3 ms·
> 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 t
by 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 agoWhy 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 agoIt 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 agoSo the current system of loans/ bonds generally benefits the rich (or people with assests)?
- kube-system 2y agoTaking 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 agoBecause "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 agoOkay, 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 agoReserve 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.