9 ms·

People will complain about the debt ceiling -- granted, it's kinda dumb -- but it's also the only speed bump left to unlimited money printing. The core issue i

People will complain about the debt ceiling -- granted, it's kinda dumb -- but it's also the only speed bump left to unlimited money printing. The core issue is the size of the debt. The US is constantly paying off old debt with new debt. Except this year the cost of those funds quadrupled -- which means, even more debt. If interest rates stay high for several years, our national debt will balloon out of control. At a point we'll have no money left for anything but interest on the debt, or we'll just print so much money to pay interest on our national debt inflation will come back with a vengeance. At some point I'd love to see a grand bargain where we 1) raise taxes a bit and 2) lower spending a bit. I'm not holding my breath...

simple-thoughts 3y ago
Even the size of the debt would be ok as long as gdp is growing faster than the debt. It’s not, which means the deficit spending is being used on things that are not growing gdp faster than interest rates on that debt. Like any business, government debt is fine as long as it’s used to fund expenses that have an roi greater than the debt servicing costs. Otherwise there will be a default (tho for government inflation is also an option)
- morepork 3y ago
  Looks to me like GDP is growing faster than the debt, at least over the past 2-3 years: https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S
  - thrawa8387336 3y ago
    You need to look at real GDP not nominal.
    - chrchang523 3y ago
      Do you? I don’t like it, but the government is allowed to pay off the debt with inflated dollars.
      - thrawa8387336 3y ago
        I mean, meanwhile the standard of living keeps declining. Health, food, transportation...
    - morepork 3y ago
      Nominal debt / nominal GDP should be equivalent to real debt / real GDP, so it shouldn't matter
  - simple-thoughts 3y ago
    Yes due to soft default (inflation). If you look at projected debt burdens, they are predicted to grow faster than gdp if inflation targets are met. If inflation targets aren’t met, like they haven’t in the past few years, then it’s effectively a default since the government is paying back less in inflation adjusted dollars than it borrowed. Plenty of other countries have tried this strategy and it doesn’t merit a high credit rating.
- mr_toad 3y ago
  > government debt is fine as long as it’s used to fund expenses that have an roi greater than the debt servicing costs Most federal spending is on things that will have no monetary return. A very large proportion is on age-related spending (healthcare and social security). Running up debt to pay for education makes a certain amount of sense. Running up debt to pay for the lifestyles of those who will never have to service that debt seems unjust.
  - simple-thoughts 3y ago
    In theory healthcare and social security could provide positive roi. For healthcare due to a healthier workforce being more productive, and for social security by removing family burdens and freeing up prime age workers from elder care.
cyberax 3y ago
[flagged]
baybal2 3y ago
[dead]
tyre 3y ago
It is not like paying credit card bills with a credit card. The US government' debt is not like personal debt. We need to, collectively, stop talking about it that way.
- thrawa8387336 3y ago
  What is it like then?
  - seanmcdirmid 3y ago
    Imagine mom and dad need to stash money away because they are going to retire in 20 years. So money can't be saved without being borrowed, and the USG acts as a safe borrower of last resort (because the world has lots of savings needs ATM). Now if the USG used that money productively, this wouldn't be a big deal, but if we just waste it on military ventures that are never going to payoff, we are going to have a problem when mom and dad need to actually retire. A lot of country's debts can be attributed to people getting old and needing to save for retirement, things will get bloody when those countries go off the demographic cliff (e.g. Japan, western Europe, China eventually, and of course the USA).
    - cool_dude85 3y ago
      Can you give a historical example of a country that this fiscal collapse due to the "demographic cliff" has happened to?
      - thrawa8387336 3y ago
        Weimar Republic count?
        cool_dude85 3y ago
        I'm not up on my Weimar Republic demographics but it seems unlikely that a nation with too many old people went out and started WW2.
mrleinad 3y ago
Welcome to Argentina
aionaiodfgnio 3y ago
We know how to reduce the deficit: raise taxes on the rich. It's not rocket appliances. It's just a complete non-starter given the current GOP. The people screaming the loudest about the deficit are the same people preventing any real steps to fix it.
- deleted 3y ago
  [deleted]
- ativzzz 3y ago
  You and I both know that if we raise more money, we will spend more money. There is no situation when the U.S. makes more money without immediately increasing spending
  - aionaiodfgnio 3y ago
    Thanks, Dr. Freud. Wait, I don't believe that at all, for the following reasons: 1. The opposite hasn't been true. We have seen two dramatic tax cuts in recent history which absolutely did not lead to reduced spending. 2. The majority of federal spending is for healthcare or social security. Spending in these areas is somewhat hard to change, even with the political will. It's certainly damn near impossible to decrease such spending; it would immediately cause massive hardship for the most vulnerable people in our society (and probably riots riots). 3. The U.S. has run a surplus before and somehow didn't immediately bet it all on the ponies. Perhaps our modern politics are so dysfunctional that there is no way out.
