I'm by no means an financial expert, but is there ever any hope that the government can pay off this debt without going into more debt to cover it? Will our national debt just increase year after...
I'm by no means an financial expert, but is there ever any hope that the government can pay off this debt without going into more debt to cover it? Will our national debt just increase year after year forever until the country eventually crashes and burns?
As a side note, I bought a 10k series I bond earlier this year since that's the maximum an individual can purchase, but I'm assuming there are loopholes that rich people use to purchase much more than that.
If there would ever to be no national debt that would be quite bad for the economy, so it is an outcome that is both difficult to achieve and not particularly wanted. With a debt denominated in a...
If there would ever to be no national debt that would be quite bad for the economy, so it is an outcome that is both difficult to achieve and not particularly wanted. With a debt denominated in a currency that a sovereign country has monetary power over, it's quite nuanced what occurs in general with higher or lower amounts of debt.
Generally the rich don't buy I-bonds, no. By definition they have a real yield of 0%.
Why would having no national debt be a bad thing? Also, isn't there a middle ground where we maintain a debt level instead of just having it increase forever? These are serious questions, I...
Why would having no national debt be a bad thing? Also, isn't there a middle ground where we maintain a debt level instead of just having it increase forever?
These are serious questions, I actually don't know.
If the US no longer issued debt, the supply of dollars would no longer be able to increase and slowly decrease overall, in terms of resource allocation it would mean that the future would be...
If the US no longer issued debt, the supply of dollars would no longer be able to increase and slowly decrease overall, in terms of resource allocation it would mean that the future would be expected produce less value than the present, it would cause instability as a result of removing the most bedrock of investments, it would cause serious issues for the US's forex reserves, and on and on.
Sure, that's a possible monetary police you could approach, assuming you mean adjusted for inflation. It would imply a fairly pessimistic estimation of the future, but our current debt-to-gdp ratio is actually about the same right now as it was in 1940, so I suppose in a tops-turvey way it is what the US actually has in terms of average trajectory in modern economic history.
This is one view. It's the one pushed by the federal reserve and elite banksters since the early 1900s and especially since 1971. Please dont present this as fact. The historical truth is that...
This is one view. It's the one pushed by the federal reserve and elite banksters since the early 1900s and especially since 1971. Please dont present this as fact.
The historical truth is that this system also conveniently allows the people who hold the most appreciating assets to steal from those who hold the least via inflation.
I'm sure that I'll get plenty of disagreement, but prior to going off the gold standard inflation was consistently very low, debt was much less common, and the US saw some of the biggest (inflation adjusted) growth that we've ever seen.
I don’t see how the data supports your conclusion- https://www.usinflationcalculator.com/inflation/historical-inflation-rates/ It’s seems pretty clear that on the gold standard inflation (and...
It’s seems pretty clear that on the gold standard inflation (and deflation) was all over the place and then it was able to be controlled by expanding and contracting the money supply.
Keep in mind that most of the inflation of the 1970s was due to mismanaged monetary policy and the oil crisis. Also, we used to have deflation under the gold standard (which I'm not entirely...
Keep in mind that most of the inflation of the 1970s was due to mismanaged monetary policy and the oil crisis. Also, we used to have deflation under the gold standard (which I'm not entirely convinced is a bad thing when it's supply expanding as opposed to demand contracting).
1917 is when the world went off the gold standard - the Bank of England decided to issue debt instruments against the pound in order to finance WW1 and the pound devalued against gold. The pound...
1917 is when the world went off the gold standard - the Bank of England decided to issue debt instruments against the pound in order to finance WW1 and the pound devalued against gold. The pound to gold exchange rate had been the same since it was set by Sir Isaac Newton.
You're looking at data that is too new, your criticisms only apply to fiat currency.
I suggest looking at the period from 1850-1920 https://iamkate.com/data/uk-inflation/. Inflation rates were generally negative and mostly between -4 and 4%. It did have a few single year spikes to larger/smaller values.
Part of that growth in wealth was due to the UK literally handing over the majority of its wealth to the US during WW2 via Operation Fish. This had two goals, to prevent it from getting into Nazi...
