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As an American, I hear "8 trillion dollars in debt" and it seems like monopoly money. Nobody lets you borrow 8 trillion dollars without paying some of it back.

As an American, I hear "8 trillion dollars in debt" and it seems like monopoly money. Nobody lets you borrow 8 trillion dollars without paying some of it back. As far as I'm concerned, it's a made-up number, it's only gotten bigger every moment I've been alive, and nothing ever comes of it. When the universe dies, the US national debt will be at one gajillion...

blitzar 7mo ago
Actually bill clinton paid some of it back (and created 22 million new jobs and an internship). also the us debt is 38 trillion
- rationalist 7mo ago
  also the U.S. unfunded liabilities is over 100 trillion* * That was the number that I first heard, but a quick search shows it's estimated anywhere from 80 trillion to 210 trillion dollars.
- gavinray 7mo ago
  > also the us debt is 38 trillion It's sort of like being given one fine that's $100, and one fine that's $250 billion. You may as well keep increasing the number of second fine, because in no earthly circumstance will I ever be able to pay it back.
  - coldtea 7mo ago
    >You may as well keep increasing the number of second fine, because in no earthly circumstance will I ever be able to pay it back. When that's the case, you'd be surprised what happens when the breaking point comes. Or do you think countries haven't gone bankrupt before?
  - lithocarpus 7mo ago
    mmm.. A better analogy would be this: You have $100k income, and $800k debt, on which you have to pay ~$40,000 interest every year. That takes up a good chunk of your income. But if the debt doubled, at the same interest rate, you could really be in trouble.
    - darth_avocado 7mo ago
      If I pay $40K interest every year on my $100K salary, I’m in trouble. If I owe $80K in interest every year on my $100K salary, the bank is in trouble.
      - hyperhello 7mo ago
        Or are they, really?
      - moi2388 7mo ago
        Not if your income was partly “getting loans from the bank” and now the bank won’t lend you money anymore, which is more in line with what the debt means for the us.
  - fakedang 7mo ago
    > because in no earthly circumstance will I ever be able to pay it back. Well at that point, all hell breaks loose - that's the Weimar story all over again. The minute the US isn't able to project power globally, and the minute the Gulf states shift even a single transaction away from the petrodollar, the USD is finished. At that point, it might not make sense for them to accept the USD or dollar-denominated debt, either because of constant devaluation or the pointlessness of holding onto US Treasuries (because the US won't pay its debt). No one would buy US debt as a safe haven any more, which means the US won't be able to fund its budget.
    - darth_avocado 7mo ago
      You’re missing the magic sauce: every other government is also equally fiscally irresponsible.
      - fakedang 7mo ago
        Doubt. Western governments sure, but not Asian governments, who are the majority buyers of Middle Eastern oil.
        Gud 7mo ago
        And also not all western governments..
    - kasey_junk 7mo ago
      You’ve been able to buy gulf oil in non-us currency all along. You can buy it in yuan, pounds, euros etc. Dollar hegemony isn’t because of the petrodollar. It’s the other way around. The oil states throw off huge amounts of profit and oil is such a big market you need the dollars reach to service it.
      - fakedang 7mo ago
