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At first I was hopeful about the "just facts" content, but once he started making comparisons between government budgets and household budgets, I had to roll my

At first I was hopeful about the "just facts" content, but once he started making comparisons between government budgets and household budgets, I had to roll my eyes. This is a very misleading way to represent the US government's financial standing. The US government doesn't have to save for retirement, it doesn't doesn't have a lifespan, and it is in a unique position to manipulate economic markets (and ultimately even the use of force) regarding its own debt. The insinuation that government deficit spending is analogous to household deficit spending is misleading. A typical response it elicits is "well how are we ever going to pay that off?!" because people compare it to their own debt. But we're not talking about credit card debt or a car note here, we're talking about issuing treasury bonds.

PaulDavisThe1st 2y ago
In addition, no households issue their own sovereign currency, let alone one used as a reserve currency by a majority of the world.
wormius 2y ago
Jesus Christ, he does that? One would think someone of his stature had a better intelligence about that sorta thing, but I guess he just wants to do more propaganda for tax cuts. The second I hear someone make that comparison, I tap out... Well I give em a few to explain why it's not accurate. Then I tap out if the explanation of why it's a bad comparison isn't forthcoming. Shame.
rpdillon 2y ago
Do you see the $35 trillion in debt as a problem? How do you think it's going to be resolved? When I see folks habitually complaining about how much the US spend on their military, and then I look at the actual budget and see that they are actually spending more to service their debt than they do on the military, I wonder what the end game is.
- kube-system 2y ago
  > resolved My entire comment above was to argue that "resolving" the debt is nonsensical. The answer to when the debt needs to be paid off is: never. The government can issue more debt indefinitely. In fact, "paying off the debt" implies the government would stop selling treasuries, which is entirely more scary than the debt. > I wonder what the end game is. There is no end game, ideally, the US wants the US to continue to exist, and continue to fund the things that improve conditions for their citizens. Believe it or not, the single largest holder of US government debt is... the US government itself. And 77.1% of the entire debt is owed to domestic US entities. The US debt is mostly Americans voluntarily financing their own government. This situation isn't something to "resolve", it is entirely okay. Debt to GDP does need to be within some reasonable bounds, but as long as our economy can support the debt, there's no reason to get rid of it, and many reasons not to.
  - deleted 2y ago
    [deleted]
  - starspangled 2y ago
    > My entire comment above was to argue that "resolving" the debt is nonsensical. The answer to when the debt needs to be paid off is: never. The government can issue more debt indefinitely. Then why do governments place a large importance on minimizing deficit? This isn't a rhetorical question, I'm ignorant about economics and government mechanisms. > Debt to GDP does need to be within some reasonable bounds, but as long as our economy can support the debt, there's no reason to get rid of it, and many reasons not to. What is reasonable and why? What does it mean to support a debt, and why wouldn't that burden be a reason to get rid of it?
    - kube-system 2y ago
      If your country's debt-to-GDP gets too out of control, markets might doubt that you'll be able to pay on your obligations, and then you've got problems. The debt is made up of many tiny obligations (treasury bills, bonds, and notes) that get paid on a regular basis every day, and the US government has always paid every one of them. When these individual obligations are due, they need to be paid, and investors need to be very confident they will be. The point at which this becomes a problem is not a hard and fast rule, but it depends on a lot of situational factors that go even beyond the realm of math and into geopolitics.
- georgeecollins 2y ago
  If the $35t were a problem US treasury bills would have to have high interest rates. As it is, investors around the world are happy to hold them. Personally I think we should raise taxes, particularly close a lot of loopholes and raise corporate taxes as a first thing to do.
  - pclmulqdq 2y ago
    Treasury bills do have high interest rates compared to their recent historical average. That rate is about 5%. You might then say that this is due to inflation, but that inflation almost certainly has something to do with lack of confidence in the dollar.
Dalewyn 2y ago