Part of that growth in wealth was due to the UK literally handing over the majority of its wealth to the US during WW2 via Operation Fish.
This had two goals, to prevent it from getting into Nazi hands if the UK fell, and to buy all the materials of war one could hope for since the USA wasn’t currently being bombed by the Luftwaffa. It’s quite literally in part how the US became a super power.
It’s a fascinating bit of history but after the war we just sort of held onto all that money and the dollar became the dominate currency. If WW2 hadn’t happened, London would most likely still have been the center of the financial world.
It's not necessarily a bad thing, you're describing "hard money" which is money backed by a commodity like gold. The USD is currently fiat currency, which is money that is backed by debt and by...
It's not necessarily a bad thing, you're describing "hard money" which is money backed by a commodity like gold. The USD is currently fiat currency, which is money that is backed by debt and by extension by the threat of violence.
I wonder if you meant that sentence to go in another post? I enjoyed reading about git, having been a long-time Perforce user and somewhat mystified by git, but didn't see anything about currency...
My other comment briefly mentions this
I wonder if you meant that sentence to go in another post? I enjoyed reading about git, having been a long-time Perforce user and somewhat mystified by git, but didn't see anything about currency in the article.
(I like your point about 'the historical truth' about government debt, which seems very sane though I can't comment knowledgeably on it)
One thing not mentioned is if you need a safe place to put your money, currently US treasuries are the best place to put your funds. More than 3T in treasuries are owned by pension funds and...
One thing not mentioned is if you need a safe place to put your money, currently US treasuries are the best place to put your funds. More than 3T in treasuries are owned by pension funds and individuals. They serve a really important roles in having a safe spot to store a basically unlimited amount of wealth with some sort of return. If the US was debt free, other options would ostensibly be either less safe or more expensive.
If the US was debt free you wouldn't need to store your money in anything, you could just hold usd because it wouldn't be devalued by high inflation rates
If the US was debt free you wouldn't need to store your money in anything, you could just hold usd because it wouldn't be devalued by high inflation rates
Sure - or in gold bullion or some other asset This would be a good thing because we can't expect Joe the high school dropout to properly manage an investment portfolio to build wealth. My point is...
Sure - or in gold bullion or some other asset
This would be a good thing because we can't expect Joe the high school dropout to properly manage an investment portfolio to build wealth.
My point is that people shouldn't need to be investment savvy in order to build wealth. They should be able to throw dollars in a savings account every month and expect it to have about the same purchasing power in a year.
Yes, there’s a balance that needs to be maintained; the national debt could be too high, or at least most people assume so. It’s not very clear that it actually is too high, or that it couldn’t...
Yes, there’s a balance that needs to be maintained; the national debt could be too high, or at least most people assume so. It’s not very clear that it actually is too high, or that it couldn’t gradually increase without issues.
I thought of a simple way of explaining this: Treasuries are a little bit like money. They’re useful and valuable to the organizations that own them. Asking when the US will pay off its debt is sort of like asking when the US will take back all its money and exchange it for gold. It would be a huge change. There would be no point to it, because people don’t want to own gold. Similarly, the people and organizations who own treasuries don’t want cash. If that’s what they wanted, they would have sold.
Of course, it’s also possible for the US to increase the money supply too much, since that would cause inflation. But we generally judge this by how much inflation there is. No inflation, no problem?
Similarly for treasuries. Most people assume that it would be possible for the US to borrow too much, that there is only so much demand for treasuries. But it’s not all that clear how we would know that the treasuries market is too big, or what its ideal size would be. (The size of the treasuries market is a different way of thinking about the size of the national debt.)
What are the symptoms of a treasuries market that’s getting too big? One sign might be that the US government has to pay higher interest rates to attract investors. But that’s not a good signal, because the Fed buys and sells treasuries as it chooses to control the money supply. They sometimes deliberately increase them to fight inflation. Interest rates are a sign of what the Fed wants, not what investors want.
So where does that leave us? From first principles, we can’t tell whether the national debt is a problem. If it is a problem, it’s not obvious. And it seems like even experts will disagree about it?