  - taeric 3y ago
    I'm curious how/why you think that? Tax rates were, quite "famously" much higher in the past. Comically so. Even at a "personal debt" level, the main way out of debt is to make more money. Always has been. "Saving your way" out is a pipe dream that mostly doesn't happen. Especially as people have been coerced into paying so many private companies for things.
dralley 3y ago
Congress passes the budget. If they want to reduce spending, they should pay the political price of having to attach their own names to those cuts. As it stands, it is simply used as blackmail for extracting concessions without actually decreasing spending.
- snowwrestler 3y ago
  The debt ceiling is raised via legislation that members of Congress vote on. They “attach their names” the same way as any other bill.
  - dralley 3y ago
    That's the point though, they never actually have to attach their names to any cuts, because they don't actually care about cuts, they just want to hold the government hostage every couple of years.
- Terr_ 3y ago
  Precisely. Congress is simultaneously demanding that the executive branch collect X taxes, and spend Y on programs, while also demanding the executive branch do it while somehow putting a total halt on paying outstanding debts it made because since X<<Y. They collectively want to save their cake for later and eat it now, and somehow it's always someone else's fault that there's just one cake. Anyway, this leaves the executive branch with nothing by bad options. Here are the ones I can think of, from least-bad to worst: 1. Ignore the debt-ceiling because it is weird self-contradictory nonsense compared to business as usual, fight it in federal court system as Congress Being Impossibly Stupid. (I prefer this one.) 2. Proactively ignore some spending laws while enforcing others of the President's choice. (Unconstitutional, President can't line-item-veto.) 3. Specifically ignore laws around Federal Reserve and its nominal independence, so that the President can arbitrarily print more money for everything. (Similarly unconstitutional as #2, will severely spook markets and leads to a slippery-slope of inflation since it's no permanent fix.) 4. Raise new taxes of its own choosing. (Explicitly unconstitutional, only Congress can do that.) 5. Cease to honor its debts. (Explicitly unconstitutional, also major financial/economic/diplomatic crisis.)
Natsu 3y ago
The problem with printing it is that we'll always be able to just print more, because it's effectively a number in a database and we probably don't even need to literally print out dollar bills for it. But we'll have piles of currency and we'll be lacking in actual things to buy with that. It acts as a regressive, stealthy tax so it's always politically favorable even if it's bad for us economically. And it has downstream effects because of the demand for inflation-proof goods that are easy to get cash for (gold, silver, property you can rent out), which has other effects like making housing an investment and it being hard for people who actually want to live in those, etc. Then you game the inflation metrics to make things look good and people wonder why numbers keep going up and they can't make any progress on actually improving their lives because they have no idea what they're really being taxed. They'll keep getting away with it as long as people see numbers going up and never realizing the source of the problems.
agar 3y ago
> it's also the only speed bump left to unlimited money printing. I have never once heard during the budget negotiation process, "we cannot increase this budget because it will put us over the debt limit." The debt limit restricts the US from paying for things it has already purchased. It in no way stops the US from purchasing them, or budgeting for them, in the first place. Using the debt limit as a means of controlling future budget negotiations (in other words, "adopt my budget priorities or I will tank the economy") is exactly why Fitch downgraded US debt, thereby increasing the cost of debt service and exacerbating the problem you're concerned about.
- nostromo 3y ago
  Except in practice it certainly does. In 2023 the negotiations on the debt limit cut $1.5T in projected debt over the next 10 years. Both parties were unhappy but agreed to the cuts. Btw, $1.5T is not nearly enough. In 2033 we'll "only" be $46.7T in debt instead of $45.2T, which is basically not enough to move the needle. https://www.cbo.gov/publication/59260 https://www.cbo.gov/publication/59260
  - WWLink 3y ago
    Quick! We need to throw all the disabled people out on the street so we can make an excel spreadsheet look better!
    - deleted 3y ago
      [deleted]
  - gochi 3y ago
    That's misleading. GOP employed their usual tactic of being completely fine with defaulting, and used split congress to force the cuts they wanted through. >McConnell said that Republicans would not block a short-term increase of the debt limit until December, as long as Democrats met certain conditions. It would be nice if both parties were unhappy! However it's very clear which party owns power when it comes to the debt ceiling here, and the other bearing the potential burden of causing financial ruin.
