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Or we let inflation eat away the debt, turkey style. But for real I agree in general - where is the money going to come from? The interest on the debt and the
by jmoak3 3y ago
Or we let inflation eat away the debt, turkey style.
But for real I agree in general - where is the money going to come from? The interest on the debt and the federal receipts don’t work! I see the ratio (linked below) hitting 0.5 this decade.
What’s crazier is that % of GDP taxed according to the FRED is at historically normal levels dating back to 1950 - we’re not even at a point of low taxation relative to output.
FRED data
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Debt to GDP: https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S
% GDP Taxed by Federal Gov: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S
Interest Payments / Federal Receipts: https://fred.stlouisfed.org/graph/?g=sOG https://fred.stlouisfed.org/graph/?g=sOG
- onlyrealcuzzo 3y agoExcept Turkey keeps adding to their debt, so it's not getting eaten away...
- jmoak3 3y agoAlso true. Most of our largest expenses - Medicare, Social Sec, Medicaid, Mil - are a mix of soft/hard pegging to inflation I believe.
- khuey 3y agoFederal receipts as a percentage of GDP may be within historical norms but the population pyramid is not. The baby boomers' retirement will have to be paid for somehow: either through benefit cuts, higher taxes on the working, or more debt.
- jmoak3 3y agoI totally agree, something has to budge. That's one of the reasons I bought a house in a cheaper area close to family and am trying to save money, but really what can one even do to prepare for this? Mass monetary creation and a higher tax burden are guaranteed. Spend less and hold assets? Work in healthcare?
- toyg 3y ago> Or we let inflation eat away the debt, turkey style. We kinda tried that in Italy in the '70s/'80s. Spoiler: it didn't work. Globalized money markets can be assumed to be more reactive than public policy pretty much all the time now, so they will keep raising interest rates faster than governments can handle, more-than-countering expected inflation and making the debt spiral eventually unbearable. Even Keynes expected to pay back (some) debts when the economy does well.