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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 ar

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.

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.