cykotic 3y ago
It seems like you may not understand how budgets at the federal level work in the U.S. Congress passes spending bills and the President signs (or vetos) them. This has nothing to do with the debt limit as such. Eliminating the need to vote on a debt limit will not in any way lead to a situation in which runaway spending can occur that is not already present in the current system. The grand bargain you speak of has already occurred. It occurs when Congress passes a budget that is signed by the President.
alex_young 3y ago
Why worry about the national debt? It's largely owed to some part of the US government, or to the Fed itself. Foreign ownership is 7.3T, with Japan the largest at just over 1T. https://www.pgpf.org/blog/2023/05/the-federal-government-has-borrowed-trillions-but-who-owns-all-that-debt https://www.pgpf.org/blog/2023/05/the-federal-government-has...
- nostromo 3y ago
  Because inflation. Reminder: inflation hurts the poor the worst, as their wages tend to lag behind price increases.
  - alex_young 3y ago
    How does the debt cause inflation? I don’t see the correlation. Here’s a chart: https://www.stlouisfed.org/on-the-economy/2022/aug/inflation-real-value-debt-double-edged-sword https://www.stlouisfed.org/on-the-economy/2022/aug/inflation...
chollida1 3y ago
> People will complain about the debt ceiling -- granted, it's kinda dumb -- but it's also the only speed bump left to unlimited money printing. This is wrong. This is a misunderstanding of what the debt ceiling is. Congress has the power of the purse and can pass what ever budget they want. They can say tomorrow that they will spend $1,000,000,000,000 a year on what every they want and the debt ceiling can't do anything about it. The Debt ceiling is only about existing spending. Which has already been authorized. And ironically, almost always by the party no longer in power who is trying to block the debt ceiling from being raised to pay for the spending they authorized when they were in power. It does nothing to stop congress from authorizing new spending after the fact. Congress can chose to lower spending when they are in office. The fact that neither party has done that in over 30 years indicates that neither party cares about the national debt until the other party is in power.
throw0101a 3y ago
> The US is constantly paying off old debt with new debt. Except this year the cost of those funds quadrupled -- which means, even more debt. And? Why is this a problem? Given the UK has never (AFAICT) had a surplus, that means they've simply continue to roll over debt, dating back to the South Sea Bubble (1700s), Napoleonic Wars (early 1800s), Crimean War (late 1800s), and WW1 (1900s): * https://www.theguardian.com/business/blog/2014/oct/31/paying-the-price-of-war-britain-makes-good-on-historic-debts https://www.theguardian.com/business/blog/2014/oct/31/paying... The UK has been doing it for four hundred years: they have in several instances been over 150% debt-to-GDP, and twice went over 200%: * https://en.wikipedia.org/wiki/United_Kingdom_national_debt#History https://en.wikipedia.org/wiki/United_Kingdom_national_debt#H... (Their current woes are of dumb decisions unrelated to fiscal issues, though the decisions are not helping the economy.) > If interest rates stay high for several years […] You mean like they did in the 1980s? * https://www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart https://www.macrotrends.net/2016/10-year-treasury-bond-rate-... * https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS * https://ritholtz.com/2016/10/long-history-long-10-year-us-treasury-yields/ https://ritholtz.com/2016/10/long-history-long-10-year-us-tr... Over the long-term (centuries), the general trend of interest rates is downward (with sporadic spikes, which often correspond to wars): * https://www.visualcapitalist.com/700-year-decline-of-interest-rates/ https://www.visualcapitalist.com/700-year-decline-of-interes... * https://www.bankofengland.co.uk/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018 https://www.bankofengland.co.uk/working-paper/2020/eight-cen... For most of the 2010s people were complaining about inflation being too low (along with interest rates).
dpweb 3y ago
I don’t see congress doing the responsible thing and dealing with the debt. Not to mention, there isn’t as much that can be cut from discretionary spending as you would think. Any meaningful cuts decimate everything outside of defense. We’re not (in my option) going back to zero interest rates, so interest will make balanced budgets impossible to achieve. Also don’t see much appetite to cut defense as we’re aligning to have China and Russia as enemies. Rather I think we’ll resort to more of the Fed buying up the debt who can remit the interest payments back to the treasury. I could see a scenario where they even just retire/redeem treasuries so the debt just goes away. The downside it’s inflationary but also does this erode confidence in the system where things are (even more so) centrally controlled.
- smitty1e 3y ago
  How could anyone do the 'responsible thing'? Voters do not reward anyone telling them 'no'.
smitty1e 3y ago
There is as yet no feedback loop on the U.S. Congress to provide any braking. It runs open loop. The only thing in view that has the slightest hope of stabilizing matters is an Article V convention, as far as I can tell. https://conventionofstates.com/ https://conventionofstates.com/

