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There is 0 risk to getting repaid from the US. We will print for the lenders the exact amount they are promised. Promises kept. All is good

andrewmutz 11d ago
Printing money causes inflation and inflation causes increasing interest rates. It is possible to enter a positive-feedback cycle, and has happened to countries before. I'm not predicting that this will happen, but we do need to take the debt seriously and not assume we will be able to just print money to get rid of it.
llm_nerd 11d ago
I feel like there is an inside joke here, so I apologize if I am being a bit spectrum-y taking it at face value. Every sovereign can print money and repay lenders, but doing so cause an inflationary cycle. When it looks like that is inevitable, borrowing rates start spiralling, so you have to print more money, and soon you are Zimbabwe. Like the US is catastrophically indebted -- both parties have been negligent on this, though one party has been much, much worse than the other -- and right now there's a certain defeated malaise about 40T in debt. The last time bond rates were this high the country had only $6T in debt, and even that was considered a catastrophic level, and bond rate trends are...not looking good for those want government funds leftover after servicing the debt. "Oh but we'll just grow the economy..." The debt has grown by 6.5x, and the GDP has grown by 2.8x since 2002. The math just isn't mathing. And remember that bond prices were historically low, and if there was ever a time to pay down the debt.... Nope, $2T deficit, "hide in the ballroom bunker and hold the world hostage with the nuclear launch button" projects, and now a hilarious $1.3T bribe to voters. Utterly busted. It is astonishing that it took this long for the world's lenders to chuckle and say nah.
- ajross 11d ago
  > the US is catastrophically indebted Debt service costs as a percent of GDP are in fact lower than they were in the 1980's, when things came out fine. Is this the best way to run the budget? Likely no. Should we make policy changes? Certainly yes. Is the best way to drive that policy argument flinging around adjectives like "catastrophically indebted". No. If you have a suggestion make a suggestion. Screaming about "The Problem" without discussing policy is echo chamber logic.
  - method_capital 11d ago
    Buffett claimed you could solve the deficit problem instantly by firing congress when they run deficits. Obviously, untenable (they'll cheat, admin overhead, etc). You could very easily force congress to balance the budget (both parties and the media have complained endlessly about this for exactly no good reason). You could also freeze spending at current levels and force congress to do it's job: allocate our limited resources most productively. Hard to get re elected doing the right thing, but maybe we just need a throw away set of leaders to do the hard work?
  - llm_nerd 11d ago
    > Debt service costs as a percent of GDP are in fact lower than they were in the 1980's This is an amazing use of the "in fact" trope, in exactly the same misleading way[1]. I talked about debt, and you casually shifted to servicing costs which presumes that rates stay historically low...when they're actually rapidly rising. Comical. In the 1980s, the debt to GDP ratio was less than half what it currently is. Rates were higher, making the debt a crisis level then, but maybe you haven't noticed...rates are going up. Indeed, right now the rates were historically low, and anyone with functioning grey matter saw what was coming. The US has an absolutely solidified, structural deficit -- utterly zero chance of paying down the debt, and a desperate need to constantly be borrowing more -- and an enormous debt. The trajectory of rates say this is crisis levels. It's actually kind of funny reading your ridiculous comment -- "screaming", "echo chamber", etc -- when you sound completely in denial. Your argument is basically the guy that used the "0% interest for six months" checks he just got with his 28% credit card, telling everyone that it's free money, so there's no problem if he goes wild. ROFL. Sounds like it's time for a $1.5T military budget and a $1.3T bribe! Free money! Sidenote: When asked about the bond market, Trump seriously offered up the "military solution". Utter insanity. [1] - It's also simply a lie, making this extra funny. The highest historic servicing cost was 3.2% of GDP. It is currently projected at 3.3%, and that presumes rates don't keep spiralling up. So your "in fact" was simple bullshit, even as you tried the narrative shift by changing from debt to servicing costs.
    - ajross 11d ago
      You're doubling down with more hyperbole. What's the policy suggestion? What do you propose to cut? Where do you propose to find new revenue? What compromises are you willing to make to other priorities and what stands are you taking on which you won't budge? Shouting about deficits is, to be blunt, just crack for the incurious mind. It's a party you're throwing for people who agree with you. Refusing to treat with the very real (and despite your hyperbole, very soluble) problems is likewise a trick your brain is using to expand the guest list: you can get almost everyone to sit at a "Deficits Suck" table, it's much harder to populate a "Let's Talk About Entitlement Restructuring and a VAT" forum. But it's the boring wonks at the forum (the one's you're shouting at!) who are ultimately on the hook for saving you.
- whatever1 11d ago
  Not sure it plays out that determistically. If the gov prints money to just payoff debt without increasing the government spending, there is no new money entering the market. You just pay off old promises that were expected to be kept. The real risk is that new lenders will not be willing to lend you, yes. But not outright inflation.
  - SilasX 11d ago
    So you agree it's a problem, but still characterized the situation as "all is good" in your first comment. I would not call that good, and I would be have used different words to characterize/trivialize this situation.
  - neilwilson 11d ago
    That assumes the new lenders have an aggregate alternative. If you follow the accounting in a floating exchange rate system you’ll find they don’t. Find me a banker that will turn down free basis points and I’ll show you a pink unicorn.
- deleted 11d ago
  [deleted]
- fragmede 11d ago
  The math that isn't mathing is that GDP needs to stop being the number we look at. Goodhart's Law says that "When a measure becomes a target, it ceases to be a good measure." and GDP is no exception. If I pay a cleaner $200 to clean my home, that's $200 into the GDP. If I do it myself, that's not reflected in the GDP. If I buy a robot maid, pay for it once, and it cleans my apartment for me, thats an ongoing quality of life improvement that's not going to be reflected in the GDP. If that $50,000 robot maid frees up 10 hours/week for me to do other stuff, GDP might actually fall instead of rise.
deleted 11d ago
[deleted]
grey-area 11d ago
What could possibly go wrong. Nobody has ever tried this before!