If a household can keep on borrowing money basically indefinitely to pay for expenditures that exceed revenue, that's basically what the US's (and many others' like Japan's) national budget is. To put it another way: America can afford to spend more than its revenue because people (Americans and otherwise, see the bond market) and countries (see prior) are (still) willing to lend more and more money. So what happens when that gravy train finally stops? Note that it is easy to default on our debts, most prominently by just not passing a budget to pay our debts. How we are going to pay all this debt off is a very real question that needs an answer eventually. Brushing it off as "we aren't a household budget" is peak denialism.
- kube-system 2y ago
  > If a household can keep on borrowing money basically indefinitely to pay for expenditures that exceed revenue If a household had an undefined credit limit and could take out debt to pay for any other debt, arbitrarily, and indefinitely, they'd be dumb to ever work a day in their life. But consumer creditors understand that their customers have essentially zero global power and will die someday, so the world of consumer debt doesn't work that way. > So what happens when that gravy train finally stops? You tell me, when is everyone in the world going to stop buying treasuries? I don't think there is a date. As long as the US has a stable and powerful economy, people with money will want somewhere to put it. > How we are going to pay all this debt off is a very real question that needs an answer eventually. The literal answer is that it all gets paid off all the time, according to the payment schedule of each individual security, but we continually reissue debt because there is literally zero reason not to.
  - Dalewyn 2y ago
    > so the world of consumer debt doesn't work that way. Yes, but I laid out how national budgets and household budgets are fundamentally the same thing: The flow of cash coming in must meet or exceed the flow of cashing going out. I'm surprised this detail is completely lost on you. >I don't think there is a date. As long as the US has a stable and powerful economy, people with money will want somewhere to put it. That's the thing, isn't it? It's not an absolute guarantee that the US will continue to have a stable and powerful economy ("past performance is not a guarantee of future results", as any good investor will tell you). Lest we forget, US credit ratings were lowered following one of the many recent shutdowns we had, and the world at-large is slowly but certainly shifting from Pax Americana to Pax Sino. So again, what happens when the gravy train stops? We don't know when that is, we don't know if the train will stop in the first place, but we have to have a plan in hand because debts must be paid. >The literal answer is that it all gets paid off all the time, according to the payment schedule of each individual security, but we continually reissue debt because there is literally zero reason not to. Yes, the issue is where do we draw the line between reasonable amounts of debt incurred and unreasonable? Spending more money than we make is fiscal irresponsibility, borrowing money to make up for the shortfall is merely a workaround and borrowing money to pay back borrowed money is disturbing. Where do we consider we are borrowing too much? This line can and should be constantly reevaluated as necessary and appropriate, but first of all do we even have such a line? I don't think we do, which is why the national deficit is such a hot topic.
pclmulqdq 2y ago
If the US federal debt doesn't matter, why do we have taxes? Surely, the government should just debt-finance everything and then we would all be happier.
- kube-system 2y ago
  As I mentioned in other comments, debt-to-GDP does matter in as much as it loosely reflects the ability of the US to pay those obligations. So taxes+debt will always be able to fund the governments ability to do more than either of those individually.
  - pclmulqdq 2y ago
    What is an acceptable debt-to-GDP ratio? Is over 100% acceptable in terms of ability to pay? I would have assumed that if that was your only metric, that the US at 122% would be far past your acceptable line.
    - dmurray 2y ago
      Debt and GDP are measured in different units (dollars, and dollars per year) so talking about a "debt-to-GDP ratio of 100%" is misleading because it sounds like there's some kind of threshold there. In fact a debt-to-GDP of 12 months or 14 months has no more special significance than the debt reaching 50 trillion dollars or your car reaching 100,000 miles.
    - kube-system 2y ago
      There's some concern that the US is playing with fire at the current ratio. However, Japan is now over 200% has been over 100% for 23 years. Despite their debt, investors aren't too worried about not getting paid. There's not really a hard and fast rule at which it becomes a problem, it is up to investors to decide. The total economic situation, monetary policy, and geopolitical situation will matter more than just the debt-to-GDP ratio. That ratio is mostly useful for comparing a country to itself over time.
      - 2y ago
elihu 2y ago
There's also the situation that if a household's finances are tight, they can often rectify the situation by not spending money on things that aren't essential. If a government imposes austerity measures during a recession, it can make the recession a lot worse, because that government spending was used directly or indirectly on goods and services, creating economic activity.