simple-thoughts 3y ago

Even the size of the debt would be ok as long as gdp is growing faster than the debt. It’s not, which means the deficit spending is being used on things that are not growing gdp faster than interest rates on that debt. Like any business, government debt is fine as long as it’s used to fund expenses that have an roi greater than the debt servicing costs. Otherwise there will be a default (tho for government inflation is also an option)

morepork 3y ago
Looks to me like GDP is growing faster than the debt, at least over the past 2-3 years: https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S
- thrawa8387336 3y ago
  You need to look at real GDP not nominal.
  - chrchang523 3y ago
    Do you? I don’t like it, but the government is allowed to pay off the debt with inflated dollars.
    - thrawa8387336 3y ago
      I mean, meanwhile the standard of living keeps declining. Health, food, transportation...
  - morepork 3y ago
    Nominal debt / nominal GDP should be equivalent to real debt / real GDP, so it shouldn't matter
- simple-thoughts 3y ago
  Yes due to soft default (inflation). If you look at projected debt burdens, they are predicted to grow faster than gdp if inflation targets are met. If inflation targets aren’t met, like they haven’t in the past few years, then it’s effectively a default since the government is paying back less in inflation adjusted dollars than it borrowed. Plenty of other countries have tried this strategy and it doesn’t merit a high credit rating.
mr_toad 3y ago
> government debt is fine as long as it’s used to fund expenses that have an roi greater than the debt servicing costs Most federal spending is on things that will have no monetary return. A very large proportion is on age-related spending (healthcare and social security). Running up debt to pay for education makes a certain amount of sense. Running up debt to pay for the lifestyles of those who will never have to service that debt seems unjust.
- simple-thoughts 3y ago
  In theory healthcare and social security could provide positive roi. For healthcare due to a healthier workforce being more productive, and for social security by removing family burdens and freeing up prime age workers from elder care.

