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I get that countries don't exactly operate like a family budget, but can someone explain what the intended steady state is? There's only really three options: p

by kortex 3y ago

I get that countries don't exactly operate like a family budget, but can someone explain what the intended steady state is? There's only really three options: pay it off, keep it at the current debt level (or keep it steady at some percent level), or continuing to let it grow, and it seems like the first two options aren't (credibly) on the table.

dkjaudyeqooe 3y ago
You missed what the US actually does: it grows its economy until the debt is insignificant. The US has never (in modern times) substantially reduced its debt level in dollar terms.
- quickthrower2 3y ago
  So the US is like a Google or Amazon, always growing? And so it can take on more debt.
- kortex 3y ago
  I get that, but isn't the debt/GDP ratio in general also growing?
  - dkjaudyeqooe 3y ago
    Yes, at the moment, but the trick is to grow your economy faster than your debt. The US has managed to do that in the long term.
  - BXlnt2EachOther 3y ago
    yes, it has doubled from 65% of GDP to 130% of GDP in the last 15 years (GFC and pandemic). Click 50Y or Max time scales for more history: https://tradingeconomics.com/united-states/government-debt-to-gdp https://tradingeconomics.com/united-states/government-debt-t... This has been growing faster than CBO projections, though obviously the last few years were unique (hopefully). Found a graph from the 2015 CBO report that is still in a wikipedia article that projected we'd be at about 75% debt/GDP now[1]. Another article from 2020 as pandemic aid spending was going out warned we could hit 106% by this year. IIUC there's not a line that we must not cross, but the level, the rate, and the can-kicking on all this debt spending, and debt in general, worries me (even as someone who leans to the left and supports big government projects). [1] https://commons.wikimedia.org/wiki/File:FederalDebt1940to2015.svg https://commons.wikimedia.org/wiki/File:FederalDebt1940to201...
dragonwriter 3y ago
> but can someone explain what the intended steady state is? There is no intended steady state. (Also, projections of government debt to size of the economy into the future fluctuate wildly based on current circumstances, because they almost never have a reasonable basis for predicting the combination of future economic conditions and future fiscal decisions.)

by kortex 3y ago

dkjaudyeqooe 3y ago

You missed what the US actually does: it grows its economy until the debt is insignificant. The US has never (in modern times) substantially reduced its debt level in dollar terms.

quickthrower2 3y ago
So the US is like a Google or Amazon, always growing? And so it can take on more debt.
kortex 3y ago
I get that, but isn't the debt/GDP ratio in general also growing?
- dkjaudyeqooe 3y ago
  Yes, at the moment, but the trick is to grow your economy faster than your debt. The US has managed to do that in the long term.
- BXlnt2EachOther 3y ago
  yes, it has doubled from 65% of GDP to 130% of GDP in the last 15 years (GFC and pandemic). Click 50Y or Max time scales for more history: https://tradingeconomics.com/united-states/government-debt-to-gdp https://tradingeconomics.com/united-states/government-debt-t... This has been growing faster than CBO projections, though obviously the last few years were unique (hopefully). Found a graph from the 2015 CBO report that is still in a wikipedia article that projected we'd be at about 75% debt/GDP now[1]. Another article from 2020 as pandemic aid spending was going out warned we could hit 106% by this year. IIUC there's not a line that we must not cross, but the level, the rate, and the can-kicking on all this debt spending, and debt in general, worries me (even as someone who leans to the left and supports big government projects). [1] https://commons.wikimedia.org/wiki/File:FederalDebt1940to2015.svg https://commons.wikimedia.org/wiki/File:FederalDebt1940to201...

dragonwriter 3y ago

> but can someone explain what the intended steady state is? There is no intended steady state. (Also, projections of government debt to size of the economy into the future fluctuate wildly based on current circumstances, because they almost never have a reasonable basis for predicting the combination of future economic conditions and future fiscal decisions.)