6 ms·

U.S. Debt Interest Payments Reach $1T

19 points by gmays 3y ago

Bostonian 3y ago
That is $3000 a year per person, given a U.S. population of 1/3 of a billion.
- exclusiv 3y ago
  Ok now add in the $210 trillion in unfunded liabilities that aren't part of the national debt. And mix in a little wage gap, AI impact, political divide, foreign conflicts, wars and military spending. Oh and the current annual interest expense is about 38% of all federal individual and Corp tax revenue. How do you service the debt? You print and print. And then that causes more unrest. You can't default and you can't keep rates high enough for long to matter on inflation. Because you have to print to service the debt which only grows with higher rates and time, which you have less of when unrest grows.
- fragmede 3y ago
  Which as we all know from our high school civics class, the debt reckoning is going to happen, and every citizen will be asked to personally pay that debt to the debt reaper, and if you can't pay it, it's off to debtor's prison with you, so you'd better be saving past your most recent paycheck, or else. Seriously though, what does that even mean? Per capita, we rank fairly low for national debt, which means we should be spending way more per person to maintain and improve our existing infrastructure. HSR when?
  - seanmcdirmid 3y ago
    > Which as we all know from out high school civics class, the debt reckoning is going to happen, and every citizen will be asked to personally pay that debt to the debt reaper, and if you can't pay it, it's off to debtor's prison with you, so you'd better be saving past your most recent paycheck, or else. A lot of this debt is money we lent to the government via past social security surpluses. The other large debtee are other American organizations, only a small part of this debt is held overseas.
- greyface- 3y ago
  In other words, if you receive more than $3000 per year in US Treasury interest payments, then you're benefitting from this. If less, then you're paying for it.
  - typingonmyphone 3y ago
    If you are making $3000 per year in US treasury interest payments, you are likely paying far more in US taxes, part of which will fund these interest payments.
- _akhe 3y ago
  If you think that number is high, consider that most people are forced to pay that amount every 30-60 days in rent just to keep a roof over their head. That's a tangible debt that exists and affects people. The concept of "national debt" is a joke in the face of cost of living. The overwhelming expense that hamstrings most people is every 30 days is losing 30-50% of their income to rent after they just lost 40% of it to taxes. This "$3k per person debt" on the other hand is related to printed money largely pocketed by corrupt people in our government - who now will print over $1T dollars in a single go for the latest cause ("keeping the govt open", Ukraine, etc.) - it has nothing to do with what Americans ask for or receive in benefit. People are over-burdened with excessive living costs and really have to take that hit each month, this so-called debt is a joke. I wish the U.S. would default on the debt already and start replacing government infrastructure with modern technology so our country can operate like a functioning machine again.
deleted 3y ago
[deleted]
andrewmcwatters 3y ago
The Federal Reserve will be incentivized somehow or coerced into more situations where it simply devalues the dollar in order to make debt payments easier to make. The national equivalent of having a long-term mortgage. The house becomes cheaper to pay off over time.
- panarky 3y ago
  Your theory is contradicted by actual events. The Fed doesn't set the value of the dollar, but it can influence the market value of the dollar lower by (1) reducing short-term interest rates, or (2) monetary policy (buying bonds on the open market). But in actual fact, it's been doing the exact opposite of that: (1) raising short-term interest rates, and (2) selling bonds on the open market and letting others mature. And it seems reluctant to change direction in any big way any time soon.
cs702 3y ago
This is alarmist linkbait that fails to provide any context. The follow plot shows interest as a percent of GDP -- that is, in relation to the size of the economy, which is how we should all look at this: https://fred.stlouisfed.org/series/FYOIGDA188S https://fred.stlouisfed.org/series/FYOIGDA188S
- jessekv 3y ago
  Why as a percent of GDP and not as a percent of tax revenue?
  - jjeaff 3y ago
    Both can be useful. GDP numbers can give you an idea of how difficult or easy it would be to raise the necessary tax revenue if push comes to shove.
- exclusiv 3y ago
  Not alarmist at all. The can was kicked in 08. We are in a debt spiral. Government spending is a component of GDP, % of GDP is NOT the context. We are insolvent. 210+ trillion in unfunded liabilities! And about 70% of spending is mandatory. The USD as world reserve currency is the biggest sword the US has. At current rates or higher we just piss off every country as they trade in eurodollars. They have started the process and will move off USD unless we get back to a favorable rate for their debt loads. With our debt load, it's either lower rates and continue to print and inflation (traditional and/or more asset bubbles). Or elevate rates and boost our interest expense and suppress the economy while fighting inflation until entities quit buying our debt and we lose significant power. And then, we still need our money printer and more inflation occurs. As for me, I'm going with keeping recent "elevated" rates so big banks can scoop up smaller ones in short term and inflation has some check, then back to lower rates after election. I'll hold inflation hedging assets indefinitely. US is screwed financially. Still better than most economies, but still screwed. Unfunded liabilities, AI, wage gap, education and housing costs, populism, political divide, geopolitical battles. There is no thesis that is great for the US unfortunately. It's best pitch is other countries are just as screwed or more. There is no way out of the debt load. All solutions require printing like crazy. Or defaulting but you cannot give up the world reserve currency and the fallout would be catastrophic.
lopez12 3y ago
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JohnClark1337 3y ago
[dead]

