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Why does it matter? Government learned during covid they can spend there way out of a crash.

by KumaBear 10mo ago

IAmBroom 10mo ago
Stay in school. When the history prof gets to the Great Depression, pay attention.
- tharmas 10mo ago
  Private debt caused the Great Depression.
  - IAmBroom 10mo ago
    Yes, but we're discussing solutions, not causes. The government spent money to pull the country out of it.
Hasz 10mo ago
...and in 2008. sadly, it might actually work: https://bipartisanpolicy.org/article/the-deficit-in-a-downturn-how-have-recessions-impacted-the-federal-budget/ https://bipartisanpolicy.org/article/the-deficit-in-a-downtu... https://www.frbsf.org/research-and-insights/publications/economic-letter/2021/02/can-government-spending-help-to-escape-recessions/ https://www.frbsf.org/research-and-insights/publications/eco... The hard part is reigning that spending in during non-crash years (see the uproar over removing the temporary COVID subsidies) in a way that is not political suicide. At the Federal level, there is zero incentive to not run a deficit.
79a6ed87 10mo ago
But since then the other countries learned that the US government could weaponize their USD holdings if they don't align. Central banks started accumulating gold to counter this. Also, debt market is not the same as it was 5 years ago, Japan now has inflation (and they hold the biggest bag of US debt). To add to this, USD lost 10% of its value this 2025 according to the DXY index. To be fair, it pretty much went to what it was worth before 2022, but the Fed has to be careful anyway. Many things happened since 2020. It's almost 2026.
- IAmBroom 10mo ago
  Wow, you weren't kidding. My impression of the market is outdated! Japan is facing real inflation in the last 3 years, at rates not seen since the 1990s. https://www.statista.com/statistics/270095/inflation-rate-in-japan/ https://www.statista.com/statistics/270095/inflation-rate-in... However, it only owns 3% of US debt; they are the largest non-US holder, but still a marginal holder. Basically, they deseated China for that spot of "Biggest But Still Small US 'Lender'". Both together are dwarfed by pensions, 401ks, and other US buyers and institutions. https://www.visualcapitalist.com/charted-heres-who-owns-u-s-debt/ https://www.visualcapitalist.com/charted-heres-who-owns-u-s-...
- KumaBear 10mo ago
  Oh I agree with you. But my point was it won’t stop them from trying damned the consequences.

Why does it matter? Government learned during covid they can spend there way out of a crash.

IAmBroom 10mo ago

Stay in school. When the history prof gets to the Great Depression, pay attention.

tharmas 10mo ago
Private debt caused the Great Depression.
- IAmBroom 10mo ago
  Yes, but we're discussing solutions, not causes. The government spent money to pull the country out of it.

Hasz 10mo ago

...and in 2008. sadly, it might actually work: https://bipartisanpolicy.org/article/the-deficit-in-a-downturn-how-have-recessions-impacted-the-federal-budget/ https://bipartisanpolicy.org/article/the-deficit-in-a-downtu... https://www.frbsf.org/research-and-insights/publications/economic-letter/2021/02/can-government-spending-help-to-escape-recessions/ https://www.frbsf.org/research-and-insights/publications/eco... The hard part is reigning that spending in during non-crash years (see the uproar over removing the temporary COVID subsidies) in a way that is not political suicide. At the Federal level, there is zero incentive to not run a deficit.

79a6ed87 10mo ago

But since then the other countries learned that the US government could weaponize their USD holdings if they don't align. Central banks started accumulating gold to counter this. Also, debt market is not the same as it was 5 years ago, Japan now has inflation (and they hold the biggest bag of US debt). To add to this, USD lost 10% of its value this 2025 according to the DXY index. To be fair, it pretty much went to what it was worth before 2022, but the Fed has to be careful anyway. Many things happened since 2020. It's almost 2026.

IAmBroom 10mo ago
Wow, you weren't kidding. My impression of the market is outdated! Japan is facing real inflation in the last 3 years, at rates not seen since the 1990s. https://www.statista.com/statistics/270095/inflation-rate-in-japan/ https://www.statista.com/statistics/270095/inflation-rate-in... However, it only owns 3% of US debt; they are the largest non-US holder, but still a marginal holder. Basically, they deseated China for that spot of "Biggest But Still Small US 'Lender'". Both together are dwarfed by pensions, 401ks, and other US buyers and institutions. https://www.visualcapitalist.com/charted-heres-who-owns-u-s-debt/ https://www.visualcapitalist.com/charted-heres-who-owns-u-s-...
KumaBear 10mo ago
Oh I agree with you. But my point was it won’t stop them from trying damned the consequences.