and fiscal. Means we source much of our actual consumption from external sources who finance our economy. The debt has to keep growing for the system to keep functioning, but there are diminishing returns of real growth from this increase in debt, plus if there is de-globalization where does the surplus come from externally to be the creditor to finance these deficits? It's true that many countries are having these problems and US probably has crisis last. But historically it is definitely special.
- henryfjordan 4y ago
  > if there is de-globalization There will not be de-globalization without a devastating WWIII and the US might as well take what financing they can get before then because afterwards it will be meaningless.
  - PKop 4y ago
    "some degree of it". Trade wars, repatriation of manufacturing, and questioning extended supply lines due to geopolitical factors are all signs of this trend. Not a complete mass isolationism of course. Perhaps also a better frame is some degree of shift away from extreme uni-polarity towards more multi-polarity, a shift that would have similar effects even if it wasn't an absolute shift. Europe severing energy ties to Russia, regulating US tech cos, West sanctioning Chinese 5G and chip producers, confiscating Euro/Dollar reserves, China, Russia and Japan years ago stopping increasing their holdings of US debt and recently selling them, Europe re-assessing the belief they could have such extreme dependence on US military for security and Russia for energy....all signs of some degree of de-globalization (towards more autarky) >a devastating WWIII I don't think it necessarily requires a devastating war, but some war is not that unlikely (we already have it.)
oliwarner 4y ago
They're some pretty old numbers. I'm sure the UK's doing much worse now.
- rwmj 4y ago
  Current plan is to borrow money in order to cut taxes for the richest because our fine government believes in trickle down.
reisse 4y ago
And also when considered per capita!
TeeMassive 4y ago
> China isn’t far behind Not really reassuring
- caeril 4y ago
  China is fine. That is a table of external debt, not total debt. External debt is serviced, on a currency-neutral basis, by trade. China has an absolutely enormous surplus. What you definitely don't want to look at is the US external debt to trade surplus ratio. If you do, you might start buying canned tuna.
efficax 4y ago
of course it's typical. debt is how the economy works. We create money by creating debt. There is no debt-free contemporary economy. We couldn't even imagine how it would work.
missedthecue 4y ago
The major issue for the US at the moment is servicing the debt. At 4% interest rates (current rates, this will go higher though), servicing the debt costs $1.25 trillion per year. This means the US government needs to find a way to raise about another $750 billion in taxes every year, but probably closer to $1 trillion as interest and debt increases. $1 trillion more in tax every year. Not to start new government programs. Not to adequately fund existing programs. None of that. $1 trillion more simply to maintain the status quo of paying interest on the debt. The CBO estimated before interest rates increased that by 2050, the US government will spend 50% of tax revenue on debt interest payments. This is likely a much higher percentage now with interest rates going through the roof. And finally, I will note that the average weighted maturity of government debt is less than 5 years, and falling. This means that the treasury is constantly rolling over old debt into new debt at the new interest rates. 25% of the federal debt is in t-bills, which have maturities between 4 weeks and 52 weeks. This means that the $8 trillion in outstanding t-bills will all be refinanced at 4%+ rates in less than a year.
- rayiner 4y ago
  Time to buy bitcoin.
- RickJWagner 4y ago
  Also salient: There are 3 ways for the government to reduce the debt: 1) Raise taxes (Politically unpopuluar) 2) Cut entitlements (Also Politically unpopular) 3) Inflation (Because the government will pay the debt with dollars that are worth less)
rayiner 4y ago
That looks wrong: https://www.macrotrends.net/countries/GBR/united-kingdom/debt-to-gdp-ratio https://www.macrotrends.net/countries/GBR/united-kingdom/deb...
- baron816 4y ago
  Oh, that’s external debt, not public debt. They’re not the same thing. Public debt: https://en.wikipedia.org/wiki/List_of_countries_by_public_debt?wprov=sfti1 https://en.wikipedia.org/wiki/List_of_countries_by_public_de...
baron816 4y ago
Comparing debt to GDP is a dumb though. You’re comparing a stock to a flow, but it’s a flow that doesn’t have any meaningful relationship to the stock. GDP doesn’t tell you very much about the serviceability of the debt. What we probably need is some sort of “serviceability score” that accounts for interest rates on the debt, rollover dates, tax collection, currency regime, etc. But that’s basically what ratings agencies do.
niklasbuschmann 4y ago
> Note that while a country may have a relatively large external debt (either in absolute or per capita terms) it could actually be a "net international creditor" if its external debt is less than the total of external debt of other countries held by it. I think it is more interesting to look at https://en.wikipedia.org/wiki/List_of_countries_by_public_debt https://en.wikipedia.org/wiki/List_of_countries_by_public_de...

anm89 4y ago

Look at the historical series. These are all "special" values (outliers).

deleted 4y ago

[deleted]

bjornsing 4y ago

True. And the US has one more thing going for it, compared to many European countries: it controls the currency it’s borrowing in. Greece and Italy for example do not.

s_dev 4y ago

Looks at Ireland. 700% GDP! I suspect most of that is private debt though being funneled through the IFSC.

boole1854 4y ago
Looks to me like it's just bad data in the table in Wikipedia. Ireland has a GDP of $499 billion [1]. That would mean an external debt of $228 billion would be 46% of GDP, not 700%. I wonder what other numbers are wrong in that table. [1] https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=IE https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?location...
- kspacewalk2 4y ago
  Another source pitting Ireland's debt to GDP at 56%[1]. This was >100% in 2012, showing how quickly this stat can change when you regain some fiscal discipline and your GDP grows in the meantime. Looks like Ireland actually did proper counter-cyclical fiscal policy[2] during the good times, to help them keep their debt in check during the bad times. How quaint of them. [1] https://tradingeconomics.com/ireland/government-debt-to-gdp https://tradingeconomics.com/ireland/government-debt-to-gdp [2] https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Glossary:Counter-cyclical_fiscal_measures https://ec.europa.eu/eurostat/statistics-explained/index.php...

