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I'm an economics noob, but from a lay perspective, I do wonder how sustainable the American economic model is. The debt is higher than the GDP. That's not real

by spaceman_2020 3y ago

I'm an economics noob, but from a lay perspective, I do wonder how sustainable the American economic model is. The debt is higher than the GDP. That's not really a problem as long as you can keep printing money and that money will be absorbed by other economies. However, for the first time in over 200 years, we're reaching a point where the largest global economies are NOT western nations. While Japan and France and UK and other EU allies could be counted upon to keep buying your currency, can you be as dependant on India, China, Indonesia and Brazil? What happens in 2050 when the amount of money needed to keep propping up the system keeps going up, yet the economies with the money and scale to absorb that extra money are not your allies?

vbezhenar 3y ago
US will print more money to pay for its debts. Inflation will cause US credits not to be a popular asset to buy, so debts naturally will reduce. US people will need to deal with higher inflation like the rest of the world does all the time.
midasuni 3y ago
> The debt is higher than the GDP. My mortgage is higher than my annual income Unlike me a country doesn’t have an end of income date in sight either - it doesn’t retire.
- christophilus 3y ago
  This is a valid point, but at some point a threshold is hit where you are basically doing nothing other than servicing past debt, and that would seem to be a real problem.
- peepeepoopoo5 3y ago
  Tax revenue is a tiny fraction of GDP, so the national debt is already many multiples over income. The current $1 trillion annual interest payments on the debt are larger than the entire defense budget. Worse, annualized interest payments are still going up by about $200B per quarter.
tacker2000 3y ago
Thats the trillion dollar question everyone will soon be asking…
carlosjobim 3y ago
Generally when the jig is up the bankers will incite and finance another world war.
BurningFrog 3y ago
> The debt is higher than the GDP The "% of GDP" measure of debt is misleading. Nothing special happens or "runs out" at 100%. A better way to say "150% of GDP" here is "18 months of GDP".

vbezhenar 3y ago

US will print more money to pay for its debts. Inflation will cause US credits not to be a popular asset to buy, so debts naturally will reduce. US people will need to deal with higher inflation like the rest of the world does all the time.

midasuni 3y ago

> The debt is higher than the GDP. My mortgage is higher than my annual income Unlike me a country doesn’t have an end of income date in sight either - it doesn’t retire.

christophilus 3y ago
This is a valid point, but at some point a threshold is hit where you are basically doing nothing other than servicing past debt, and that would seem to be a real problem.
peepeepoopoo5 3y ago
Tax revenue is a tiny fraction of GDP, so the national debt is already many multiples over income. The current $1 trillion annual interest payments on the debt are larger than the entire defense budget. Worse, annualized interest payments are still going up by about $200B per quarter.

tacker2000 3y ago

Thats the trillion dollar question everyone will soon be asking…

carlosjobim 3y ago

Generally when the jig is up the bankers will incite and finance another world war.

BurningFrog 3y ago

> The debt is higher than the GDP The "% of GDP" measure of debt is misleading. Nothing special happens or "runs out" at 100%. A better way to say "150% of GDP" here is "18 months of GDP".