
Will America's debt doom us? - spking
https://www.usatoday.com/story/money/columnist/2019/09/22/debt-debt-doom-america/2384550001/
======
_edo
> Because debt-to-GDP is apples-to-nonsense.

No it's not. Debt is measured in dollars. GDP is dollars per year.

Debt/GDP is $/($/yr)=yr

This ratio converts debt, a number it's hard to have intuition for, to years.
It tells us how many years of productivity we owe. For those of us who don't
manage $30 billion in assets _years of productivity_ probably carries more
meaning than big numbers with 12 zeros.

~~~
topkai22
His proposed alternate metric, interest as a percentage of tax revenue is also
deeply flawed- it misses the obligation to pay the principal, which has
tripled since the low point in the early 2000s.

I like the finance wonks word for debt- leverage. Taking on debt is like going
out further on a lever- the debter is more exposed to swings in the overall
economy. While it's worked out fine so far, a high debt to gdp ratio exposes
the US to higher risk on the downside.

~~~
JackFr
> it misses the obligation to pay the principal

But you never really have to do that. You can just keep rolling them. If we
could keep the debt at the same absolute level inflation and productivity
increases would drive it into insignificance.

Of course the idea of keeping it at the same level is a fantasy.

~~~
abecedarius
I wonder how people reconcile how it's OK to rely on progress to grow our way
out of a debt burden but also incredibly irresponsible to expect progress to
cope with our carbon problem. Both seem defensible to me but like they kind of
need an adaptor to fit in the same worldview.

~~~
electricviolet
Maybe it's because of the difference in what's at stake:

If the USA falls into a debt crisis the result will be global economic
disruption.

If the world falls into runaway climate change the result will be the
extinction of the human race and possibly all life on earth.

Personally I'm more comfortable with the possibility of the first than of the
second.

~~~
marcosdumay
There may not be much difference. Extinction of the human race is an
exaggerated prediction, but more importantly, what do you expect the
consequences of global economic disruption (to the level of taking the US
down) to be? Take a look at history if you may.

~~~
electricviolet
Not trying to minimize the human cost of global economic disruption, but it's
almost certainly less than total extinction.

~~~
marcosdumay
A global nuclear winter is very likely much more impacting than global
warming.

------
Apes
It's always great to see an extremely intelligent person try to rationalize a
core belief that's at direct odds with the cold, hard, and unforgiving reality
they live in. The amount of mental gymnastics done here are Olympian, and this
guy deserves a gold medal.

However, even the fanciest mental tricks are never going to change the
fundamental laws of reality.

In the entire article he dances around second order effects and demonstrates
why they're meaningless. Great, but there's one measure that actually matters:
the percentage of our annual budget spent servicing existing debt. Right now
that number is at 6%, and there's some share under 100% where it will cause
our country to effectively go bankrupt. The closer we get to 100%, the
exponentially higher the chance of bankruptcy.

Right now there's two things which make me scared this number is going to go
up considerably:

One, US tax revenue is going up around 2% a year, but our outstanding debt is
going up around 20% a year. The debt is rapidly outpacing economic and tax
revenue growth. If nothing changes, paying off the debt will be 25% of our
national budget in around 20 years, and 50% in 40 years. That's well within
most our lifetimes, and is well in the extreme bankruptcy risk area.

Two, the US has access to unprecedented low rates of interest right now. The
average rate on it's 23 trillion in debt is 1%. If that were to go up to a
more historical 3%, interest repayment would jump to 24%. Due to the length of
government debt, this transition would probably take around 20 years to fully
happen.

Now combine the two into a nightmare scenario: debt continues to rise over the
next 20 years at its current rate, and interest rates return to their
historical 3%; and within 20 years repaying debt will explode to 75% of our
budget. There is your potential black swan event.

Hopefully action is taken before any of this happens, but something has to
give from where we are now, and pretending that there's no troubled waters on
the horizon is absolutely insane and irresponsible.

~~~
istjohn
On the other hand, top marginal tax rates are a fraction of what they were at
their peak last century. We could double tax revenue at the drop of a hat,
paying down our debt and ameliorating toxic wealth inequality simultaneously.

~~~
dpc_pw
I agree that in principle the inequality is causing instability and , and as
much as I detest socialism, I don't see a peaceful way out of where we are not
involving the "tax the wealthy... a lot".

Some comments: income taxes are the most stupid taxes ever. Rich people don't
have incomes, they have capital gains. Increasing income taxes hurts middle-
class: the rich wannabe. We need to abolish income tax, and turn it into asset
tax, or at very least increase the capital taxes significantly. Tax people
that are already rich, not the ones that are motivated to try to get there!
Once they get there - then you can tax them.

Having said that - the taxes can't be too high, because people don't like
taxes and rich people have plenty of resources to run away with their wealth.

So... there's no really easy way to get out of this mess.