PKop 4y ago

UK is nearly having a currency crisis. Part of issue for US is having twin deficits, trade and fiscal. Means we source much of our actual consumption from external sources who finance our economy. The debt has to keep growing for the system to keep functioning, but there are diminishing returns of real growth from this increase in debt, plus if there is de-globalization where does the surplus come from externally to be the creditor to finance these deficits? It's true that many countries are having these problems and US probably has crisis last. But historically it is definitely special.

henryfjordan 4y ago
> if there is de-globalization There will not be de-globalization without a devastating WWIII and the US might as well take what financing they can get before then because afterwards it will be meaningless.
- PKop 4y ago
  "some degree of it". Trade wars, repatriation of manufacturing, and questioning extended supply lines due to geopolitical factors are all signs of this trend. Not a complete mass isolationism of course. Perhaps also a better frame is some degree of shift away from extreme uni-polarity towards more multi-polarity, a shift that would have similar effects even if it wasn't an absolute shift. Europe severing energy ties to Russia, regulating US tech cos, West sanctioning Chinese 5G and chip producers, confiscating Euro/Dollar reserves, China, Russia and Japan years ago stopping increasing their holdings of US debt and recently selling them, Europe re-assessing the belief they could have such extreme dependence on US military for security and Russia for energy....all signs of some degree of de-globalization (towards more autarky) >a devastating WWIII I don't think it necessarily requires a devastating war, but some war is not that unlikely (we already have it.)

oliwarner 4y ago

They're some pretty old numbers. I'm sure the UK's doing much worse now.

rwmj 4y ago
Current plan is to borrow money in order to cut taxes for the richest because our fine government believes in trickle down.

reisse 4y ago

And also when considered per capita!

TeeMassive 4y ago

> China isn’t far behind Not really reassuring

caeril 4y ago
China is fine. That is a table of external debt, not total debt. External debt is serviced, on a currency-neutral basis, by trade. China has an absolutely enormous surplus. What you definitely don't want to look at is the US external debt to trade surplus ratio. If you do, you might start buying canned tuna.

efficax 4y ago

of course it's typical. debt is how the economy works. We create money by creating debt. There is no debt-free contemporary economy. We couldn't even imagine how it would work.

missedthecue 4y ago

The major issue for the US at the moment is servicing the debt. At 4% interest rates (current rates, this will go higher though), servicing the debt costs $1.25 trillion per year. This means the US government needs to find a way to raise about another $750 billion in taxes every year, but probably closer to $1 trillion as interest and debt increases. $1 trillion more in tax every year. Not to start new government programs. Not to adequately fund existing programs. None of that. $1 trillion more simply to maintain the status quo of paying interest on the debt. The CBO estimated before interest rates increased that by 2050, the US government will spend 50% of tax revenue on debt interest payments. This is likely a much higher percentage now with interest rates going through the roof. And finally, I will note that the average weighted maturity of government debt is less than 5 years, and falling. This means that the treasury is constantly rolling over old debt into new debt at the new interest rates. 25% of the federal debt is in t-bills, which have maturities between 4 weeks and 52 weeks. This means that the $8 trillion in outstanding t-bills will all be refinanced at 4%+ rates in less than a year.

rayiner 4y ago
Time to buy bitcoin.
RickJWagner 4y ago
Also salient: There are 3 ways for the government to reduce the debt: 1) Raise taxes (Politically unpopuluar) 2) Cut entitlements (Also Politically unpopular) 3) Inflation (Because the government will pay the debt with dollars that are worth less)

rayiner 4y ago

That looks wrong: https://www.macrotrends.net/countries/GBR/united-kingdom/debt-to-gdp-ratio https://www.macrotrends.net/countries/GBR/united-kingdom/deb...

baron816 4y ago
Oh, that’s external debt, not public debt. They’re not the same thing. Public debt: https://en.wikipedia.org/wiki/List_of_countries_by_public_debt?wprov=sfti1 https://en.wikipedia.org/wiki/List_of_countries_by_public_de...

baron816 4y ago

Comparing debt to GDP is a dumb though. You’re comparing a stock to a flow, but it’s a flow that doesn’t have any meaningful relationship to the stock. GDP doesn’t tell you very much about the serviceability of the debt. What we probably need is some sort of “serviceability score” that accounts for interest rates on the debt, rollover dates, tax collection, currency regime, etc. But that’s basically what ratings agencies do.

niklasbuschmann 4y ago

> Note that while a country may have a relatively large external debt (either in absolute or per capita terms) it could actually be a "net international creditor" if its external debt is less than the total of external debt of other countries held by it. I think it is more interesting to look at https://en.wikipedia.org/wiki/List_of_countries_by_public_debt https://en.wikipedia.org/wiki/List_of_countries_by_public_de...