4 ms·

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.
  - seanmcdirmid 3y ago
    We've never been this low in a graph before, at least in modern history: https://www.macrotrends.net/countries/USA/united-states/birth-rate https://www.macrotrends.net/countries/USA/united-states/birt... What happens when we hit 10 births per 1000 people? South Korea has it even worse: https://www.macrotrends.net/countries/KOR/south-korea/birth-rate https://www.macrotrends.net/countries/KOR/south-korea/birth-... They are bottoming at 6. You never know what happens until it does. Hopefully productivity increases along with redistribution away from just the capital that provides those increases will help, or perhaps we will get in a big war or pandemic and the problem will sort itself through excess deaths.
    - cool_dude85 3y ago
      Isn't there another option? Allowing a modest amount of immigration?
      - seanmcdirmid 3y ago
        Maybe? I think immigration allows the USA not to be at the bottom anyways (as well as other immigrant friendly countries). But if all the other countries lean in on immigration as their way out, we won't be able to be so picky about what immigrants we take in (e.g. lesser skilled vs. more highly skilled ones). That might cause some problems.
- mr_toad 3y ago
  > 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). Money can be invested in assets other than savings accounts, e.g. the share market. Government borrowing pushes up interest rates attracting saving that might otherwise go into investments that generate returns. Government spending using debt isn’t like saving for retirement, it’s borrowing for retirement and leaving the debt to your kids.
  - seanmcdirmid 3y ago
    > Money can be invested in assets other than savings accounts, e.g. the share market. Yes, that's why we have stock market bubbles and housing bubbles. Our 401Ks are heavily invested in index funds, while the rest of our savings are usually invested heavily in real estate (which is one reason why our housing prices are rising so quickly!). Now imagine leaning in on those 10 times more heavily than we do today... > it’s borrowing for retirement and leaving the debt to your kids. The point is that there is a massive demand for savings now, that money would have to be lent out to someone no matter what, and dollars are safe because US treasuries can soak up billions instantly with some sort of interest rate that will be paid back. You can't just say "oh, we should stop borrowing that money" unless you have a better idea of where to it can go.
  - jfengel 3y ago
    Who leave it to their kids, who leave it to their kids. Individual humans retire. Corporations and governments don't. The latter can roll over debt indefinitely. There is never any reason to pay it off. The only limit is whether they can afford the interest, which is a function of how well they apply the spending to ensure income. It's very different from a household budget and comparisons easily mislead.
    - nradov 3y ago
      On a longer time scale, most corporations eventually go bankrupt. Most countries eventually undergo some kind of violent transition in which the new government repudiates old debts. This is a form of "retirement", but it's harder to predict those events than with individual human retirements.

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.
- seanmcdirmid 3y ago
  We've never been this low in a graph before, at least in modern history: https://www.macrotrends.net/countries/USA/united-states/birth-rate https://www.macrotrends.net/countries/USA/united-states/birt... What happens when we hit 10 births per 1000 people? South Korea has it even worse: https://www.macrotrends.net/countries/KOR/south-korea/birth-rate https://www.macrotrends.net/countries/KOR/south-korea/birth-... They are bottoming at 6. You never know what happens until it does. Hopefully productivity increases along with redistribution away from just the capital that provides those increases will help, or perhaps we will get in a big war or pandemic and the problem will sort itself through excess deaths.
  - cool_dude85 3y ago
    Isn't there another option? Allowing a modest amount of immigration?
    - seanmcdirmid 3y ago
      Maybe? I think immigration allows the USA not to be at the bottom anyways (as well as other immigrant friendly countries). But if all the other countries lean in on immigration as their way out, we won't be able to be so picky about what immigrants we take in (e.g. lesser skilled vs. more highly skilled ones). That might cause some problems.
mr_toad 3y ago
> 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). Money can be invested in assets other than savings accounts, e.g. the share market. Government borrowing pushes up interest rates attracting saving that might otherwise go into investments that generate returns. Government spending using debt isn’t like saving for retirement, it’s borrowing for retirement and leaving the debt to your kids.
- seanmcdirmid 3y ago
  > Money can be invested in assets other than savings accounts, e.g. the share market. Yes, that's why we have stock market bubbles and housing bubbles. Our 401Ks are heavily invested in index funds, while the rest of our savings are usually invested heavily in real estate (which is one reason why our housing prices are rising so quickly!). Now imagine leaning in on those 10 times more heavily than we do today... > it’s borrowing for retirement and leaving the debt to your kids. The point is that there is a massive demand for savings now, that money would have to be lent out to someone no matter what, and dollars are safe because US treasuries can soak up billions instantly with some sort of interest rate that will be paid back. You can't just say "oh, we should stop borrowing that money" unless you have a better idea of where to it can go.
- jfengel 3y ago
  Who leave it to their kids, who leave it to their kids. Individual humans retire. Corporations and governments don't. The latter can roll over debt indefinitely. There is never any reason to pay it off. The only limit is whether they can afford the interest, which is a function of how well they apply the spending to ensure income. It's very different from a household budget and comparisons easily mislead.
  - nradov 3y ago
    On a longer time scale, most corporations eventually go bankrupt. Most countries eventually undergo some kind of violent transition in which the new government repudiates old debts. This is a form of "retirement", but it's harder to predict those events than with individual human retirements.