cyberax 3y ago

[flagged]

baybal2 3y ago

[dead]

tyre 3y ago

It is not like paying credit card bills with a credit card. The US government' debt is not like personal debt. We need to, collectively, stop talking about it that way.

thrawa8387336 3y ago
What is it like then?
- seanmcdirmid 3y ago
  Imagine mom and dad need to stash money away because they are going to retire in 20 years. So money can't be saved without being borrowed, and the USG acts as a safe borrower of last resort (because the world has lots of savings needs ATM). Now if the USG used that money productively, this wouldn't be a big deal, but if we just waste it on military ventures that are never going to payoff, we are going to have a problem when mom and dad need to actually retire. A lot of country's debts can be attributed to people getting old and needing to save for retirement, things will get bloody when those countries go off the demographic cliff (e.g. Japan, western Europe, China eventually, and of course the USA).
  - cool_dude85 3y ago
    Can you give a historical example of a country that this fiscal collapse due to the "demographic cliff" has happened to?
    - thrawa8387336 3y ago
      Weimar Republic count?
      - cool_dude85 3y ago
        I'm not up on my Weimar Republic demographics but it seems unlikely that a nation with too many old people went out and started WW2.

mrleinad 3y ago

Welcome to Argentina

aionaiodfgnio 3y ago

We know how to reduce the deficit: raise taxes on the rich. It's not rocket appliances. It's just a complete non-starter given the current GOP. The people screaming the loudest about the deficit are the same people preventing any real steps to fix it.

deleted 3y ago
[deleted]
ativzzz 3y ago
You and I both know that if we raise more money, we will spend more money. There is no situation when the U.S. makes more money without immediately increasing spending
- aionaiodfgnio 3y ago
  Thanks, Dr. Freud. Wait, I don't believe that at all, for the following reasons: 1. The opposite hasn't been true. We have seen two dramatic tax cuts in recent history which absolutely did not lead to reduced spending. 2. The majority of federal spending is for healthcare or social security. Spending in these areas is somewhat hard to change, even with the political will. It's certainly damn near impossible to decrease such spending; it would immediately cause massive hardship for the most vulnerable people in our society (and probably riots riots). 3. The U.S. has run a surplus before and somehow didn't immediately bet it all on the ponies. Perhaps our modern politics are so dysfunctional that there is no way out.
- taeric 3y ago
  I'm curious how/why you think that? Tax rates were, quite "famously" much higher in the past. Comically so. Even at a "personal debt" level, the main way out of debt is to make more money. Always has been. "Saving your way" out is a pipe dream that mostly doesn't happen. Especially as people have been coerced into paying so many private companies for things.

dralley 3y ago

Congress passes the budget. If they want to reduce spending, they should pay the political price of having to attach their own names to those cuts. As it stands, it is simply used as blackmail for extracting concessions without actually decreasing spending.

snowwrestler 3y ago
The debt ceiling is raised via legislation that members of Congress vote on. They “attach their names” the same way as any other bill.
- dralley 3y ago
  That's the point though, they never actually have to attach their names to any cuts, because they don't actually care about cuts, they just want to hold the government hostage every couple of years.
Terr_ 3y ago
Precisely. Congress is simultaneously demanding that the executive branch collect X taxes, and spend Y on programs, while also demanding the executive branch do it while somehow putting a total halt on paying outstanding debts it made because since X<<Y. They collectively want to save their cake for later and eat it now, and somehow it's always someone else's fault that there's just one cake. Anyway, this leaves the executive branch with nothing by bad options. Here are the ones I can think of, from least-bad to worst: 1. Ignore the debt-ceiling because it is weird self-contradictory nonsense compared to business as usual, fight it in federal court system as Congress Being Impossibly Stupid. (I prefer this one.) 2. Proactively ignore some spending laws while enforcing others of the President's choice. (Unconstitutional, President can't line-item-veto.) 3. Specifically ignore laws around Federal Reserve and its nominal independence, so that the President can arbitrarily print more money for everything. (Similarly unconstitutional as #2, will severely spook markets and leads to a slippery-slope of inflation since it's no permanent fix.) 4. Raise new taxes of its own choosing. (Explicitly unconstitutional, only Congress can do that.) 5. Cease to honor its debts. (Explicitly unconstitutional, also major financial/economic/diplomatic crisis.)