PaulDavisThe1st 2y ago

In addition, no households issue their own sovereign currency, let alone one used as a reserve currency by a majority of the world.

wormius 2y ago

Jesus Christ, he does that? One would think someone of his stature had a better intelligence about that sorta thing, but I guess he just wants to do more propaganda for tax cuts. The second I hear someone make that comparison, I tap out... Well I give em a few to explain why it's not accurate. Then I tap out if the explanation of why it's a bad comparison isn't forthcoming. Shame.

rpdillon 2y ago

Do you see the $35 trillion in debt as a problem? How do you think it's going to be resolved? When I see folks habitually complaining about how much the US spend on their military, and then I look at the actual budget and see that they are actually spending more to service their debt than they do on the military, I wonder what the end game is.

kube-system 2y ago
> resolved My entire comment above was to argue that "resolving" the debt is nonsensical. The answer to when the debt needs to be paid off is: never. The government can issue more debt indefinitely. In fact, "paying off the debt" implies the government would stop selling treasuries, which is entirely more scary than the debt. > I wonder what the end game is. There is no end game, ideally, the US wants the US to continue to exist, and continue to fund the things that improve conditions for their citizens. Believe it or not, the single largest holder of US government debt is... the US government itself. And 77.1% of the entire debt is owed to domestic US entities. The US debt is mostly Americans voluntarily financing their own government. This situation isn't something to "resolve", it is entirely okay. Debt to GDP does need to be within some reasonable bounds, but as long as our economy can support the debt, there's no reason to get rid of it, and many reasons not to.
- deleted 2y ago
  [deleted]
- starspangled 2y ago
  > My entire comment above was to argue that "resolving" the debt is nonsensical. The answer to when the debt needs to be paid off is: never. The government can issue more debt indefinitely. Then why do governments place a large importance on minimizing deficit? This isn't a rhetorical question, I'm ignorant about economics and government mechanisms. > Debt to GDP does need to be within some reasonable bounds, but as long as our economy can support the debt, there's no reason to get rid of it, and many reasons not to. What is reasonable and why? What does it mean to support a debt, and why wouldn't that burden be a reason to get rid of it?
  - kube-system 2y ago
    If your country's debt-to-GDP gets too out of control, markets might doubt that you'll be able to pay on your obligations, and then you've got problems. The debt is made up of many tiny obligations (treasury bills, bonds, and notes) that get paid on a regular basis every day, and the US government has always paid every one of them. When these individual obligations are due, they need to be paid, and investors need to be very confident they will be. The point at which this becomes a problem is not a hard and fast rule, but it depends on a lot of situational factors that go even beyond the realm of math and into geopolitics.
georgeecollins 2y ago
If the $35t were a problem US treasury bills would have to have high interest rates. As it is, investors around the world are happy to hold them. Personally I think we should raise taxes, particularly close a lot of loopholes and raise corporate taxes as a first thing to do.
- pclmulqdq 2y ago
  Treasury bills do have high interest rates compared to their recent historical average. That rate is about 5%. You might then say that this is due to inflation, but that inflation almost certainly has something to do with lack of confidence in the dollar.