Putting a cap on the national debt, saying, “this far, but no further” is sort of like putting a cap on the money supply. It’s a political move and there doesn’t seem to be any real reason for it.
There is absolutely no incentive for the US to "completely" pay off its debt. Heck, no one is expecting the US to "completely" pay off its debt. The world runs on a debt economy. Value is...
There is absolutely no incentive for the US to "completely" pay off its debt. Heck, no one is expecting the US to "completely" pay off its debt. The world runs on a debt economy. Value is generated as debt mounts and only paid off gradually. The accrual of value from interest (where the phrase "time value of money" comes from) keeps the economy circling. The debt ceiling itself is just a bargaining chip used in bygone eras, which the US still lives in despite its technological progress.
+1 for this line of thinking. I'm projecting here, and this is not a reflection of tealblue's sentiments, but I feel individuals sometimes mistakenly assume personal debt and sovereign debt to be...
+1 for this line of thinking. I'm projecting here, and this is not a reflection of tealblue's sentiments, but I feel individuals sometimes mistakenly assume personal debt and sovereign debt to be cut from the same cloth. Personal debt? More often than not, get that cleared ASAP imo. Sovereign debt? It's a good thing; it can, and should, be leveraged and utilised to have great benefit to a nation. Especially when considering the climate of essentially 'free money' during the 2010s. That is, of course, assuming the powers that be are responsible enough to mitigate unacceptable levels of risk.
The idea of sovereign debt and using it responsibly is not a new one / something we should be shying away from. The Dutch made fantastic use of 100 year Gov Bonds all throughout their (recent, ~200 yr) history.
I also feel that this is a common assumption of any criticism of debt even though it's been explained to death that they aren't the same. If we're going for different lines of thinking to...
but I feel individuals sometimes mistakenly assume personal debt and sovereign debt to be cut from the same cloth.
I also feel that this is a common assumption of any criticism of debt even though it's been explained to death that they aren't the same.
If we're going for different lines of thinking to challenge perception, why not have 5x the amount of debt right now? If debt is a good thing, then we should have more debt. If you can't agree with this, then clearly there must be a line where too much debt is not a good thing.
Debt works as long as it helps you gain more in the future than it would cost you in the same time span. Personal debt can be leveraged this way as well, except most individuals don't have the level of resources, power or knowledge to work debt this way, or don't have the right circumstances to take risks.
When you go all-in on this approach, it's great for people now, possibly great for people in the future, but inevitably really really bad for people in the future when it crashes. It's the one thing humans do really well, sell the future for the present.
"Some debt is good" isn't the same as "more debt is always better." If everyone's agreed that there can be too much debt, then the question is how much is too much. At that point we're beyond...
"Some debt is good" isn't the same as "more debt is always better."
If everyone's agreed that there can be too much debt, then the question is how much is too much. At that point we're beyond discussing it on a philosophical / conceptual level and would need to start talking about how we could tell when it's too much. What are the signs?
That's why I approached it as a challenge of perception, the previous couple comments were about a comment addressing perception of why something was at "an unsustainable level". I think the key...
That's why I approached it as a challenge of perception, the previous couple comments were about a comment addressing perception of why something was at "an unsustainable level".
I think the key point you stated was whether everyone can agree that there can be too much debt. I understand that there's a level of public responsibility behind the comments stating that public debt does not equal private debt, but I feel we're not at the point of acknowledging that everyone agrees there's potential that there can be too much debt or attempting to question what that looks like.
I completely agree that once we're on that level, the question about what the signs are is key to furthering the discussion. I don't know the discrete signs or how to identify them, but I think a lot of the concerns about debt are along these lines and they're getting misconstrued into the perception that concerns about debt are just misinformed people thinking public debt = private debt.
I'm all on board with recognizing that individual debt can't be approached the same as public debt (generally speaking), and it may be too complex a topic to explain the nuance of it, but at the same time if we're going to tell people a boilerplate answer and expect them to just believe it then it needs to stay based in reality rather than try to force it down peoples' throats as though they're just anti-facts if they don't believe it. Not all debt is good debt, and going further in debt isn't always the right solution, so dismissing people who question debt as misinformed people who simply think of all debt the same as their car loan or their credit cards is not keeping it real.
