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IIRC, the US debt is at 39 trillion right now, with no plan to pay it back. Which is logical, because it's unpayable. There's no way in the world that will ev

IIRC, the US debt is at 39 trillion right now, with no plan to pay it back. Which is logical, because it's unpayable. There's no way in the world that will ever be paid back. I still haven't seen anybody properly analyze how high the debt can go before it actually can't go any higher, but we're going to find out.

pfannkuchen 7mo ago
Monetize it or default are the only options I think. Monetizing affects everyone while default only (directly) affects bond holders. Monetizing is much easier to obfuscate though so that is probably what will happen.
- nradov 7mo ago
  Perhaps, but the monetization would have to be pretty extreme. And that would send interest rates to the moon, making further borrowing difficult. While these things are impossible to predict, my guess is that in a couple decades the government will do some sort of technical default. Force Treasury bond holders to exchange their current holdings at par for new bonds with longer maturities and artificially low interest rates. Politicians will be able to claim that no one has lost money since the nominal bond values will remain the same even though the market values will be much lower. The other thing I expect to happen is that the government will force retirement accounts (both defined benefit pension plans and defined contribution 401k plans) to purchase Treasury bonds. Because of course they're so much "safer" for retirees than risky stocks.
Ancalagon 7mo ago
Without any funny business (meaning no re-valuation of the debt, which I guess there are strategies for) and assuming an interest rate on the debt of between 3-5%, I figured between 10-20 years before the interest payments eat up most essential services.
deleted 7mo ago
[deleted]
triceratops 7mo ago
Private US wealth is in the range of 200-400 trillion. A blanket 1% annual wealth tax would wipe out the debt in 10-20 years. 75% of US debt is held domestically. So most of that money will go back into the country. It's highly unlikely a lucrative revenue stream like this would ever go to paying off the debt. But theoretically the money exists.
- carefree-bob 7mo ago
  The problem is that the constitution doesn't allow for a wealth tax. If you remember, we had to pass an amendment to be able to levy a tax on income, and that amendment is clear in that it only applies to income. Interestingly, it was also promised to be only 1% or so on the richest households, and it has become, er, different. But more important to the point, as the government already taxes about 20% of income, that is equivalent to holding about 20% of the wealth, as the wealth is just an income generating device and the value of the wealth is the flow of income it generates, of which 20% is already taxed. What I'd like to know is why people are obsessed about stocks and flows in completely different ways. For example, not caring about the deficit but worrying about the debt, or vice versa, or focusing on taxing wealth but not really caring about taxing income. I think the idea of taxing income makes a lot of sense, and don't want the government to try to value assets, particularly illiquid assets. And if it was up to me, I would dramatically simplify the tax code to eliminate all deductions and tax all income at the same rate, regardless of source. No reason to have one tax rate for carried interest, another tax rate for dividend payments, a third tax rate for wage income. Treat all income the same, and apply a progressive rate to the total income. Your tax form should not be more than a page long.
  - triceratops 7mo ago
    > What I'd like to know is why people are obsessed about stocks and flows in completely different ways...focusing on taxing wealth but not really caring about taxing income. Because wealth grows faster than income. r > g It's easy, especially for rich people with lots of wealth, to have low taxable income. https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century#Contents https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce... > not caring about the deficit but worrying about the debt Are there people like that? The debt is the sum of all deficits.
no-name-here 7mo ago
> it's unpayable The deficit/debt exist because US tax rates (even including fed+state+local) are so low compared to every other major advanced economy in the world, even before last year's "One Big Beautiful (Ugly?) Bill". In fact, the US could have raised rates by more than 15% and still been the lowest. https://www.imf.org/en/Publications/WEO/weo-database/2025/april/weo-report?c=156,132,134,136,158,112,111,&s=GGR_NGDP,&sy=2025&ey=2025&ssd=1 https://www.imf.org/en/Publications/WEO/weo-database/2025/ap... If US tax rates were even just the average among other G7 countries, it would be trillions more than the deficit per year. (The US also has the lowest spending (fed+state+local) among them as well, but even though our spending is the lowest among them, the tax rates are so very low they're still not enough to cover even the lower spending compared to them. https://www.imf.org/en/Publications/WEO/weo-database/2025/April/weo-report?c=156,132,134,136,158,112,111,&s=GGX_NGDP,&sy=2025&ey=2025&ssd=1 https://www.imf.org/en/Publications/WEO/weo-database/2025/Ap... )

pfannkuchen 7mo ago

Monetize it or default are the only options I think. Monetizing affects everyone while default only (directly) affects bond holders. Monetizing is much easier to obfuscate though so that is probably what will happen.