        You can't buy them off the bat from a petrostate. Heck, even China had to enter multi-year special negotiations with Saudi Arabia to even get a batch of oil sold in yuan terms. Gaddafi and Saddam Hussein were the two proponents of selling oil in euros, and look where that led them. The spot market is different but that's not where most of the world's oil is sold. > The oil states throw off huge amounts of profit and oil is such a big market you need the dollars reach to service it. The oil states prefer dollars (and have pegged their currency to the dollar) solely because of a number of historical decisions that enabled dollar hegemony, which made the oil states peg their currency to the dollar and prefer the USD. That's changing now, but only very recently and at a snail's pace.
- quickthrowman 7mo ago
  Clinton didn’t do much of anything to pay down the total amount of outstanding debt, but he (and Congress!) did have positive effects by balancing the government’s budget. Outstanding US government debt chart from FRED: https://fred.stlouisfed.org/series/GFDEBTN https://fred.stlouisfed.org/series/GFDEBTN The budget was balanced and/or a surplus for the years from 1997-2001, which meant a lot less money was borrowed (or fewer bonds were sold, depending on how you want to look at it.) The percentage of public debt to GDP also fell substantially from 1993-2000, which is a better metric than gross debt levels anyways. Here’s a chart of that from FRED: https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S
- pinkmuffinere 7mo ago
  > (and created 22 million new jobs and an internship) I appreciate the humor you hid in this aside.
rcxdude 7mo ago
The US government does spent a pretty large amount of its budget paying some of the debt back. More now that there's been multiple brinkmanship games of threatening a default for political points.
- rationalist 7mo ago
  The interest on the debt alone, is 1 trillion dollars a year.
  - rcxdude 7mo ago
    And that's at basically the lowest interest you can possibly get a loan.
    - rationalist 7mo ago
      The U.S. GDP is about 31 trillion, so 3 percent of that isn't bad, as long as we can continue to grow more than that, forever. Federal Outlays: Interest as Percent of Gross Domestic Product (FYOIGDA188S) https://fred.stlouisfed.org/series/FYOIGDA188S https://fred.stlouisfed.org/series/FYOIGDA188S Although according the the article, the interest payments account for one fifth of revenue, projected to be one quarter in ten years.
      - izacus 7mo ago
        The core of the issue is that the new debt isn't taken at low 3% interest right? So the servicing costs are rising faster than the economy is growing.
      - coldtea 7mo ago
        >as long as we can continue to grow more than that, forever. "Being chased while on foot by a pack of hungry cheetahs is not that bad, as long as we can keep our distance"
        kelseyfrog 7mo ago
deleted 7mo ago
[deleted]
liveoneggs 7mo ago
it means we gave $8T to someone and slowly pay it. https://www.youtube.com/watch?v=KLQlOK3AWSs https://www.youtube.com/watch?v=KLQlOK3AWSs
jfengel 7mo ago
We pay it back all the time. Our debt exists in the form of Treasury bills and bonds, which are dutifully paid when they mature (anywhere from a month to 30 years later). The total debt goes up because we keep issuing new bonds. But bondholders are satisfied that we do pay back our debts, so they're willing to loan us more money. They're so confident that we get the lowest interest rates; every other interest rate is pegged to that. It's important not to be misled by analogy to personal debt. You will die some day; countries do not. If somebody loans you money they have to take into account if you will die before you pay it off. That's not a problem for the country. (Or a company; many corporations also have permanently revolving debt.) Now, if we ever fail to pay back a debt, that entire house of cards collapses very, very quickly. We're currently at no risk of that; we make enough money to pay our debts as they come due. But a government could decide to fix the "debt problem" by failing to pay them, and that would be so unbelievably bad that it's hard to imagine why politicians even suggest it.