The way I sometimes try to “keep it real” is by keeping in mind how much we don’t know. It’s avoiding “instant expert syndrome” where knowing a little turns into thinking you know it all and can...
The way I sometimes try to “keep it real” is by keeping in mind how much we don’t know. It’s avoiding “instant expert syndrome” where knowing a little turns into thinking you know it all and can make confident proclamations about stuff you only read about in the news. (It’s something I’m prone to too.)
I assume we are misinformed about a lot of stuff. There’s definitely a lot of pontificating about money and the economy. While it can be done badly, I think some attempts to keep the confident assertions in check are useful. We aren’t experts in this stuff, and even the experts are often wrong.
One way to get back to basics is to start by asking questions instead of making statements. What do we actually know about government debt, and how did we learn it? Where could we learn more about it?
I mean...the debt is expected to take up a larger and larger share of government spending. I don't think any honest economist could say that current deficit spending is sustainable, unless they...
I mean...the debt is expected to take up a larger and larger share of government spending. I don't think any honest economist could say that current deficit spending is sustainable, unless they believe that the US can pull fast one on the world and allow inflation to run rampant while keeping interest rates low.
I don't think there's all that much incentive to pay it off as long as investors are willing to keep buying. There is presumably some limit to that, but nobody knows where it is for the US. (It's...
I don't think there's all that much incentive to pay it off as long as investors are willing to keep buying. There is presumably some limit to that, but nobody knows where it is for the US. (It's not free money anymore at these interest rates, though.)
You can put in 10k every year, and there are plenty of other investments for the people who think that it's too small to bother. I'm doubtful that there are loopholes or enough incentive to look for them, because it would be taking a risk, and the people who like risk-taking could easily find higher-paying, riskier investments elsewhere.
Filip De Mott In just the past three months, over $1 trillion in new Treasury bills have been purchased. Noncompetitive bidders bought a record-high $2.898 billion of six-month bills in...
Filip De Mott
In just the past three months, over $1 trillion in new Treasury bills have been purchased.
Noncompetitive bidders bought a record-high $2.898 billion of six-month bills in mid-August, Bloomberg said.
That suggests smaller investors are increasingly jumping into the market for short-term US debt.
Demand for short-term US debt is so high that the balance sheets of primary dealers, who serve as bond market middle men, have tumbled from a record high of $116 billion in July to about $45 billion in August, Bloomberg said.
Robust demand for T-bills comes as the Fed stopped buying bonds last year and has been shrinking its balance sheet, leaving others in the market to pick up the slack.
In fact, the US debt binge may force the Fed to halt its quantitative tightening campaign so the financial system doesn't become unstable, according to economists at the St. Louis Fed.
Meanwhile, a whopping $7.6 trillion in interest-bearing US public debt will mature within a year, representing 31% of all outstanding government debt.
Dalio’s reluctance to embrace bonds underscores the growing complexity that investors face as global central banks grapple with the specter of inflation. He admitted that, for now, cash appears to be a prudent choice.
Cash-like instruments, particularly exchange-traded funds (ETFs) linked to Treasury bills or short-dated Treasury bonds, are experiencing a remarkable surge in demand.
According to Dalio, when debt becomes a significant portion of the economy, a troubling trend emerges where the situation tends to compound and accelerate. This ominous scenario is further exacerbated as interest payments burgeon.
The billionaire investor asserted that the world is at a turning point of acceleration. As the U.S. grapples with a burgeoning deficit that necessitates selling bonds to global investors, a precarious balancing act ensues. Keeping interest rates at an attractive level for creditors while not burdening the issuer with excessive rates becomes an intricate dance.
Dalio noted that when investors choose to sell, driving up yields, central banks face a critical decision—whether to print money and buy bonds, a move that can stoke inflation pressures, Bloomberg reported.
He concluded that, in his view, bonds are not a good investment in the longer term.
Well, I guess I agree. A >5% short-term, risk-free rate is pretty good, if you have money to lend. It seems like there's less reason to reach for yield with longer durations or riskier...
