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The rest of the world pays for US defense through investing in US treasuries, which they are moving away from for obvious reasons. The US isn’t providing defens

The rest of the world pays for US defense through investing in US treasuries, which they are moving away from for obvious reasons. The US isn’t providing defense for free, they are compensated for it by the world buying their debt at favorable yields considering the debt load (~120% of GDP as of this comment). https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEBTN https://fred.stlouisfed.org/series/GFDEBTN

pfannkuchen 9mo ago
I don’t really understand the advantage of doing it this way vs having them pay directly. Re debt loads - does the debt load actually materially affect default risk in this case? It’s not like US bonds are officially rated as high risk, at least. Debt to GDP is one thing but without a comparison to other bonds and their associated debt to GDP and a relationship inferred from that data it doesn’t really say anything in a vacuum. Why would it be done this way instead of just paying directly? As opposed to the more straightforward explanation of US bonds just having a favorable payout to risk ratio vs other options. It just smells like some kind of conspiratorial thinking and I’m not sure if it actually adds up. Honestly asking by the way, I haven’t seen anyone spell out the theory and it just seems quite hand wavey to me.
applicative 9mo ago
Your argument needs ‘public debt /held by foreigners/ as percent of gdp’, I think? Or rather ‘public debt /held by foreigners to whom US provides defense/ as percent of gdp’ Then you are down to Japan.
- toomuchtodo 9mo ago
  Europe was investing €300B/year in the US. That capital is likely better invested domestically in Europe, and the direction Europe is headed. https://news.ycombinator.com/item?id=46722594 https://news.ycombinator.com/item?id=46722594 https://old.reddit.com/r/europe/comments/1qjtvtl/macron_says_300_billion_in_european_savings_flown/ https://old.reddit.com/r/europe/comments/1qjtvtl/macron_says...

pfannkuchen 9mo ago

I don’t really understand the advantage of doing it this way vs having them pay directly. Re debt loads - does the debt load actually materially affect default risk in this case? It’s not like US bonds are officially rated as high risk, at least. Debt to GDP is one thing but without a comparison to other bonds and their associated debt to GDP and a relationship inferred from that data it doesn’t really say anything in a vacuum. Why would it be done this way instead of just paying directly? As opposed to the more straightforward explanation of US bonds just having a favorable payout to risk ratio vs other options. It just smells like some kind of conspiratorial thinking and I’m not sure if it actually adds up. Honestly asking by the way, I haven’t seen anyone spell out the theory and it just seems quite hand wavey to me.

applicative 9mo ago

Your argument needs ‘public debt /held by foreigners/ as percent of gdp’, I think? Or rather ‘public debt /held by foreigners to whom US provides defense/ as percent of gdp’ Then you are down to Japan.

toomuchtodo 9mo ago
Europe was investing €300B/year in the US. That capital is likely better invested domestically in Europe, and the direction Europe is headed. https://news.ycombinator.com/item?id=46722594 https://news.ycombinator.com/item?id=46722594 https://old.reddit.com/r/europe/comments/1qjtvtl/macron_says_300_billion_in_european_savings_flown/ https://old.reddit.com/r/europe/comments/1qjtvtl/macron_says...