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> but indebtedness and the future having to pay up for the spending of the past The debt is denominated USD, the US mint could hypothetically print a trillion

> but indebtedness and the future having to pay up for the spending of the past The debt is denominated USD, the US mint could hypothetically print a trillion dollar note and settle the debts. Doing so would wreck trust in the existing system - so it's not just about the debt, but people tend to gloss over how much control the US has over the debt, so the indebtedness (in USD) is a relatively small factor overall.

s1artibartfast 1y ago
Inflating away the debt is a default in all but name, with the same results. If I pay you 50% of what I owe, or 100% reset to half the value. Both burn creditors and ruin credit.
- alexey-salmin 1y ago
  While there are similarities, I think it's still very different. Default by itself doesn't make the debt disappear, you just stop serving it for a while. Then you may negotiate some cuts with creditors in exchange for a promise to repay the rest but there's no way they just forgive 100% of it, this makes no economic sense. If you want to get out of the debt completely you need not only a default but bankruptcy and dissolution which is rather painful at the state level. An example would be the Russian revolution and civil war where among other things the Bolsheviks refused to recognize tsar's debts claiming it's a new state now.
JumpCrisscross 1y ago
> Doing so would wreck trust in the existing system It would cause immediate hyperinflation. Those notes would go to bondholders who would use it to buy things because holding billions in cash printed by a defaulter isn’t anyone’s cup of tea. So anyone willing to take even absurd amounts of dollars for non-dollar assets is offered absurd amounts. Which means those who didn’t get the helicopter drop find their currency, savings and wages worthless in real terms.
- david927 1y ago
  And this is a timely discussion. Yesterday the Fed held an auction for US Bonds and no one showed up, so the Fed bought it all.
  - JumpCrisscross 1y ago
    Source? (I’ve been on holiday.)
    - JumpCrisscross 1y ago
      As suspected, “the Fed held an auction for US Bonds and no one showed up, so the Fed bought it all” is crap. The Treasury held an auction. It was weak but didn’t fail. The Fed, as required by law, did not participate in the auction.
coliveira 1y ago
Do you understand what $100T printed overnight would cause to the economy? The price of everything starting from assets would skyrocket and in a few months we could be living in hyper inflation.
- alexey-salmin 1y ago
  Yes, but it's a temporary turbulence that lasts for a few years, then you can rebound. The debt on the other hand can last for decades taxing the economy more and more. If the cost of servicing the debt crosses a certain threshold there can be no rebound, not without a default. Effectively when printing money you reset both the debt and the savings. If your debt is much bigger than savings it becomes a good deal.
  - coliveira 1y ago
    Ask Argentina how this kind of experiment is going...
    - alexey-salmin 1y ago
      They didn't have the luxury to inflate-away their own debt.
      - coliveira 1y ago
        The US won't have it either for much longer, investors are not so stupid as people think.
  - fakedang 1y ago
    The US economy still hasn't "rebounded" from the effects of the 2008 recession, forget COVID, even after the bailouts and the offloading of the US debt onto Europe, Japan and China, even though that was in the order of single digit trillions. I don't know where people get the idea that adding a hundred trillion more is where you can cure the deficit. Especially when this time around, you're not going to have EU, China and Japan to baghold for you. > when printing money you reset both the debt and the savings. If your debt is much bigger than savings it becomes a good deal. Huh how? When printing money, you make your ability to pay further down the line even more tenuous. I don't know how people can't see the obvious parallels between money-printing and currency-debasing of the Roman times (which led to the economic downfall of that empire). The only way to cure a deficit while retaining your trustworthiness is to pay it down one way or another.That requires intense taxation for a few years on the rich and corporations alike, and using those proceeds to pay it off. And if possible, to loot someone's gold reserves or something, although that would destroy your trustworthiness on all other fronts and equate you to Nazi Germany.
hunglee2 1y ago
The US has done this before, more than a few times. In fact, de-globalisation can be traced directly to the GFC, where the US did indeed print billions to bail out US banks and auto, then getting Japan and China to step up and buy UST to recapitalise the economy. PBoC in 2013 said 'no more' and launched BRI

s1artibartfast 1y ago

Inflating away the debt is a default in all but name, with the same results. If I pay you 50% of what I owe, or 100% reset to half the value. Both burn creditors and ruin credit.