nradov 7mo ago
Perhaps, but the monetization would have to be pretty extreme. And that would send interest rates to the moon, making further borrowing difficult. While these things are impossible to predict, my guess is that in a couple decades the government will do some sort of technical default. Force Treasury bond holders to exchange their current holdings at par for new bonds with longer maturities and artificially low interest rates. Politicians will be able to claim that no one has lost money since the nominal bond values will remain the same even though the market values will be much lower. The other thing I expect to happen is that the government will force retirement accounts (both defined benefit pension plans and defined contribution 401k plans) to purchase Treasury bonds. Because of course they're so much "safer" for retirees than risky stocks.

Ancalagon 7mo ago

Without any funny business (meaning no re-valuation of the debt, which I guess there are strategies for) and assuming an interest rate on the debt of between 3-5%, I figured between 10-20 years before the interest payments eat up most essential services.

deleted 7mo ago

[deleted]

triceratops 7mo ago

Private US wealth is in the range of 200-400 trillion. A blanket 1% annual wealth tax would wipe out the debt in 10-20 years. 75% of US debt is held domestically. So most of that money will go back into the country. It's highly unlikely a lucrative revenue stream like this would ever go to paying off the debt. But theoretically the money exists.

carefree-bob 7mo ago
The problem is that the constitution doesn't allow for a wealth tax. If you remember, we had to pass an amendment to be able to levy a tax on income, and that amendment is clear in that it only applies to income. Interestingly, it was also promised to be only 1% or so on the richest households, and it has become, er, different. But more important to the point, as the government already taxes about 20% of income, that is equivalent to holding about 20% of the wealth, as the wealth is just an income generating device and the value of the wealth is the flow of income it generates, of which 20% is already taxed. What I'd like to know is why people are obsessed about stocks and flows in completely different ways. For example, not caring about the deficit but worrying about the debt, or vice versa, or focusing on taxing wealth but not really caring about taxing income. I think the idea of taxing income makes a lot of sense, and don't want the government to try to value assets, particularly illiquid assets. And if it was up to me, I would dramatically simplify the tax code to eliminate all deductions and tax all income at the same rate, regardless of source. No reason to have one tax rate for carried interest, another tax rate for dividend payments, a third tax rate for wage income. Treat all income the same, and apply a progressive rate to the total income. Your tax form should not be more than a page long.
- triceratops 7mo ago
  > What I'd like to know is why people are obsessed about stocks and flows in completely different ways...focusing on taxing wealth but not really caring about taxing income. Because wealth grows faster than income. r > g It's easy, especially for rich people with lots of wealth, to have low taxable income. https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Century#Contents https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce... > not caring about the deficit but worrying about the debt Are there people like that? The debt is the sum of all deficits.

no-name-here 7mo ago

> it's unpayable The deficit/debt exist because US tax rates (even including fed+state+local) are so low compared to every other major advanced economy in the world, even before last year's "One Big Beautiful (Ugly?) Bill". In fact, the US could have raised rates by more than 15% and still been the lowest. https://www.imf.org/en/Publications/WEO/weo-database/2025/april/weo-report?c=156,132,134,136,158,112,111,&s=GGR_NGDP,&sy=2025&ey=2025&ssd=1 https://www.imf.org/en/Publications/WEO/weo-database/2025/ap... If US tax rates were even just the average among other G7 countries, it would be trillions more than the deficit per year. (The US also has the lowest spending (fed+state+local) among them as well, but even though our spending is the lowest among them, the tax rates are so very low they're still not enough to cover even the lower spending compared to them. https://www.imf.org/en/Publications/WEO/weo-database/2025/April/weo-report?c=156,132,134,136,158,112,111,&s=GGX_NGDP,&sy=2025&ey=2025&ssd=1 https://www.imf.org/en/Publications/WEO/weo-database/2025/Ap... )