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Sort of yes and no. I don’t think indefinite spending was ever on the cards. But if other countries tried to maintain the levels of US deficit / debt, they wer

Sort of yes and no. I don’t think indefinite spending was ever on the cards. But if other countries tried to maintain the levels of US deficit / debt, they were given far less lenience from investors, in pressure / yields. This was because US was seen as, on the whole, fiscally responsible, very productive, and safer from shocks - to the point that when the US mortgage crisis exploded, the safe haven for assets was… the US. As these assumptions are challenged, the US is waking up to what the European old economies experienced following 2008. Increasingly yields, increasing costs of borrowing etc. If you’re reliably printing good GDP growth, higher level of debt may be good as it gives you more leverage, and drives more growth in turn. But leverage is a multiplier and it isn’t free, so if the engine sputters, you might find yourself falling out of the car at a greater speed…

mono442 1mo ago
A debt crisis like in eurozone countries in 2008 is very unlikely to happen in the US. For it to happen, it would require the fed working against the us government.
- rich_sasha 1mo ago
  Well, the US clearly has far, far more rope than Greece or Italy. Question is, is that a buffer, or a perfect noose in the making. The Fed seems already constrained by the administration to not raise rates. Yields went up anyway. US primary deficit is huge and so debt to GDP is accelerating from different angles - interest, increased spending, increased yield demand based off uncontrolled inflation expectations etc. In fact I suspect that the mega-pivot to AI is an attempt to solve the problem by massively inflating GDP, so that the debt doesn’t matter - ie radically grow the economy. It remains to be seen if it pays off and solves US’s problems. At the end of the day, the US cannot escape from the forces that drowned Greece - inflation, investor confidence, debt spiral. It’s totally avoidable, but the US seems determined to race full speed ahead at it. Let’s see if Trump can play chicken with economics.
  - pjc50 1mo ago
    It's basically the Liz Truss situation, except the UK could actually remove her after just one budget because the Conservative party weren't fully on board with her level of brainworms. Whereas the US's two legislative houses are 100% supportive of this.
    - disgruntledphd2 1mo ago
      > Whereas the US's two legislative houses are 100% supportive of this. I think that it's more likely that many of them just like their jobs, and Trump has a history of orchestrating primary challenges against people who disagree with them. Now, one could additionally argue that this is only possible because of their frankly insane gerrymandering, and one would be correct, so maybe it is ultimately their fault.
  - mono442 1mo ago
    Greece doesn't have its own currency and is completely reliant on private debt markets. Investors, mostly banks, started demanding higher yields, and Greece couldn't do anything about it. The EU used that as an excuse to impose garbage economic policies (austerity) on them, but the whole crisis could have been avoided if the ECB had intervened to keep Greek bond yields close to the ECB's interest rate.

mono442 1mo ago

A debt crisis like in eurozone countries in 2008 is very unlikely to happen in the US. For it to happen, it would require the fed working against the us government.

rich_sasha 1mo ago
Well, the US clearly has far, far more rope than Greece or Italy. Question is, is that a buffer, or a perfect noose in the making. The Fed seems already constrained by the administration to not raise rates. Yields went up anyway. US primary deficit is huge and so debt to GDP is accelerating from different angles - interest, increased spending, increased yield demand based off uncontrolled inflation expectations etc. In fact I suspect that the mega-pivot to AI is an attempt to solve the problem by massively inflating GDP, so that the debt doesn’t matter - ie radically grow the economy. It remains to be seen if it pays off and solves US’s problems. At the end of the day, the US cannot escape from the forces that drowned Greece - inflation, investor confidence, debt spiral. It’s totally avoidable, but the US seems determined to race full speed ahead at it. Let’s see if Trump can play chicken with economics.
- pjc50 1mo ago
  It's basically the Liz Truss situation, except the UK could actually remove her after just one budget because the Conservative party weren't fully on board with her level of brainworms. Whereas the US's two legislative houses are 100% supportive of this.
  - disgruntledphd2 1mo ago
    > Whereas the US's two legislative houses are 100% supportive of this. I think that it's more likely that many of them just like their jobs, and Trump has a history of orchestrating primary challenges against people who disagree with them. Now, one could additionally argue that this is only possible because of their frankly insane gerrymandering, and one would be correct, so maybe it is ultimately their fault.
- mono442 1mo ago
  Greece doesn't have its own currency and is completely reliant on private debt markets. Investors, mostly banks, started demanding higher yields, and Greece couldn't do anything about it. The EU used that as an excuse to impose garbage economic policies (austerity) on them, but the whole crisis could have been avoided if the ECB had intervened to keep Greek bond yields close to the ECB's interest rate.