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The debt is money owed by the US to itself and foreign buyers of its bonds. The debt is payable in US dollars. The US has control over how much supply of US do
by rswail 3y ago
The debt is money owed by the US to itself and foreign buyers of its bonds.
The debt is payable in US dollars. The US has control over how much supply of US dollars there is. The more US dollars, the "cheaper" they are in a foreign currency, but also the lower the value of a US bond in the hands of someone overseas.
So the current US national debt is held mostly by US people. $7T is currently held overseas.
So out of the ~$25T, $7T will be paid back in US dollars to overseas holders.
The rest is paid to US domestic holders. So that's 7/25 * 15 = 4.2% being paid outside of the US, the rest is effectively increasing the money supply inside the US.
The debt has to grow until people stop buying US treasuries when they are issued. Given that the majority of world trade is denominated in US dollars and that US Treasuries are effectively treated as the "risk free" base, and that the US debt is at ~122% of US GDP, that's just over a year's worth of US "income" to pay it back.
The US federal government share of the economy is ~24% (down from 30% at the height of COVID).
As a comparison, Japan's national debt is $9.2T (converted from yen) and is 263% of GDP. Its government share of the economy is ~21%.
- webninja 3y agoGDP is not “income”. Taxes are income and are effectively synonymous with revenue since there’s not much revenue outside of taxes. Revenue is a significantly lower number.
- dragonwriter 3y ago> GDP is not “income”. GDP is literally the primary national income measure. Its not government revenue, but government revenue is largely a choice within parameters set by, more than anything else, national income.
- webninja 3y agoNo, GDP is Gross Domestic Product. It’s a measure of economic activity, not income. An analogy on a smaller scale: Visa’s GDP is the sum of all transactions that occur on its network. You wouldn’t call any of that income except the sliver siphoned off as interchange fees. To make matters worse, GDP numbers are generally one of the most inaccurate and untrustworthy numbers since it’s set for political reasons. It’s not possible to measure all of the transactions that occur within a country since a large amount occurs offline and are unrecorded.
- dragonwriter 3y ago> > GDP is literally the primary national income measure. > No, GDP is Gross Domestic Product. Congratulations, you've expanded the initialism. Now what are the group of economic measures including GDP, GNP, GNI, NNI, and a few others called as a group, because of what they all measure with slightly different inclusions and exclusions?
- dllthomas 3y agoThe point might be that GDP is not the income of any individual entity, however construed.
- dragonwriter 3y ago> The point might be that GDP is not the income of any individual entity, however construed. Addressed upthread: “Its not government revenue, but government revenue is largely a choice within parameters set by, more than anything else, national income.” That is, its is what sets the bounds on the revenue of the only relevant entity, within which the actual revenue is a matter of thr decisions of that same entity.
- dllthomas 3y agoBut it's not only not government revenue, it's not the revenue of any single entity really. It's an aggregate of a bunch of revenues of different entities.
- johngladtj 3y agoAll those arguments were used in Argentina and in every other hyperinflationary economies
- rswail 3y agoExcept that all those arguments don't apply if your bonds are not in your own currency (all of the US Treasuries are) and you don't control the money supply of your own currency (the US does) and your currency is not the default world currency (the USD is).