andrewmutz 11d ago

Printing money causes inflation and inflation causes increasing interest rates. It is possible to enter a positive-feedback cycle, and has happened to countries before. I'm not predicting that this will happen, but we do need to take the debt seriously and not assume we will be able to just print money to get rid of it.

llm_nerd 11d ago

I feel like there is an inside joke here, so I apologize if I am being a bit spectrum-y taking it at face value. Every sovereign can print money and repay lenders, but doing so cause an inflationary cycle. When it looks like that is inevitable, borrowing rates start spiralling, so you have to print more money, and soon you are Zimbabwe. Like the US is catastrophically indebted -- both parties have been negligent on this, though one party has been much, much worse than the other -- and right now there's a certain defeated malaise about 40T in debt. The last time bond rates were this high the country had only $6T in debt, and even that was considered a catastrophic level, and bond rate trends are...not looking good for those want government funds leftover after servicing the debt. "Oh but we'll just grow the economy..." The debt has grown by 6.5x, and the GDP has grown by 2.8x since 2002. The math just isn't mathing. And remember that bond prices were historically low, and if there was ever a time to pay down the debt.... Nope, $2T deficit, "hide in the ballroom bunker and hold the world hostage with the nuclear launch button" projects, and now a hilarious $1.3T bribe to voters. Utterly busted. It is astonishing that it took this long for the world's lenders to chuckle and say nah.