alexey-salmin 1y ago
While there are similarities, I think it's still very different. Default by itself doesn't make the debt disappear, you just stop serving it for a while. Then you may negotiate some cuts with creditors in exchange for a promise to repay the rest but there's no way they just forgive 100% of it, this makes no economic sense. If you want to get out of the debt completely you need not only a default but bankruptcy and dissolution which is rather painful at the state level. An example would be the Russian revolution and civil war where among other things the Bolsheviks refused to recognize tsar's debts claiming it's a new state now.

JumpCrisscross 1y ago

> Doing so would wreck trust in the existing system It would cause immediate hyperinflation. Those notes would go to bondholders who would use it to buy things because holding billions in cash printed by a defaulter isn’t anyone’s cup of tea. So anyone willing to take even absurd amounts of dollars for non-dollar assets is offered absurd amounts. Which means those who didn’t get the helicopter drop find their currency, savings and wages worthless in real terms.

david927 1y ago
And this is a timely discussion. Yesterday the Fed held an auction for US Bonds and no one showed up, so the Fed bought it all.
- JumpCrisscross 1y ago
  Source? (I’ve been on holiday.)
  - JumpCrisscross 1y ago
    As suspected, “the Fed held an auction for US Bonds and no one showed up, so the Fed bought it all” is crap. The Treasury held an auction. It was weak but didn’t fail. The Fed, as required by law, did not participate in the auction.

coliveira 1y ago

Do you understand what $100T printed overnight would cause to the economy? The price of everything starting from assets would skyrocket and in a few months we could be living in hyper inflation.

alexey-salmin 1y ago
Yes, but it's a temporary turbulence that lasts for a few years, then you can rebound. The debt on the other hand can last for decades taxing the economy more and more. If the cost of servicing the debt crosses a certain threshold there can be no rebound, not without a default. Effectively when printing money you reset both the debt and the savings. If your debt is much bigger than savings it becomes a good deal.
- coliveira 1y ago
  Ask Argentina how this kind of experiment is going...
  - alexey-salmin 1y ago
    They didn't have the luxury to inflate-away their own debt.
    - coliveira 1y ago
      The US won't have it either for much longer, investors are not so stupid as people think.
- fakedang 1y ago
  The US economy still hasn't "rebounded" from the effects of the 2008 recession, forget COVID, even after the bailouts and the offloading of the US debt onto Europe, Japan and China, even though that was in the order of single digit trillions. I don't know where people get the idea that adding a hundred trillion more is where you can cure the deficit. Especially when this time around, you're not going to have EU, China and Japan to baghold for you. > when printing money you reset both the debt and the savings. If your debt is much bigger than savings it becomes a good deal. Huh how? When printing money, you make your ability to pay further down the line even more tenuous. I don't know how people can't see the obvious parallels between money-printing and currency-debasing of the Roman times (which led to the economic downfall of that empire). The only way to cure a deficit while retaining your trustworthiness is to pay it down one way or another.That requires intense taxation for a few years on the rich and corporations alike, and using those proceeds to pay it off. And if possible, to loot someone's gold reserves or something, although that would destroy your trustworthiness on all other fronts and equate you to Nazi Germany.

hunglee2 1y ago

The US has done this before, more than a few times. In fact, de-globalisation can be traced directly to the GFC, where the US did indeed print billions to bail out US banks and auto, then getting Japan and China to step up and buy UST to recapitalise the economy. PBoC in 2013 said 'no more' and launched BRI