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This present issue has been caused by decades of bad fiscal policy by both parties: https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/

This present issue has been caused by decades of bad fiscal policy by both parties: https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S Here for example, the Congressional Budget Office, forecasted federal debt as a percent of GDP would continue to rise unchecked, back in 2023: https://www.cbo.gov/publication/59014 https://www.cbo.gov/publication/59014 The only presidential politician who sounded the alarm was Ross Perot, all the way back in the 90s. Lyn Alden has been talking about this for a long time. If you want a good intro to the problem, I’d recommend this article of hers: https://www.lynalden.com/september-2024-newsletter/ https://www.lynalden.com/september-2024-newsletter/

mindslight 1y ago
> This present issue has been caused by decades of bad fiscal policy by both parties So I completely agree with this statement, but I completely disagree with the metric you've chosen to illustrate it. "National debt" only exists due to the martingale of the Federal Reserve neutering the government's own monetary sovereignty. If we need to have an inflationary currency, then the new money should be spent by Congress on deliberate public goals - it's another tax. You can tell "national debt" is a dodgy metric because it combines two very different things into one scary-in-the-context-of-household-finances thing. The portion of "the debt" that is Treasuries held by the Federal Reserve is the lesser bit of monetary creation that was actually spent for public goals, in spite of the fake "fiscal responsibility" narrative. It is moot as far as debt goes - nothing actually happens if it compounds to infinity. The other portion of "the debt" that is held by private/foreign owners is the government functioning as a bank account of last resort, and could very well just be at the central bank instead. What we currently have is a dog and pony show to pretend that we don't have this centralized fountain of money, in order for the financial industry to keep getting the first cut of low interest loans (which have mostly gone into bidding up the asset bubbles).
- jameslk 1y ago
  This is basically a modern money theory view (correct me if I’m wrong)? It relies on discipline in the government to prevent inflation, e.g. raising taxes and cutting spending. But this is a similar problem to what we have already. There is no discipline, just short term thinking due to bad incentives. http://www.thomaspalley.com/docs/articles/macro_theory/mmt_response_to_wray.pdf http://www.thomaspalley.com/docs/articles/macro_theory/mmt_r...
  - mindslight 1y ago
    Perhaps, from the bits I've read? I have arrived at it coming from an Austrian/conservative economics perspective. It's clear that we have had profligate monetary creation for decades without corresponding high across-the-board price inflation. My older self is also willing to accept the orthodox response to Gresham's law whereby a deflationary currency would be quickly replaced with a different inflating one. So then the question becomes what are we spending the new money on? Presently that is mostly subsidized low-interest loans. If your concern is discipline, then it's easy enough to imagine a department similar to the Fed that comes up with a figure of how much new money to create for the right amount of average price inflation, with much discretionary spending by Congress being set in terms of that figure. That would surely be more responsible than the current system where one political team talks in terms of a pretend "fiscal responsibility" that only hamstrings Congress but doesn't actually affect monetary inflation.
hedora 1y ago
Clinton balanced the budget back in the 90’s. Biden and Obama’s terms were almost entirely defined by picking up economic disasters the previous administration caused. (2009 marked the beginning of the housing crisis, bank defaults due to deregulation and occupy wall street. 2021 was mid pandemic, after Trump spent years printing money with his zero interest rate stuff and tax cuts. He also fired the US funded team that China relied on for early pandemic detection and response.) So, claiming this problem is bipartisan is nonsense. I’ll blame the dems for lots of stuff, but wildly inflationary fiscal policies and intentionally destructive economic policies aren’t on the list.
- hedora 1y ago
  I should also add: Trump 2 inherited a stable economy with massive investments in US manufacturing. Early indications suggest he has already ruined it with tariffs, erratic jailing of skilled laborers and gutting of the government programs and agencies that were supporting the investment in the first place. The dollar has dropped 10% since inauguration day, inflation is way up and the deficit is ballooning. https://fred.stlouisfed.org/series/C307RC1Q027SBEA https://fred.stlouisfed.org/series/C307RC1Q027SBEA https://www.exchange-rates.org/converter/usd-eur https://www.exchange-rates.org/converter/usd-eur
- polski-g 1y ago
  In the 90s, the percentage of young to old was vastly different. SS/Medicare will bankrupt the country without reforms.
  - mindslight 1y ago
    What non-USD-denominated liabilities do SS/Medicare have? Those would be required in order for the country to go bankrupt.
    - hedora 1y ago
      Social Security is a trust fund and is set up so that it cannot lose money. Congress has been stealing money from the fund for years, but that’s not Social Security’s fault. Claiming it needs reform is like blaming account holders after the president of the bank embezzles their deposits.