Natsu 3y ago

The problem with printing it is that we'll always be able to just print more, because it's effectively a number in a database and we probably don't even need to literally print out dollar bills for it. But we'll have piles of currency and we'll be lacking in actual things to buy with that. It acts as a regressive, stealthy tax so it's always politically favorable even if it's bad for us economically. And it has downstream effects because of the demand for inflation-proof goods that are easy to get cash for (gold, silver, property you can rent out), which has other effects like making housing an investment and it being hard for people who actually want to live in those, etc. Then you game the inflation metrics to make things look good and people wonder why numbers keep going up and they can't make any progress on actually improving their lives because they have no idea what they're really being taxed. They'll keep getting away with it as long as people see numbers going up and never realizing the source of the problems.

agar 3y ago

> it's also the only speed bump left to unlimited money printing. I have never once heard during the budget negotiation process, "we cannot increase this budget because it will put us over the debt limit." The debt limit restricts the US from paying for things it has already purchased. It in no way stops the US from purchasing them, or budgeting for them, in the first place. Using the debt limit as a means of controlling future budget negotiations (in other words, "adopt my budget priorities or I will tank the economy") is exactly why Fitch downgraded US debt, thereby increasing the cost of debt service and exacerbating the problem you're concerned about.

nostromo 3y ago
Except in practice it certainly does. In 2023 the negotiations on the debt limit cut $1.5T in projected debt over the next 10 years. Both parties were unhappy but agreed to the cuts. Btw, $1.5T is not nearly enough. In 2033 we'll "only" be $46.7T in debt instead of $45.2T, which is basically not enough to move the needle. https://www.cbo.gov/publication/59260 https://www.cbo.gov/publication/59260
- WWLink 3y ago
  Quick! We need to throw all the disabled people out on the street so we can make an excel spreadsheet look better!
  - deleted 3y ago
    [deleted]
- gochi 3y ago
  That's misleading. GOP employed their usual tactic of being completely fine with defaulting, and used split congress to force the cuts they wanted through. >McConnell said that Republicans would not block a short-term increase of the debt limit until December, as long as Democrats met certain conditions. It would be nice if both parties were unhappy! However it's very clear which party owns power when it comes to the debt ceiling here, and the other bearing the potential burden of causing financial ruin.

cykotic 3y ago

It seems like you may not understand how budgets at the federal level work in the U.S. Congress passes spending bills and the President signs (or vetos) them. This has nothing to do with the debt limit as such. Eliminating the need to vote on a debt limit will not in any way lead to a situation in which runaway spending can occur that is not already present in the current system. The grand bargain you speak of has already occurred. It occurs when Congress passes a budget that is signed by the President.

alex_young 3y ago

Why worry about the national debt? It's largely owed to some part of the US government, or to the Fed itself. Foreign ownership is 7.3T, with Japan the largest at just over 1T. https://www.pgpf.org/blog/2023/05/the-federal-government-has-borrowed-trillions-but-who-owns-all-that-debt https://www.pgpf.org/blog/2023/05/the-federal-government-has...

nostromo 3y ago
Because inflation. Reminder: inflation hurts the poor the worst, as their wages tend to lag behind price increases.
- alex_young 3y ago
  How does the debt cause inflation? I don’t see the correlation. Here’s a chart: https://www.stlouisfed.org/on-the-economy/2022/aug/inflation-real-value-debt-double-edged-sword https://www.stlouisfed.org/on-the-economy/2022/aug/inflation...