blitzar 7mo ago

Actually bill clinton paid some of it back (and created 22 million new jobs and an internship). also the us debt is 38 trillion

rationalist 7mo ago
also the U.S. unfunded liabilities is over 100 trillion* * That was the number that I first heard, but a quick search shows it's estimated anywhere from 80 trillion to 210 trillion dollars.
gavinray 7mo ago
> also the us debt is 38 trillion It's sort of like being given one fine that's $100, and one fine that's $250 billion. You may as well keep increasing the number of second fine, because in no earthly circumstance will I ever be able to pay it back.
- coldtea 7mo ago
  >You may as well keep increasing the number of second fine, because in no earthly circumstance will I ever be able to pay it back. When that's the case, you'd be surprised what happens when the breaking point comes. Or do you think countries haven't gone bankrupt before?
- lithocarpus 7mo ago
  mmm.. A better analogy would be this: You have $100k income, and $800k debt, on which you have to pay ~$40,000 interest every year. That takes up a good chunk of your income. But if the debt doubled, at the same interest rate, you could really be in trouble.
  - darth_avocado 7mo ago
    If I pay $40K interest every year on my $100K salary, I’m in trouble. If I owe $80K in interest every year on my $100K salary, the bank is in trouble.
    - hyperhello 7mo ago
      Or are they, really?
    - moi2388 7mo ago
      Not if your income was partly “getting loans from the bank” and now the bank won’t lend you money anymore, which is more in line with what the debt means for the us.
- fakedang 7mo ago
  > because in no earthly circumstance will I ever be able to pay it back. Well at that point, all hell breaks loose - that's the Weimar story all over again. The minute the US isn't able to project power globally, and the minute the Gulf states shift even a single transaction away from the petrodollar, the USD is finished. At that point, it might not make sense for them to accept the USD or dollar-denominated debt, either because of constant devaluation or the pointlessness of holding onto US Treasuries (because the US won't pay its debt). No one would buy US debt as a safe haven any more, which means the US won't be able to fund its budget.
  - darth_avocado 7mo ago
    You’re missing the magic sauce: every other government is also equally fiscally irresponsible.
    - fakedang 7mo ago
      Doubt. Western governments sure, but not Asian governments, who are the majority buyers of Middle Eastern oil.
      - Gud 7mo ago
        And also not all western governments..
  - kasey_junk 7mo ago
    You’ve been able to buy gulf oil in non-us currency all along. You can buy it in yuan, pounds, euros etc. Dollar hegemony isn’t because of the petrodollar. It’s the other way around. The oil states throw off huge amounts of profit and oil is such a big market you need the dollars reach to service it.
    - fakedang 7mo ago
      You can't buy them off the bat from a petrostate. Heck, even China had to enter multi-year special negotiations with Saudi Arabia to even get a batch of oil sold in yuan terms. Gaddafi and Saddam Hussein were the two proponents of selling oil in euros, and look where that led them. The spot market is different but that's not where most of the world's oil is sold. > The oil states throw off huge amounts of profit and oil is such a big market you need the dollars reach to service it. The oil states prefer dollars (and have pegged their currency to the dollar) solely because of a number of historical decisions that enabled dollar hegemony, which made the oil states peg their currency to the dollar and prefer the USD. That's changing now, but only very recently and at a snail's pace.
quickthrowman 7mo ago
Clinton didn’t do much of anything to pay down the total amount of outstanding debt, but he (and Congress!) did have positive effects by balancing the government’s budget. Outstanding US government debt chart from FRED: https://fred.stlouisfed.org/series/GFDEBTN https://fred.stlouisfed.org/series/GFDEBTN The budget was balanced and/or a surplus for the years from 1997-2001, which meant a lot less money was borrowed (or fewer bonds were sold, depending on how you want to look at it.) The percentage of public debt to GDP also fell substantially from 1993-2000, which is a better metric than gross debt levels anyways. Here’s a chart of that from FRED: https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S
pinkmuffinere 7mo ago
> (and created 22 million new jobs and an internship) I appreciate the humor you hid in this aside.

rcxdude 7mo ago

The US government does spent a pretty large amount of its budget paying some of the debt back. More now that there's been multiple brinkmanship games of threatening a default for political points.

rationalist 7mo ago
The interest on the debt alone, is 1 trillion dollars a year.
- rcxdude 7mo ago
  And that's at basically the lowest interest you can possibly get a loan.
  - rationalist 7mo ago
    The U.S. GDP is about 31 trillion, so 3 percent of that isn't bad, as long as we can continue to grow more than that, forever. Federal Outlays: Interest as Percent of Gross Domestic Product (FYOIGDA188S) https://fred.stlouisfed.org/series/FYOIGDA188S https://fred.stlouisfed.org/series/FYOIGDA188S Although according the the article, the interest payments account for one fifth of revenue, projected to be one quarter in ten years.
    - izacus 7mo ago
      The core of the issue is that the new debt isn't taken at low 3% interest right? So the servicing costs are rising faster than the economy is growing.
    - coldtea 7mo ago
      >as long as we can continue to grow more than that, forever. "Being chased while on foot by a pack of hungry cheetahs is not that bad, as long as we can keep our distance"
      - kelseyfrog 7mo ago

deleted 7mo ago

[deleted]

liveoneggs 7mo ago

it means we gave $8T to someone and slowly pay it. https://www.youtube.com/watch?v=KLQlOK3AWSs https://www.youtube.com/watch?v=KLQlOK3AWSs

jfengel 7mo ago

We pay it back all the time. Our debt exists in the form of Treasury bills and bonds, which are dutifully paid when they mature (anywhere from a month to 30 years later). The total debt goes up because we keep issuing new bonds. But bondholders are satisfied that we do pay back our debts, so they're willing to loan us more money. They're so confident that we get the lowest interest rates; every other interest rate is pegged to that. It's important not to be misled by analogy to personal debt. You will die some day; countries do not. If somebody loans you money they have to take into account if you will die before you pay it off. That's not a problem for the country. (Or a company; many corporations also have permanently revolving debt.) Now, if we ever fail to pay back a debt, that entire house of cards collapses very, very quickly. We're currently at no risk of that; we make enough money to pay our debts as they come due. But a government could decide to fix the "debt problem" by failing to pay them, and that would be so unbelievably bad that it's hard to imagine why politicians even suggest it.