ajross 11d ago
> the US is catastrophically indebted Debt service costs as a percent of GDP are in fact lower than they were in the 1980's, when things came out fine. Is this the best way to run the budget? Likely no. Should we make policy changes? Certainly yes. Is the best way to drive that policy argument flinging around adjectives like "catastrophically indebted". No. If you have a suggestion make a suggestion. Screaming about "The Problem" without discussing policy is echo chamber logic.
- method_capital 11d ago
  Buffett claimed you could solve the deficit problem instantly by firing congress when they run deficits. Obviously, untenable (they'll cheat, admin overhead, etc). You could very easily force congress to balance the budget (both parties and the media have complained endlessly about this for exactly no good reason). You could also freeze spending at current levels and force congress to do it's job: allocate our limited resources most productively. Hard to get re elected doing the right thing, but maybe we just need a throw away set of leaders to do the hard work?
- llm_nerd 11d ago
  > Debt service costs as a percent of GDP are in fact lower than they were in the 1980's This is an amazing use of the "in fact" trope, in exactly the same misleading way[1]. I talked about debt, and you casually shifted to servicing costs which presumes that rates stay historically low...when they're actually rapidly rising. Comical. In the 1980s, the debt to GDP ratio was less than half what it currently is. Rates were higher, making the debt a crisis level then, but maybe you haven't noticed...rates are going up. Indeed, right now the rates were historically low, and anyone with functioning grey matter saw what was coming. The US has an absolutely solidified, structural deficit -- utterly zero chance of paying down the debt, and a desperate need to constantly be borrowing more -- and an enormous debt. The trajectory of rates say this is crisis levels. It's actually kind of funny reading your ridiculous comment -- "screaming", "echo chamber", etc -- when you sound completely in denial. Your argument is basically the guy that used the "0% interest for six months" checks he just got with his 28% credit card, telling everyone that it's free money, so there's no problem if he goes wild. ROFL. Sounds like it's time for a $1.5T military budget and a $1.3T bribe! Free money! Sidenote: When asked about the bond market, Trump seriously offered up the "military solution". Utter insanity. [1] - It's also simply a lie, making this extra funny. The highest historic servicing cost was 3.2% of GDP. It is currently projected at 3.3%, and that presumes rates don't keep spiralling up. So your "in fact" was simple bullshit, even as you tried the narrative shift by changing from debt to servicing costs.
  - ajross 11d ago
    You're doubling down with more hyperbole. What's the policy suggestion? What do you propose to cut? Where do you propose to find new revenue? What compromises are you willing to make to other priorities and what stands are you taking on which you won't budge? Shouting about deficits is, to be blunt, just crack for the incurious mind. It's a party you're throwing for people who agree with you. Refusing to treat with the very real (and despite your hyperbole, very soluble) problems is likewise a trick your brain is using to expand the guest list: you can get almost everyone to sit at a "Deficits Suck" table, it's much harder to populate a "Let's Talk About Entitlement Restructuring and a VAT" forum. But it's the boring wonks at the forum (the one's you're shouting at!) who are ultimately on the hook for saving you.
whatever1 11d ago
Not sure it plays out that determistically. If the gov prints money to just payoff debt without increasing the government spending, there is no new money entering the market. You just pay off old promises that were expected to be kept. The real risk is that new lenders will not be willing to lend you, yes. But not outright inflation.
- SilasX 11d ago
  So you agree it's a problem, but still characterized the situation as "all is good" in your first comment. I would not call that good, and I would be have used different words to characterize/trivialize this situation.
- neilwilson 11d ago
  That assumes the new lenders have an aggregate alternative. If you follow the accounting in a floating exchange rate system you’ll find they don’t. Find me a banker that will turn down free basis points and I’ll show you a pink unicorn.
deleted 11d ago
[deleted]
fragmede 11d ago
The math that isn't mathing is that GDP needs to stop being the number we look at. Goodhart's Law says that "When a measure becomes a target, it ceases to be a good measure." and GDP is no exception. If I pay a cleaner $200 to clean my home, that's $200 into the GDP. If I do it myself, that's not reflected in the GDP. If I buy a robot maid, pay for it once, and it cleans my apartment for me, thats an ongoing quality of life improvement that's not going to be reflected in the GDP. If that $50,000 robot maid frees up 10 hours/week for me to do other stuff, GDP might actually fall instead of rise.

deleted 11d ago

[deleted]

grey-area 11d ago

What could possibly go wrong. Nobody has ever tried this before!