19 points by gmays 3y ago

Bostonian 3y ago

That is $3000 a year per person, given a U.S. population of 1/3 of a billion.

exclusiv 3y ago
Ok now add in the $210 trillion in unfunded liabilities that aren't part of the national debt. And mix in a little wage gap, AI impact, political divide, foreign conflicts, wars and military spending. Oh and the current annual interest expense is about 38% of all federal individual and Corp tax revenue. How do you service the debt? You print and print. And then that causes more unrest. You can't default and you can't keep rates high enough for long to matter on inflation. Because you have to print to service the debt which only grows with higher rates and time, which you have less of when unrest grows.
fragmede 3y ago
Which as we all know from our high school civics class, the debt reckoning is going to happen, and every citizen will be asked to personally pay that debt to the debt reaper, and if you can't pay it, it's off to debtor's prison with you, so you'd better be saving past your most recent paycheck, or else. Seriously though, what does that even mean? Per capita, we rank fairly low for national debt, which means we should be spending way more per person to maintain and improve our existing infrastructure. HSR when?
- seanmcdirmid 3y ago
  > Which as we all know from out high school civics class, the debt reckoning is going to happen, and every citizen will be asked to personally pay that debt to the debt reaper, and if you can't pay it, it's off to debtor's prison with you, so you'd better be saving past your most recent paycheck, or else. A lot of this debt is money we lent to the government via past social security surpluses. The other large debtee are other American organizations, only a small part of this debt is held overseas.
greyface- 3y ago
In other words, if you receive more than $3000 per year in US Treasury interest payments, then you're benefitting from this. If less, then you're paying for it.
- typingonmyphone 3y ago
  If you are making $3000 per year in US treasury interest payments, you are likely paying far more in US taxes, part of which will fund these interest payments.
_akhe 3y ago
If you think that number is high, consider that most people are forced to pay that amount every 30-60 days in rent just to keep a roof over their head. That's a tangible debt that exists and affects people. The concept of "national debt" is a joke in the face of cost of living. The overwhelming expense that hamstrings most people is every 30 days is losing 30-50% of their income to rent after they just lost 40% of it to taxes. This "$3k per person debt" on the other hand is related to printed money largely pocketed by corrupt people in our government - who now will print over $1T dollars in a single go for the latest cause ("keeping the govt open", Ukraine, etc.) - it has nothing to do with what Americans ask for or receive in benefit. People are over-burdened with excessive living costs and really have to take that hit each month, this so-called debt is a joke. I wish the U.S. would default on the debt already and start replacing government infrastructure with modern technology so our country can operate like a functioning machine again.

deleted 3y ago

[deleted]

andrewmcwatters 3y ago

The Federal Reserve will be incentivized somehow or coerced into more situations where it simply devalues the dollar in order to make debt payments easier to make. The national equivalent of having a long-term mortgage. The house becomes cheaper to pay off over time.

panarky 3y ago
Your theory is contradicted by actual events. The Fed doesn't set the value of the dollar, but it can influence the market value of the dollar lower by (1) reducing short-term interest rates, or (2) monetary policy (buying bonds on the open market). But in actual fact, it's been doing the exact opposite of that: (1) raising short-term interest rates, and (2) selling bonds on the open market and letting others mature. And it seems reluctant to change direction in any big way any time soon.

cs702 3y ago

This is alarmist linkbait that fails to provide any context. The follow plot shows interest as a percent of GDP -- that is, in relation to the size of the economy, which is how we should all look at this: https://fred.stlouisfed.org/series/FYOIGDA188S https://fred.stlouisfed.org/series/FYOIGDA188S

jessekv 3y ago
Why as a percent of GDP and not as a percent of tax revenue?
- jjeaff 3y ago
  Both can be useful. GDP numbers can give you an idea of how difficult or easy it would be to raise the necessary tax revenue if push comes to shove.
exclusiv 3y ago
Not alarmist at all. The can was kicked in 08. We are in a debt spiral. Government spending is a component of GDP, % of GDP is NOT the context. We are insolvent. 210+ trillion in unfunded liabilities! And about 70% of spending is mandatory. The USD as world reserve currency is the biggest sword the US has. At current rates or higher we just piss off every country as they trade in eurodollars. They have started the process and will move off USD unless we get back to a favorable rate for their debt loads. With our debt load, it's either lower rates and continue to print and inflation (traditional and/or more asset bubbles). Or elevate rates and boost our interest expense and suppress the economy while fighting inflation until entities quit buying our debt and we lose significant power. And then, we still need our money printer and more inflation occurs. As for me, I'm going with keeping recent "elevated" rates so big banks can scoop up smaller ones in short term and inflation has some check, then back to lower rates after election. I'll hold inflation hedging assets indefinitely. US is screwed financially. Still better than most economies, but still screwed. Unfunded liabilities, AI, wage gap, education and housing costs, populism, political divide, geopolitical battles. There is no thesis that is great for the US unfortunately. It's best pitch is other countries are just as screwed or more. There is no way out of the debt load. All solutions require printing like crazy. Or defaulting but you cannot give up the world reserve currency and the fallout would be catastrophic.

lopez12 3y ago

[dead]

JohnClark1337 3y ago

[dead]