Dalewyn 2y ago

If a household can keep on borrowing money basically indefinitely to pay for expenditures that exceed revenue, that's basically what the US's (and many others' like Japan's) national budget is. To put it another way: America can afford to spend more than its revenue because people (Americans and otherwise, see the bond market) and countries (see prior) are (still) willing to lend more and more money. So what happens when that gravy train finally stops? Note that it is easy to default on our debts, most prominently by just not passing a budget to pay our debts. How we are going to pay all this debt off is a very real question that needs an answer eventually. Brushing it off as "we aren't a household budget" is peak denialism.

kube-system 2y ago
> If a household can keep on borrowing money basically indefinitely to pay for expenditures that exceed revenue If a household had an undefined credit limit and could take out debt to pay for any other debt, arbitrarily, and indefinitely, they'd be dumb to ever work a day in their life. But consumer creditors understand that their customers have essentially zero global power and will die someday, so the world of consumer debt doesn't work that way. > So what happens when that gravy train finally stops? You tell me, when is everyone in the world going to stop buying treasuries? I don't think there is a date. As long as the US has a stable and powerful economy, people with money will want somewhere to put it. > How we are going to pay all this debt off is a very real question that needs an answer eventually. The literal answer is that it all gets paid off all the time, according to the payment schedule of each individual security, but we continually reissue debt because there is literally zero reason not to.
- Dalewyn 2y ago
  > so the world of consumer debt doesn't work that way. Yes, but I laid out how national budgets and household budgets are fundamentally the same thing: The flow of cash coming in must meet or exceed the flow of cashing going out. I'm surprised this detail is completely lost on you. >I don't think there is a date. As long as the US has a stable and powerful economy, people with money will want somewhere to put it. That's the thing, isn't it? It's not an absolute guarantee that the US will continue to have a stable and powerful economy ("past performance is not a guarantee of future results", as any good investor will tell you). Lest we forget, US credit ratings were lowered following one of the many recent shutdowns we had, and the world at-large is slowly but certainly shifting from Pax Americana to Pax Sino. So again, what happens when the gravy train stops? We don't know when that is, we don't know if the train will stop in the first place, but we have to have a plan in hand because debts must be paid. >The literal answer is that it all gets paid off all the time, according to the payment schedule of each individual security, but we continually reissue debt because there is literally zero reason not to. Yes, the issue is where do we draw the line between reasonable amounts of debt incurred and unreasonable? Spending more money than we make is fiscal irresponsibility, borrowing money to make up for the shortfall is merely a workaround and borrowing money to pay back borrowed money is disturbing. Where do we consider we are borrowing too much? This line can and should be constantly reevaluated as necessary and appropriate, but first of all do we even have such a line? I don't think we do, which is why the national deficit is such a hot topic.

pclmulqdq 2y ago

If the US federal debt doesn't matter, why do we have taxes? Surely, the government should just debt-finance everything and then we would all be happier.

kube-system 2y ago
As I mentioned in other comments, debt-to-GDP does matter in as much as it loosely reflects the ability of the US to pay those obligations. So taxes+debt will always be able to fund the governments ability to do more than either of those individually.
- pclmulqdq 2y ago
  What is an acceptable debt-to-GDP ratio? Is over 100% acceptable in terms of ability to pay? I would have assumed that if that was your only metric, that the US at 122% would be far past your acceptable line.
  - dmurray 2y ago
    Debt and GDP are measured in different units (dollars, and dollars per year) so talking about a "debt-to-GDP ratio of 100%" is misleading because it sounds like there's some kind of threshold there. In fact a debt-to-GDP of 12 months or 14 months has no more special significance than the debt reaching 50 trillion dollars or your car reaching 100,000 miles.
  - kube-system 2y ago
    There's some concern that the US is playing with fire at the current ratio. However, Japan is now over 200% has been over 100% for 23 years. Despite their debt, investors aren't too worried about not getting paid. There's not really a hard and fast rule at which it becomes a problem, it is up to investors to decide. The total economic situation, monetary policy, and geopolitical situation will matter more than just the debt-to-GDP ratio. That ratio is mostly useful for comparing a country to itself over time.
    - 2y ago

elihu 2y ago

There's also the situation that if a household's finances are tight, they can often rectify the situation by not spending money on things that aren't essential. If a government imposes austerity measures during a recession, it can make the recession a lot worse, because that government spending was used directly or indirectly on goods and services, creating economic activity.