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>I'd like to see some compelling evidence that supports the seemingly prevailing economic theory that the US can issue an unlimited amount of debt just because

>I'd like to see some compelling evidence that supports the seemingly prevailing economic theory that the US can issue an unlimited amount of debt just because it's denominated in USD and interest rates are historically low. This was true perhaps in the 1950s to 1970s or so. It's not true today and very very not true in the last couple years. Nixon's actions back in the 70s set the slippery slope that will result in the USA no longer being dominate as a reserve currency. What you are curious about is being a reserve currency. https://en.wikipedia.org/wiki/Reserve_currency#Global_currency_reserves https://en.wikipedia.org/wiki/Reserve_currency#Global_curren... The advantage of being the reserve currency is that you can indeed print significant money at low inflation because so many other countries are the ones who end up paying the cost. It's not necessarily unlimited, but when you have a dominant position it can be practically unlimited wherein being able to rebase on a new reserve perhaps gold or bitcoin would still be more costly than assuming the cost of holding USD. Which is why the euro was designed the way it is. They are effectively playing the long game. No single country controls the ability to print money and they have requirements which hurt countries who dont control their debt to gdp. Portugal, Italy, Greece, Spain are all in violation but they end up having to balance their budgets in the future. Greece can never print oodles of money to inflate their way out of their debt and deficit spending. Germany and france will NEVER allow that to happen. If Greece exits the EU it'll be their own demise with >50% poverty within years of that decision. The USA will inevitably vote themselves more money, as they currently have, and cause so much inflation than the reserve currency hurts all the others and eventually the euro will become #1. When that happens European union will become quite strong and the brits will be kicking themselves for brexit.

boppo1 4y ago
> The USA will inevitably vote themselves more money, as they currently have, and cause so much inflation than the reserve currency hurts all the others and eventually the euro will become #1. When that happens European union will become quite strong and the brits will be kicking themselves for brexit. Nah, us americans are too smart for all that. We'll just start a nice big war.
- incomingpain 4y ago
  >Nah, us americans are too smart for all that. We'll just start a nice big war. So what you're cynically referring to is the war economy. The caveat of debt to gdp is that it's a balance. If you could take on debt and invest properly to the point that the returned GDP is greater. Then you end up lowering debt to gdp. The caveat of the war economy is that it's not spent on yourself. The trope as it were is that the USA has been 'nation building' in the middle east and ended up neglecting back home. For example, I am super excited to learn more about the B21 raider later this year. I expect the cost per stealth bomber will probably be around $5 billion each. How many schools could you build with $5 billion if they decide to build just 1 less? How many roads could be built if you build 2 less?
  - boppo1 4y ago
    Oh, buddy, I'm 1000% with you here. Hell I was just trying to explain to someone why the Afghanistan war was, in fact, not a source of great wealth and economic prosperity for the US and I used an extremely similar argument (If we sent over fewer tanks would we have had more steel for cars, and a cheaper used car market now?). My cynicism is more along the lines of A. Lots of people think GDP == real wealth and can't seem to wrap their heads around our argument B. You don't have to do better than you have been to keep the global-economic pole position, you just have to be doing better than everyone else. I'm not gonna elaborate on the rest of this, I'll leave that as a sad exercise to the reader. I really really hope we don't start or find ourselves required to participate in a war.

boppo1 4y ago

> The USA will inevitably vote themselves more money, as they currently have, and cause so much inflation than the reserve currency hurts all the others and eventually the euro will become #1. When that happens European union will become quite strong and the brits will be kicking themselves for brexit. Nah, us americans are too smart for all that. We'll just start a nice big war.

incomingpain 4y ago
>Nah, us americans are too smart for all that. We'll just start a nice big war. So what you're cynically referring to is the war economy. The caveat of debt to gdp is that it's a balance. If you could take on debt and invest properly to the point that the returned GDP is greater. Then you end up lowering debt to gdp. The caveat of the war economy is that it's not spent on yourself. The trope as it were is that the USA has been 'nation building' in the middle east and ended up neglecting back home. For example, I am super excited to learn more about the B21 raider later this year. I expect the cost per stealth bomber will probably be around $5 billion each. How many schools could you build with $5 billion if they decide to build just 1 less? How many roads could be built if you build 2 less?
- boppo1 4y ago
  Oh, buddy, I'm 1000% with you here. Hell I was just trying to explain to someone why the Afghanistan war was, in fact, not a source of great wealth and economic prosperity for the US and I used an extremely similar argument (If we sent over fewer tanks would we have had more steel for cars, and a cheaper used car market now?). My cynicism is more along the lines of A. Lots of people think GDP == real wealth and can't seem to wrap their heads around our argument B. You don't have to do better than you have been to keep the global-economic pole position, you just have to be doing better than everyone else. I'm not gonna elaborate on the rest of this, I'll leave that as a sad exercise to the reader. I really really hope we don't start or find ourselves required to participate in a war.