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> There’s no magic number at which the debt load becomes a full-on crisis. When the US loses its AAA borrowing status and countless funds are required to sell

by lumb63 2y ago

> There’s no magic number at which the debt load becomes a full-on crisis. When the US loses its AAA borrowing status and countless funds are required to sell all US Bonds, you will see that statement is incorrect.

jandrewrogers 2y ago
The US already lost its AAA borrowing status.
- GenerWork 2y ago
  It lost it from one rating company, and the others still have it as AAA.
  - contagiousflow 2y ago
    3 actually. https://budget.house.gov/resources/staff-working-papers/us-debt-credit-rating-downgraded-only-second-time-in-nations-history https://budget.house.gov/resources/staff-working-papers/us-d...
    - SpaceManNabs 2y ago
      What a weird article House reps and their staffers should sign them their name to it because seeing a government website with very biased political points is odd.
      - Shikadi 2y ago
        I agree authors should be listed, but I disagree that this is odd. Especially in a time where points from scientific consensus are considered biased political points, it's the norm.
beaglesss 2y ago
The fed can buy those bonds via QE and just pass it as inflation.
makeworld 2y ago
That doesn't sound like number to me.
- BaculumMeumEst 2y ago
  Would a national debt of $0 be a point where the debt is a full-on crisis? Would a national debt of $999,999,999,999,999,999,999,999,999 be a point where the debt is a full-on crisis? If only there were some kind of conclusion we could draw from this, even if we don't have an exact number. Oh well, back to eating paste.
  - munchler 2y ago
    Disagree. If we had the ability to borrow $999,999,999,999,999,999,999,999,999 and spend it on useful projects, we’d be mining helium on the moon, colonizing Mars, terraforming Venus, building a Dyson sphere around the sun, and warping to Alpha Centuri. Our gross planetary product would probably be able to pay off the debt in a week or two.
    - lupusreal 2y ago
      That doesn't work, particularly the Venus and Dyson sphere ideas, because being able to borrow that much money doesn't actually give you access to the requisite resources and labor. Resources and labor isn't something you can just conjure out of the void as easily as adding zeros to an entry in a bank's database. If you brought such a ludicrous amount of money into existence, the amount of steel or man-hours a dollar could buy would be greatly diminished. Furthermore, you presume the money would be spent on successful and profitable projects, rather than being squandered away. If only it were so easy.
      - munchler 2y ago
        Yes, but it’s an absurd number to begin with, so I think some poetic liberty is justified. To make it slightly more realistic, let’s say the Galactic Development Bank of Betelgeuse offered us that amount as a loan, along with access to their expertise and trading partners, with 1000 years to pay it off. My actual point is that in the ratio of debt to GDP, perhaps we should use projected future GDP in the denominator, rather than current GDP. This is why a hard upper limit on debt (or even debt-to-GDP ratio) is a dubious idea. It’s all about what the government does with the money.
contagiousflow 2y ago
I mean, that has already happened. But I think the point of that statement is there is no known number where once debt reaches, the US will be downgraded further.
eigenspace 2y ago
And could you remind us at which magic number it is where the USA loses it's AAA borrowing status again? /s
- jorblumesea 2y ago
  No one knows (really, no one knows) but people will keep bringing it up
polygotdomain 2y ago
But why did the US lose their AAA rating? It has nothing to do with how much debt we have. It has far more to do with a non-functioning congress that simply decided it wasn't going to pay it. As has been said several times in this thread, it's political, not about the numbers themselves.
- katzinsky 2y ago
  Ignoring sanctions the US has not defaulted on its debt since the 70s. Those periods where a new budget has not been approved resulted in the US being late to fulfill invoices but all of the coupons on the bonds still went out. If that didn't happen a lot more than just the government's credit would unwind. That's the primary reason debt is still purchased despite the obvious fact that it will never be repaid.
deleted 2y ago
[deleted]

by lumb63 2y ago

jandrewrogers 2y ago

The US already lost its AAA borrowing status.

GenerWork 2y ago
It lost it from one rating company, and the others still have it as AAA.
- contagiousflow 2y ago
  3 actually. https://budget.house.gov/resources/staff-working-papers/us-debt-credit-rating-downgraded-only-second-time-in-nations-history https://budget.house.gov/resources/staff-working-papers/us-d...
  - SpaceManNabs 2y ago
    What a weird article House reps and their staffers should sign them their name to it because seeing a government website with very biased political points is odd.
    - Shikadi 2y ago
      I agree authors should be listed, but I disagree that this is odd. Especially in a time where points from scientific consensus are considered biased political points, it's the norm.

beaglesss 2y ago

The fed can buy those bonds via QE and just pass it as inflation.

makeworld 2y ago

That doesn't sound like number to me.

BaculumMeumEst 2y ago
Would a national debt of $0 be a point where the debt is a full-on crisis? Would a national debt of $999,999,999,999,999,999,999,999,999 be a point where the debt is a full-on crisis? If only there were some kind of conclusion we could draw from this, even if we don't have an exact number. Oh well, back to eating paste.
- munchler 2y ago
  Disagree. If we had the ability to borrow $999,999,999,999,999,999,999,999,999 and spend it on useful projects, we’d be mining helium on the moon, colonizing Mars, terraforming Venus, building a Dyson sphere around the sun, and warping to Alpha Centuri. Our gross planetary product would probably be able to pay off the debt in a week or two.
  - lupusreal 2y ago
    That doesn't work, particularly the Venus and Dyson sphere ideas, because being able to borrow that much money doesn't actually give you access to the requisite resources and labor. Resources and labor isn't something you can just conjure out of the void as easily as adding zeros to an entry in a bank's database. If you brought such a ludicrous amount of money into existence, the amount of steel or man-hours a dollar could buy would be greatly diminished. Furthermore, you presume the money would be spent on successful and profitable projects, rather than being squandered away. If only it were so easy.
    - munchler 2y ago
      Yes, but it’s an absurd number to begin with, so I think some poetic liberty is justified. To make it slightly more realistic, let’s say the Galactic Development Bank of Betelgeuse offered us that amount as a loan, along with access to their expertise and trading partners, with 1000 years to pay it off. My actual point is that in the ratio of debt to GDP, perhaps we should use projected future GDP in the denominator, rather than current GDP. This is why a hard upper limit on debt (or even debt-to-GDP ratio) is a dubious idea. It’s all about what the government does with the money.

contagiousflow 2y ago

I mean, that has already happened. But I think the point of that statement is there is no known number where once debt reaches, the US will be downgraded further.

eigenspace 2y ago

And could you remind us at which magic number it is where the USA loses it's AAA borrowing status again? /s

jorblumesea 2y ago
No one knows (really, no one knows) but people will keep bringing it up

polygotdomain 2y ago

But why did the US lose their AAA rating? It has nothing to do with how much debt we have. It has far more to do with a non-functioning congress that simply decided it wasn't going to pay it. As has been said several times in this thread, it's political, not about the numbers themselves.

katzinsky 2y ago
Ignoring sanctions the US has not defaulted on its debt since the 70s. Those periods where a new budget has not been approved resulted in the US being late to fulfill invoices but all of the coupons on the bonds still went out. If that didn't happen a lot more than just the government's credit would unwind. That's the primary reason debt is still purchased despite the obvious fact that it will never be repaid.

deleted 2y ago

[deleted]