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Assuming the US legislature hasn't been almost completely broken since 2010, there are really just 3 solutions to the country's ballooning debt: 1. Increase ta
by curtis3389 3y ago
Assuming the US legislature hasn't been almost completely broken since 2010, there are really just 3 solutions to the country's ballooning debt:
1. Increase taxes (a no-go for Republicans)
2. Default (a no-go for everyone)
3. Reduce spending, probably entitlements and not military (Republicans would love this; Democrats would whinge)
Option 3 is the most likely to occur if the legislature was able to get its act together.
None of this would stop the decline of the USD as world's reserve currency. With the ongoing political chaos in the US, countries are wise to diversify.
- jinushaun 3y agoYou forgot option 4. Reduce spending including military.
- cameldrv 3y agoOr option 4, which is the Federal Reserve buying government debt with printed money. This raises the price of government bonds, which is the same as reducing interest rates, helping make the debt service more affordable. Also, when the Federal Reserve buys these bonds, the Federal Reserve collects the interest payments on the bonds, which they then give to the Treasury, further making the budget more balanced. This also has the effect of creating inflation, potentially a lot of it, but in my opinion it's one of the more likely medium-term scenarios simply because Congress doesn't have to agree on anything in order for it to be implemented.