Well, I guess I agree. A >5% short-term, risk-free rate is pretty good, if you have money to lend. It seems like there's less reason to reach for yield with longer durations or riskier investments.
"The world is at a turning point" seems like a fancy way to say that the future is uncertain. But uncertain doesn't mean bad, necessarily.
Yeah 5% is about the most you can hope for risk free right now, it doesn't quite keep up with all the inflation that we've suffered through but it doesn't hurt.
Yeah 5% is about the most you can hope for risk free right now, it doesn't quite keep up with all the inflation that we've suffered through but it doesn't hurt.
I'm by no means an financial expert, but is there ever any hope that the government can pay off this debt without going into more debt to cover it? Will our national debt just increase year after year forever until the country eventually crashes and burns?
As a side note, I bought a 10k series I bond earlier this year since that's the maximum an individual can purchase, but I'm assuming there are loopholes that rich people use to purchase much more than that.
If there would ever to be no national debt that would be quite bad for the economy, so it is an outcome that is both difficult to achieve and not particularly wanted. With a debt denominated in a currency that a sovereign country has monetary power over, it's quite nuanced what occurs in general with higher or lower amounts of debt.
Generally the rich don't buy I-bonds, no. By definition they have a real yield of 0%.
Why would having no national debt be a bad thing? Also, isn't there a middle ground where we maintain a debt level instead of just having it increase forever?
These are serious questions, I actually don't know.
If the US no longer issued debt, the supply of dollars would no longer be able to increase and slowly decrease overall, in terms of resource allocation it would mean that the future would be expected produce less value than the present, it would cause instability as a result of removing the most bedrock of investments, it would cause serious issues for the US's forex reserves, and on and on.
Sure, that's a possible monetary police you could approach, assuming you mean adjusted for inflation. It would imply a fairly pessimistic estimation of the future, but our current debt-to-gdp ratio is actually about the same right now as it was in 1940, so I suppose in a tops-turvey way it is what the US actually has in terms of average trajectory in modern economic history.
This is one view. It's the one pushed by the federal reserve and elite banksters since the early 1900s and especially since 1971. Please dont present this as fact.
The historical truth is that this system also conveniently allows the people who hold the most appreciating assets to steal from those who hold the least via inflation.
I'm sure that I'll get plenty of disagreement, but prior to going off the gold standard inflation was consistently very low, debt was much less common, and the US saw some of the biggest (inflation adjusted) growth that we've ever seen.
I don’t see how the data supports your conclusion- https://www.usinflationcalculator.com/inflation/historical-inflation-rates/
It’s seems pretty clear that on the gold standard inflation (and deflation) was all over the place and then it was able to be controlled by expanding and contracting the money supply.
Keep in mind that most of the inflation of the 1970s was due to mismanaged monetary policy and the oil crisis. Also, we used to have deflation under the gold standard (which I'm not entirely convinced is a bad thing when it's supply expanding as opposed to demand contracting).
1917 is when the world went off the gold standard - the Bank of England decided to issue debt instruments against the pound in order to finance WW1 and the pound devalued against gold. The pound to gold exchange rate had been the same since it was set by Sir Isaac Newton.
You're looking at data that is too new, your criticisms only apply to fiat currency.
I suggest looking at the period from 1850-1920 https://iamkate.com/data/uk-inflation/. Inflation rates were generally negative and mostly between -4 and 4%. It did have a few single year spikes to larger/smaller values.
Part of that growth in wealth was due to the UK literally handing over the majority of its wealth to the US during WW2 via Operation Fish.
This had two goals, to prevent it from getting into Nazi hands if the UK fell, and to buy all the materials of war one could hope for since the USA wasn’t currently being bombed by the Luftwaffa. It’s quite literally in part how the US became a super power.
It’s a fascinating bit of history but after the war we just sort of held onto all that money and the dollar became the dominate currency. If WW2 hadn’t happened, London would most likely still have been the center of the financial world.
It's not necessarily a bad thing, you're describing "hard money" which is money backed by a commodity like gold. The USD is currently fiat currency, which is money that is backed by debt and by extension by the threat of violence.