mindslight 1y ago

> This present issue has been caused by decades of bad fiscal policy by both parties So I completely agree with this statement, but I completely disagree with the metric you've chosen to illustrate it. "National debt" only exists due to the martingale of the Federal Reserve neutering the government's own monetary sovereignty. If we need to have an inflationary currency, then the new money should be spent by Congress on deliberate public goals - it's another tax. You can tell "national debt" is a dodgy metric because it combines two very different things into one scary-in-the-context-of-household-finances thing. The portion of "the debt" that is Treasuries held by the Federal Reserve is the lesser bit of monetary creation that was actually spent for public goals, in spite of the fake "fiscal responsibility" narrative. It is moot as far as debt goes - nothing actually happens if it compounds to infinity. The other portion of "the debt" that is held by private/foreign owners is the government functioning as a bank account of last resort, and could very well just be at the central bank instead. What we currently have is a dog and pony show to pretend that we don't have this centralized fountain of money, in order for the financial industry to keep getting the first cut of low interest loans (which have mostly gone into bidding up the asset bubbles).

jameslk 1y ago
This is basically a modern money theory view (correct me if I’m wrong)? It relies on discipline in the government to prevent inflation, e.g. raising taxes and cutting spending. But this is a similar problem to what we have already. There is no discipline, just short term thinking due to bad incentives. http://www.thomaspalley.com/docs/articles/macro_theory/mmt_response_to_wray.pdf http://www.thomaspalley.com/docs/articles/macro_theory/mmt_r...
- mindslight 1y ago
  Perhaps, from the bits I've read? I have arrived at it coming from an Austrian/conservative economics perspective. It's clear that we have had profligate monetary creation for decades without corresponding high across-the-board price inflation. My older self is also willing to accept the orthodox response to Gresham's law whereby a deflationary currency would be quickly replaced with a different inflating one. So then the question becomes what are we spending the new money on? Presently that is mostly subsidized low-interest loans. If your concern is discipline, then it's easy enough to imagine a department similar to the Fed that comes up with a figure of how much new money to create for the right amount of average price inflation, with much discretionary spending by Congress being set in terms of that figure. That would surely be more responsible than the current system where one political team talks in terms of a pretend "fiscal responsibility" that only hamstrings Congress but doesn't actually affect monetary inflation.

hedora 1y ago

Clinton balanced the budget back in the 90’s. Biden and Obama’s terms were almost entirely defined by picking up economic disasters the previous administration caused. (2009 marked the beginning of the housing crisis, bank defaults due to deregulation and occupy wall street. 2021 was mid pandemic, after Trump spent years printing money with his zero interest rate stuff and tax cuts. He also fired the US funded team that China relied on for early pandemic detection and response.) So, claiming this problem is bipartisan is nonsense. I’ll blame the dems for lots of stuff, but wildly inflationary fiscal policies and intentionally destructive economic policies aren’t on the list.

hedora 1y ago
I should also add: Trump 2 inherited a stable economy with massive investments in US manufacturing. Early indications suggest he has already ruined it with tariffs, erratic jailing of skilled laborers and gutting of the government programs and agencies that were supporting the investment in the first place. The dollar has dropped 10% since inauguration day, inflation is way up and the deficit is ballooning. https://fred.stlouisfed.org/series/C307RC1Q027SBEA https://fred.stlouisfed.org/series/C307RC1Q027SBEA https://www.exchange-rates.org/converter/usd-eur https://www.exchange-rates.org/converter/usd-eur
polski-g 1y ago
In the 90s, the percentage of young to old was vastly different. SS/Medicare will bankrupt the country without reforms.
- mindslight 1y ago
  What non-USD-denominated liabilities do SS/Medicare have? Those would be required in order for the country to go bankrupt.
  - hedora 1y ago
    Social Security is a trust fund and is set up so that it cannot lose money. Congress has been stealing money from the fund for years, but that’s not Social Security’s fault. Claiming it needs reform is like blaming account holders after the president of the bank embezzles their deposits.