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Yes. * The US is able to get very cheap loans, which enables the US to throw around money when necessary to do things that are important (emergency projects, e

Yes. * The US is able to get very cheap loans, which enables the US to throw around money when necessary to do things that are important (emergency projects, economic stabilization, etc). * The US has an extraordinary power to influence global politics due to their ability to control trade and banking systems. * The US dollar is stable in part because of its status as a trade currency. And a stable currency is extremely important for citizens of a country. > Because it enables us to run unsustainable deficits? No, it it actually the primary reason that enables the US to run huge deficits sustainably. The currency is important enough to the world that giving a loan to the US is safer than giving one to another country whose currency is not as important.

rayiner 2y ago
But that sounds bad! Why should we be borrowing all this money from foreigners when we’re a rich country? What if I want the U.S. to build stuff, instead of moving money around and trying to “influence global politics.” I’d also love a sane domestic politics that acknowledges that borrowing money from foreigners every year because we can’t square our spending with our taxing is a bad thing.
- kube-system 2y ago
  > Why should we be borrowing all this money from foreigners when we’re a rich country? The crazy thing is, most of the money that the US borrows from is from their own citizens... not foreigners. I don't know why everyone presumes that US debt is mostly or entirely owed to other countries. It isn't.
  - deleted 2y ago
    [deleted]
  - 123pie123 2y ago
    Why doesn't the US just print money instead of having to borrow money then print it? does any other country do it this way?
    - maujun 2y ago
      It is related to the general definition of inflation. Those with existing assets (including retired folks in the US) theoretically "lose" in this situation. You can split the US and see inequality arise from printing: (1) US federal govt vs non-govt entities (2) US citizens with assets vs US citizens without assets, (4) people who received money first vs people who last bits of the "trickle down". In various cases, certain people "win" and others "lose"
      - 123pie123 2y ago
        So the current system of loans/ bonds generally benefits the rich (or people with assests)?
    - kube-system 2y ago
      Taking out a loan and promising to repay it is a voluntary exchange of value that markets are comfortable with -- to issue debt is to play by the rules. Printing money directly is just an exercise in pissing on the users of that currency. People don't want to use currencies that do that. When people buy US debt, they are implicitly validating their trust in the currency to be paid back later. Some other countries have simply tried to print their way out of deficits, usually it doesn't end well. Zimbabwe is my favorite example. https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
    - omikun 2y ago
      Because "borrowing" money 1.) recycles foreign dollars back into the US economy 2.) maintains foreign interest in accepting US dollars for goods and thus sustains US trade deficit 3.) prevents idle foreign US dollars that would other wise buying US assets that then inflates their price (eg real estate)
  - rayiner 2y ago
    Okay, but then doesn’t that undermine your point about the importance of the US being the world’s reserve currency? What does that matter if most of our debt is to ourselves anyway? Japan runs huge structural deficits and most is held by its own citizens.
    - ben_w 2y ago
      Reserve currencies are important for international trade, not just international loans. Being a reserve currency increases currency stability. Being stable makes the cost of all loans, including domestic loans, cheaper. Being stable also increases the use of a currency for reserve purposes.
- anon84873628 2y ago
  Indeed, there are disadvantages to being the world's reserve currency. This is known as the Tiffin Dilemma and was articulated in 60's: https://en.m.wikipedia.org/wiki/Triffin_dilemma https://en.m.wikipedia.org/wiki/Triffin_dilemma Basically this is why times have been great for industries like finance and tech in the US, but sucked for manufacturing. In turn leading to wealth inequality and, dare we say the class struggle that seem to have reached a boiling point.

rayiner 2y ago

But that sounds bad! Why should we be borrowing all this money from foreigners when we’re a rich country? What if I want the U.S. to build stuff, instead of moving money around and trying to “influence global politics.” I’d also love a sane domestic politics that acknowledges that borrowing money from foreigners every year because we can’t square our spending with our taxing is a bad thing.

kube-system 2y ago
> Why should we be borrowing all this money from foreigners when we’re a rich country? The crazy thing is, most of the money that the US borrows from is from their own citizens... not foreigners. I don't know why everyone presumes that US debt is mostly or entirely owed to other countries. It isn't.
- deleted 2y ago
  [deleted]
- 123pie123 2y ago
  Why doesn't the US just print money instead of having to borrow money then print it? does any other country do it this way?
  - maujun 2y ago
    It is related to the general definition of inflation. Those with existing assets (including retired folks in the US) theoretically "lose" in this situation. You can split the US and see inequality arise from printing: (1) US federal govt vs non-govt entities (2) US citizens with assets vs US citizens without assets, (4) people who received money first vs people who last bits of the "trickle down". In various cases, certain people "win" and others "lose"
    - 123pie123 2y ago
      So the current system of loans/ bonds generally benefits the rich (or people with assests)?
  - kube-system 2y ago
    Taking out a loan and promising to repay it is a voluntary exchange of value that markets are comfortable with -- to issue debt is to play by the rules. Printing money directly is just an exercise in pissing on the users of that currency. People don't want to use currencies that do that. When people buy US debt, they are implicitly validating their trust in the currency to be paid back later. Some other countries have simply tried to print their way out of deficits, usually it doesn't end well. Zimbabwe is my favorite example. https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
  - omikun 2y ago
    Because "borrowing" money 1.) recycles foreign dollars back into the US economy 2.) maintains foreign interest in accepting US dollars for goods and thus sustains US trade deficit 3.) prevents idle foreign US dollars that would other wise buying US assets that then inflates their price (eg real estate)
- rayiner 2y ago
  Okay, but then doesn’t that undermine your point about the importance of the US being the world’s reserve currency? What does that matter if most of our debt is to ourselves anyway? Japan runs huge structural deficits and most is held by its own citizens.
  - ben_w 2y ago
    Reserve currencies are important for international trade, not just international loans. Being a reserve currency increases currency stability. Being stable makes the cost of all loans, including domestic loans, cheaper. Being stable also increases the use of a currency for reserve purposes.
anon84873628 2y ago
Indeed, there are disadvantages to being the world's reserve currency. This is known as the Tiffin Dilemma and was articulated in 60's: https://en.m.wikipedia.org/wiki/Triffin_dilemma https://en.m.wikipedia.org/wiki/Triffin_dilemma Basically this is why times have been great for industries like finance and tech in the US, but sucked for manufacturing. In turn leading to wealth inequality and, dare we say the class struggle that seem to have reached a boiling point.