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Interest rates are where they were in the mid/late 90s (https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS). The idea that

Interest rates are where they were in the mid/late 90s (https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS). The idea that these interest rates are unsustainable/dangerous is just silly. If anything, the 2009-2016 and 2020-2021 periods at an interest rate of 0% are the anomalies.

InTheArena 4y ago
The problem is is that the amount of debt is percentage of GDP, and therefore the interest rates that we need to pay are significantly higher now. This kind of analysis is hopelessly naïve without taking into account overall macro situation.
- makestuff 4y ago
  I always see people say the national debt doesn’t matter because it isn’t like household debt. However, I just fail to see how that is true. At some point the can won’t be able to be kicked down the road anymore. I guess everyone is hoping that it won’t be during their lifetime.
  - InTheArena 4y ago
    People still hold to Soviet style, Socialism/communism, why would you be surprised if they’re still holding on to modern monetary theory?
  - admax88qqq 4y ago
    Because fundamentally the US government can print money to pay US debt. You can't print money to pay off your household debt. It's a different beast altogether subject to entirely different rules and incentives than household debt.
    - fwungy 4y ago
      Yes, and we the taxpayers get the privilege of paying interest on the money that is printed based on our nation's creditworthiness. The debt can never be paid. It's by design.
      - fundad 4y ago
        With tax revenue on growing wages.
    - joemazerino 4y ago
      Printing money results in inflation. That was my original point.
      - admax88qqq 4y ago
        My point is just that national debt is more complicated than household debt. And every attempt to reduce it to household debt is flawed. They are fundamentally different.
  - lmm 4y ago
    > At some point the can won’t be able to be kicked down the road anymore. No country other than New Zeeland bothers to properly account for the asset side of the national budget. Increasing liabilities is fine if there's a corresponding increase in assets. But most countries are basically guessing about the second half. (This is also why we see so many wasteful privatisations where national assets are sold off for way less than they're worth)
- ZachPruckowski 4y ago
  I mean, yeah, that's ultimately a potential problem for the federal budget. But that's not what tripped up SVB - long-term Treasury prices declined because higher interest rates made short-term Treasuries more attractive than long-term ones.
  - InTheArena 4y ago
    Which in turn would not be a problem if the amount of data issued didn’t swamp at destroy the market for debt already on the books…
  - deleted 4y ago
    [deleted]
fallingknife 4y ago
Too bad debt/GDP isn't https://fred.stlouisfed.org/series/GFDGDPA188S https://fred.stlouisfed.org/series/GFDGDPA188S

InTheArena 4y ago

The problem is is that the amount of debt is percentage of GDP, and therefore the interest rates that we need to pay are significantly higher now. This kind of analysis is hopelessly naïve without taking into account overall macro situation.

makestuff 4y ago
I always see people say the national debt doesn’t matter because it isn’t like household debt. However, I just fail to see how that is true. At some point the can won’t be able to be kicked down the road anymore. I guess everyone is hoping that it won’t be during their lifetime.
- InTheArena 4y ago
  People still hold to Soviet style, Socialism/communism, why would you be surprised if they’re still holding on to modern monetary theory?
- admax88qqq 4y ago
  Because fundamentally the US government can print money to pay US debt. You can't print money to pay off your household debt. It's a different beast altogether subject to entirely different rules and incentives than household debt.
  - fwungy 4y ago
    Yes, and we the taxpayers get the privilege of paying interest on the money that is printed based on our nation's creditworthiness. The debt can never be paid. It's by design.
    - fundad 4y ago
      With tax revenue on growing wages.
  - joemazerino 4y ago
    Printing money results in inflation. That was my original point.
    - admax88qqq 4y ago
      My point is just that national debt is more complicated than household debt. And every attempt to reduce it to household debt is flawed. They are fundamentally different.
- lmm 4y ago
  > At some point the can won’t be able to be kicked down the road anymore. No country other than New Zeeland bothers to properly account for the asset side of the national budget. Increasing liabilities is fine if there's a corresponding increase in assets. But most countries are basically guessing about the second half. (This is also why we see so many wasteful privatisations where national assets are sold off for way less than they're worth)
ZachPruckowski 4y ago
I mean, yeah, that's ultimately a potential problem for the federal budget. But that's not what tripped up SVB - long-term Treasury prices declined because higher interest rates made short-term Treasuries more attractive than long-term ones.
- InTheArena 4y ago
  Which in turn would not be a problem if the amount of data issued didn’t swamp at destroy the market for debt already on the books…
- deleted 4y ago
  [deleted]

fallingknife 4y ago

Too bad debt/GDP isn't https://fred.stlouisfed.org/series/GFDGDPA188S https://fred.stlouisfed.org/series/GFDGDPA188S