chollida1 3y ago

> People will complain about the debt ceiling -- granted, it's kinda dumb -- but it's also the only speed bump left to unlimited money printing. This is wrong. This is a misunderstanding of what the debt ceiling is. Congress has the power of the purse and can pass what ever budget they want. They can say tomorrow that they will spend $1,000,000,000,000 a year on what every they want and the debt ceiling can't do anything about it. The Debt ceiling is only about existing spending. Which has already been authorized. And ironically, almost always by the party no longer in power who is trying to block the debt ceiling from being raised to pay for the spending they authorized when they were in power. It does nothing to stop congress from authorizing new spending after the fact. Congress can chose to lower spending when they are in office. The fact that neither party has done that in over 30 years indicates that neither party cares about the national debt until the other party is in power.

throw0101a 3y ago

> The US is constantly paying off old debt with new debt. Except this year the cost of those funds quadrupled -- which means, even more debt. And? Why is this a problem? Given the UK has never (AFAICT) had a surplus, that means they've simply continue to roll over debt, dating back to the South Sea Bubble (1700s), Napoleonic Wars (early 1800s), Crimean War (late 1800s), and WW1 (1900s): * https://www.theguardian.com/business/blog/2014/oct/31/paying-the-price-of-war-britain-makes-good-on-historic-debts https://www.theguardian.com/business/blog/2014/oct/31/paying... The UK has been doing it for four hundred years: they have in several instances been over 150% debt-to-GDP, and twice went over 200%: * https://en.wikipedia.org/wiki/United_Kingdom_national_debt#History https://en.wikipedia.org/wiki/United_Kingdom_national_debt#H... (Their current woes are of dumb decisions unrelated to fiscal issues, though the decisions are not helping the economy.) > If interest rates stay high for several years […] You mean like they did in the 1980s? * https://www.macrotrends.net/2016/10-year-treasury-bond-rate-yield-chart https://www.macrotrends.net/2016/10-year-treasury-bond-rate-... * https://fred.stlouisfed.org/series/FEDFUNDS https://fred.stlouisfed.org/series/FEDFUNDS * https://ritholtz.com/2016/10/long-history-long-10-year-us-treasury-yields/ https://ritholtz.com/2016/10/long-history-long-10-year-us-tr... Over the long-term (centuries), the general trend of interest rates is downward (with sporadic spikes, which often correspond to wars): * https://www.visualcapitalist.com/700-year-decline-of-interest-rates/ https://www.visualcapitalist.com/700-year-decline-of-interes... * https://www.bankofengland.co.uk/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018 https://www.bankofengland.co.uk/working-paper/2020/eight-cen... For most of the 2010s people were complaining about inflation being too low (along with interest rates).

dpweb 3y ago

I don’t see congress doing the responsible thing and dealing with the debt. Not to mention, there isn’t as much that can be cut from discretionary spending as you would think. Any meaningful cuts decimate everything outside of defense. We’re not (in my option) going back to zero interest rates, so interest will make balanced budgets impossible to achieve. Also don’t see much appetite to cut defense as we’re aligning to have China and Russia as enemies. Rather I think we’ll resort to more of the Fed buying up the debt who can remit the interest payments back to the treasury. I could see a scenario where they even just retire/redeem treasuries so the debt just goes away. The downside it’s inflationary but also does this erode confidence in the system where things are (even more so) centrally controlled.

smitty1e 3y ago
How could anyone do the 'responsible thing'? Voters do not reward anyone telling them 'no'.

smitty1e 3y ago

There is as yet no feedback loop on the U.S. Congress to provide any braking. It runs open loop. The only thing in view that has the slightest hope of stabilizing matters is an Article V convention, as far as I can tell. https://conventionofstates.com/ https://conventionofstates.com/