My other comment briefly mentions this as well https://jvns.ca/blog/2023/09/14/in-a-git-repository--where-do-your-files-live-/
I wonder if you meant that sentence to go in another post? I enjoyed reading about git, having been a long-time Perforce user and somewhat mystified by git, but didn't see anything about currency in the article.
(I like your point about 'the historical truth' about government debt, which seems very sane though I can't comment knowledgeably on it)
Yep lol thanks, I totally meant to link to my other comment chain in this thread :)
One thing not mentioned is if you need a safe place to put your money, currently US treasuries are the best place to put your funds. More than 3T in treasuries are owned by pension funds and individuals. They serve a really important roles in having a safe spot to store a basically unlimited amount of wealth with some sort of return. If the US was debt free, other options would ostensibly be either less safe or more expensive.
If the US was debt free you wouldn't need to store your money in anything, you could just hold usd because it wouldn't be devalued by high inflation rates
Just a few billion dollars under the mattress?
Sure - or in gold bullion or some other asset
This would be a good thing because we can't expect Joe the high school dropout to properly manage an investment portfolio to build wealth.
My point is that people shouldn't need to be investment savvy in order to build wealth. They should be able to throw dollars in a savings account every month and expect it to have about the same purchasing power in a year.
Yes, there’s a balance that needs to be maintained; the national debt could be too high, or at least most people assume so. It’s not very clear that it actually is too high, or that it couldn’t gradually increase without issues.
I thought of a simple way of explaining this: Treasuries are a little bit like money. They’re useful and valuable to the organizations that own them. Asking when the US will pay off its debt is sort of like asking when the US will take back all its money and exchange it for gold. It would be a huge change. There would be no point to it, because people don’t want to own gold. Similarly, the people and organizations who own treasuries don’t want cash. If that’s what they wanted, they would have sold.
Of course, it’s also possible for the US to increase the money supply too much, since that would cause inflation. But we generally judge this by how much inflation there is. No inflation, no problem?
Similarly for treasuries. Most people assume that it would be possible for the US to borrow too much, that there is only so much demand for treasuries. But it’s not all that clear how we would know that the treasuries market is too big, or what its ideal size would be. (The size of the treasuries market is a different way of thinking about the size of the national debt.)
What are the symptoms of a treasuries market that’s getting too big? One sign might be that the US government has to pay higher interest rates to attract investors. But that’s not a good signal, because the Fed buys and sells treasuries as it chooses to control the money supply. They sometimes deliberately increase them to fight inflation. Interest rates are a sign of what the Fed wants, not what investors want.
So where does that leave us? From first principles, we can’t tell whether the national debt is a problem. If it is a problem, it’s not obvious. And it seems like even experts will disagree about it?
Putting a cap on the national debt, saying, “this far, but no further” is sort of like putting a cap on the money supply. It’s a political move and there doesn’t seem to be any real reason for it.
There is absolutely no incentive for the US to "completely" pay off its debt. Heck, no one is expecting the US to "completely" pay off its debt. The world runs on a debt economy. Value is generated as debt mounts and only paid off gradually. The accrual of value from interest (where the phrase "time value of money" comes from) keeps the economy circling. The debt ceiling itself is just a bargaining chip used in bygone eras, which the US still lives in despite its technological progress.
There's a dramatic difference between trying to get to zero debt and the completely unsustainable level of debt that the US currently has.
Why is it an unsustainable level?
+1 for this line of thinking. I'm projecting here, and this is not a reflection of tealblue's sentiments, but I feel individuals sometimes mistakenly assume personal debt and sovereign debt to be cut from the same cloth. Personal debt? More often than not, get that cleared ASAP imo. Sovereign debt? It's a good thing; it can, and should, be leveraged and utilised to have great benefit to a nation. Especially when considering the climate of essentially 'free money' during the 2010s. That is, of course, assuming the powers that be are responsible enough to mitigate unacceptable levels of risk.
The idea of sovereign debt and using it responsibly is not a new one / something we should be shying away from. The Dutch made fantastic use of 100 year Gov Bonds all throughout their (recent, ~200 yr) history.
