5 ms·

I think people are right to be nervous about the brinkmanship around the debt ceiling. We pretend to be about to default every couple years, then at the last p

I think people are right to be nervous about the brinkmanship around the debt ceiling. We pretend to be about to default every couple years, then at the last possible second, we say "haha, just kidding". It's possible that one day, the "haha just kidding" part might not happen. That said, I'm not sure that this is any more dangerous than any other kind of debt. In the past, people considered US government debt to be equal in safety to a savings account. It is definitely a little more risky than that these days. The FDIC has never said "just kidding about that insurance!"

wongarsu 3y ago
So far we've always had the backup plan of just minting a billion dollar coin. Once that option is taken away at some point this whole thing becomes a lot more serious, and I would expect an accelerated move away from US government bonds and the USD (from people outside the US). Of course actually minting that coin might also damage trust in the USD.
- contravariant 3y ago
  This was never about the U.S. not having enough money, with the USD as the currency for oil it's never going to be too hard for the U.S. to get enough USD together one way or another. The problem is the U.S. simply being unwilling to pay interest. Which you cannot solve by printing more money.
  - Guthur 3y ago
    It essentially has infinite dollars, it just hasn't told you about them yet.
  - wongarsu 3y ago
    It's about the US playing silly political games on a regular schedule. Which you can solve by minting coins, because minting coins generates income without needing approval from congress. https://en.wikipedia.org/wiki/Trillion-dollar_coin https://en.wikipedia.org/wiki/Trillion-dollar_coin
    - contravariant 3y ago
      Wait so congress can stop lending but not minting new coins? That's just weird. Although the whole concept of a hard debt limit is weird, not saying you can't limit the amount of debt but you can't just back out of existing obligations.
      - wongarsu 3y ago
        The minting thing was meant for commemorative coins, which was probably though not important enough to bother congress with. But the law doesn't set a limit on the value of those coins, creating the loophole of creating ridiculously valuable commemorative coins.
- 1over137 3y ago
  >...backup plan of just minting a billion dollar coin That'd get you nowhere. You mean trillion. A crazy amount of money.
  - wongarsu 3y ago
    You're right, I was thinking in long-scale numbers.
CaptainMarvel 3y ago
Let’s be clear it’s not “every couple of years”. It’s “every time there is a democratic president, the republican-controlled legislative branches refuse to raise the debt ceiling”. How many times has this ever happened in reverse? Democrats must stop compromising with people that blatantly do not operate in good faith.
- WJW 3y ago
  Looking from outside the USA: If they don't cooperate then the budget won't be approved at all, no? It's all good and well not to want to cooperate with people that don't act in good faith, but since the other party has almost half the seats in the senate and a majority in the house of reps then how do you govern at all?
  - firebird84 3y ago
    The budget is already approved, the debt limit has nothing to do with it, it's just a cudgel with which one party bludgeons the other. It serves no other purpose.
- networkchad 3y ago
  [dead]
- unsupp0rted 3y ago
  > How many times has this ever happened in reverse? How many times have democrats been pro-gun and anti-abortion? Of course republicans play games with the debt ceiling- part of their platform is predicated on cutting government income / spending.
  - Eric_WVGG 3y ago
    If that were true they would be consistent about the debt ceiling while there were republican presidents in office. That’s what “bad faith” means.
  - pavlov 3y ago
thriftwy 3y ago
I'm not sure what happens to your savings account in an US bank if US government debt is in the state of even mildest of default. At the very minimum, you may see decades of interest wiped by devaluation of currency (a good question is "compared to what", but that's another story). FDIC becomes seriously unbacked in this case.

wongarsu 3y ago

So far we've always had the backup plan of just minting a billion dollar coin. Once that option is taken away at some point this whole thing becomes a lot more serious, and I would expect an accelerated move away from US government bonds and the USD (from people outside the US). Of course actually minting that coin might also damage trust in the USD.

contravariant 3y ago
This was never about the U.S. not having enough money, with the USD as the currency for oil it's never going to be too hard for the U.S. to get enough USD together one way or another. The problem is the U.S. simply being unwilling to pay interest. Which you cannot solve by printing more money.
- Guthur 3y ago
  It essentially has infinite dollars, it just hasn't told you about them yet.
- wongarsu 3y ago
  It's about the US playing silly political games on a regular schedule. Which you can solve by minting coins, because minting coins generates income without needing approval from congress. https://en.wikipedia.org/wiki/Trillion-dollar_coin https://en.wikipedia.org/wiki/Trillion-dollar_coin
  - contravariant 3y ago
    Wait so congress can stop lending but not minting new coins? That's just weird. Although the whole concept of a hard debt limit is weird, not saying you can't limit the amount of debt but you can't just back out of existing obligations.
    - wongarsu 3y ago
      The minting thing was meant for commemorative coins, which was probably though not important enough to bother congress with. But the law doesn't set a limit on the value of those coins, creating the loophole of creating ridiculously valuable commemorative coins.
1over137 3y ago
>...backup plan of just minting a billion dollar coin That'd get you nowhere. You mean trillion. A crazy amount of money.
- wongarsu 3y ago
  You're right, I was thinking in long-scale numbers.

CaptainMarvel 3y ago

Let’s be clear it’s not “every couple of years”. It’s “every time there is a democratic president, the republican-controlled legislative branches refuse to raise the debt ceiling”. How many times has this ever happened in reverse? Democrats must stop compromising with people that blatantly do not operate in good faith.

WJW 3y ago
Looking from outside the USA: If they don't cooperate then the budget won't be approved at all, no? It's all good and well not to want to cooperate with people that don't act in good faith, but since the other party has almost half the seats in the senate and a majority in the house of reps then how do you govern at all?
- firebird84 3y ago
  The budget is already approved, the debt limit has nothing to do with it, it's just a cudgel with which one party bludgeons the other. It serves no other purpose.
networkchad 3y ago
[dead]
unsupp0rted 3y ago
> How many times has this ever happened in reverse? How many times have democrats been pro-gun and anti-abortion? Of course republicans play games with the debt ceiling- part of their platform is predicated on cutting government income / spending.
- Eric_WVGG 3y ago
  If that were true they would be consistent about the debt ceiling while there were republican presidents in office. That’s what “bad faith” means.
- pavlov 3y ago

thriftwy 3y ago

I'm not sure what happens to your savings account in an US bank if US government debt is in the state of even mildest of default. At the very minimum, you may see decades of interest wiped by devaluation of currency (a good question is "compared to what", but that's another story). FDIC becomes seriously unbacked in this case.