I also feel that this is a common assumption of any criticism of debt even though it's been explained to death that they aren't the same.
If we're going for different lines of thinking to challenge perception, why not have 5x the amount of debt right now? If debt is a good thing, then we should have more debt. If you can't agree with this, then clearly there must be a line where too much debt is not a good thing.
Debt works as long as it helps you gain more in the future than it would cost you in the same time span. Personal debt can be leveraged this way as well, except most individuals don't have the level of resources, power or knowledge to work debt this way, or don't have the right circumstances to take risks.
When you go all-in on this approach, it's great for people now, possibly great for people in the future, but inevitably really really bad for people in the future when it crashes. It's the one thing humans do really well, sell the future for the present.
"Some debt is good" isn't the same as "more debt is always better."
If everyone's agreed that there can be too much debt, then the question is how much is too much. At that point we're beyond discussing it on a philosophical / conceptual level and would need to start talking about how we could tell when it's too much. What are the signs?
That's why I approached it as a challenge of perception, the previous couple comments were about a comment addressing perception of why something was at "an unsustainable level".
I think the key point you stated was whether everyone can agree that there can be too much debt. I understand that there's a level of public responsibility behind the comments stating that public debt does not equal private debt, but I feel we're not at the point of acknowledging that everyone agrees there's potential that there can be too much debt or attempting to question what that looks like.
I completely agree that once we're on that level, the question about what the signs are is key to furthering the discussion. I don't know the discrete signs or how to identify them, but I think a lot of the concerns about debt are along these lines and they're getting misconstrued into the perception that concerns about debt are just misinformed people thinking public debt = private debt.
I'm all on board with recognizing that individual debt can't be approached the same as public debt (generally speaking), and it may be too complex a topic to explain the nuance of it, but at the same time if we're going to tell people a boilerplate answer and expect them to just believe it then it needs to stay based in reality rather than try to force it down peoples' throats as though they're just anti-facts if they don't believe it. Not all debt is good debt, and going further in debt isn't always the right solution, so dismissing people who question debt as misinformed people who simply think of all debt the same as their car loan or their credit cards is not keeping it real.
The way I sometimes try to “keep it real” is by keeping in mind how much we don’t know. It’s avoiding “instant expert syndrome” where knowing a little turns into thinking you know it all and can make confident proclamations about stuff you only read about in the news. (It’s something I’m prone to too.)
I assume we are misinformed about a lot of stuff. There’s definitely a lot of pontificating about money and the economy. While it can be done badly, I think some attempts to keep the confident assertions in check are useful. We aren’t experts in this stuff, and even the experts are often wrong.
One way to get back to basics is to start by asking questions instead of making statements. What do we actually know about government debt, and how did we learn it? Where could we learn more about it?
I mean...the debt is expected to take up a larger and larger share of government spending. I don't think any honest economist could say that current deficit spending is sustainable, unless they believe that the US can pull fast one on the world and allow inflation to run rampant while keeping interest rates low.
I don't think there's all that much incentive to pay it off as long as investors are willing to keep buying. There is presumably some limit to that, but nobody knows where it is for the US. (It's not free money anymore at these interest rates, though.)
You can put in 10k every year, and there are plenty of other investments for the people who think that it's too small to bother. I'm doubtful that there are loopholes or enough incentive to look for them, because it would be taking a risk, and the people who like risk-taking could easily find higher-paying, riskier investments elsewhere.
If everything else fails, the US government can still just inflate its way out of it.
Debt to GDP is the metric to watch
Filip De Mott
Billionaire Ray Dalio Shuns Bonds, Embraces Cash: What's Behind His Strategy?
by Benzinga
Well, I guess I agree. A >5% short-term, risk-free rate is pretty good, if you have money to lend. It seems like there's less reason to reach for yield with longer durations or riskier investments.
"The world is at a turning point" seems like a fancy way to say that the future is uncertain. But uncertain doesn't mean bad, necessarily.
Yeah 5% is about the most you can hope for risk free right now, it doesn't quite keep up with all the inflation that we've suffered through but it doesn't hurt.
It's beating current inflation, at least these last few months, but probably not after taxes.