~~~
eee_honda
>as much as I detest socialism, I don't see a peaceful way out of where we are
not involving the "tax the wealthy... a lot"

Socialism != taxing the wealthy a lot.

Maybe part of your "hatred" of socialism comes from a misunderstanding of it?
I make the suggestion because the rest of your comment pretty much outlines
some of the many major problems with unlimited accumulation and concentration
of wealth.

------
neilwilson
The US debt is a problem in the same way that the earth constantly falling
into the sun is a problem.

You've missed a velocity vector in your analysis.

Ask yourself this: if you get dollars for your maturing Treasury, where do
those dollars end up in aggregate? They are either taxed away due to them
circulating past tax points as they are spent and respent, which eliminates
the need for a bond, or they are saved which increases the demand for a new
bond from the individual, the deposit holding bank _and_ the central bank (on
the same dollar due to the hierarchy of money).

Where's the problem?

~~~
AnimalMuppet
_If_ your velocity enables you to stay in orbit, there's no problem. If not,
then you're just falling, which is also fine... until you hit the ground.

As for your analysis of what happens when you receive payment for a bond, you
seem to be saying that the government gets the money back, either by taxing
spending or by you buying a new bond. I don't buy that analysis, for two
reasons. First, I could receive payment for a Treasury, and buy some _other_
investment with it. And second, your analysis would remain unchanged even if
the result was hyperinflation (that's "hitting the ground" in my first
paragraph).

~~~
neilwilson
"First, I could receive payment for a Treasury, and buy some other investment
with it."

You could. But that is just an asset swap. The person who gets your cash is
then faced with the same choice you were - spend it (which will result in
taxation) or save the money (which ends up with a bond purchase).

Always remember that money doesn't stop at the first use.

~~~
AnimalMuppet
No, they are faced with the same choice I was - spend it, or invest the money
in a bond, _or invest it somewhere else_.

In particular, people in aggregate can decide to invest less money in Treasury
bonds. This has in fact been happening - there have been Treasury auctions
that have "failed", which in practice means that dealers buy the remaining
bonds. But they can't do that forever, because the dealers don't have infinite
money.

And even the static picture that you present isn't enough, because the
government is running a deficit, and therefore needs _more_ money to come into
Treasury bonds. The same amount isn't enough. Even the same amount plus the
interest earned isn't enough.

------
dpc_pw
Low rates are a result of boomeres all over the world saving for retirement (+
CB manipulation). As soon as they start using that savings, instead of
accumulating them both inflation and yields will tend to naturally raise
again. More people to care for, less people to do the work -> inflation.
Inflation expectation -> higher yields.

That $175T wealth figure is measured at the peak of everything bubble in the
US. Real estate, stock market, bonds - everything is at the all time highs,
after debt and low yields fueled decade. And yet still, according to the
article government would have to confiscate 10% of __all wealth in the America
__to pay the debt.

And that's just the official debt. What about unfounded liabilities, which are
many, many times higher?
[https://www.forbes.com/sites/johnmauldin/2017/10/10/your-
pen...](https://www.forbes.com/sites/johnmauldin/2017/10/10/your-pension-is-a-
lie-theres-210-trillion-of-liabilities-our-government-cant-
fulfill/#10169e2d65b1)

So basically optimists here say, that to pay the debt the government will need
confiscate more than a half of all the total wealth in US, at its peak,
without causing economic slowdown and without causing inflation (and thus
yields) to spike. And that assuming the government doesn't accrue any new debt
as it is running a balanced budget. And considering that fiscal spending is an
important part of keeping this struggling economy going ... that balanced
budget would have to come from the tax... like you would never seen before
(basically double?). And again... all these taxation without crippling the
economy.

And all that inflation and taxation, without people noticing and trying to
counteract to preserve their wealth (tax avoidance, running into PM, crypto,
foreign assets, whatever.)

Yeah... whatever keeps you sleep well at night. :D

~~~
ThrustVectoring
Inflation is basically necessary at this point in order to collapse the
various asset bubbles without causing a mass default spiral on the debt issued
to finance it. The housing crisis is a good portion of this; we cannot build
our way out of housing without putting homeowners underwater on their
mortgages en masse, and young people cannot tolerate the current trends of
housing prices near areas of economic opportunity indefinitely. The only way
out of this double-bind is to inflate away homeowner's mortgage debt as we
make more available housing to prevent housing prices from inflating along the
general trend.

~~~
dpc_pw
Agreed. But ... can there be A Beautiful Deleveraging
[https://www.youtube.com/watch?v=wI0bUuQJN3s](https://www.youtube.com/watch?v=wI0bUuQJN3s)
? I don't think so. It is all a dynamic system. I think there will be no
inflation for a while, and when it appears it will be massive and almost
uncontrollable. It is hard to "trade" on it, because I could imagine even a
decade of politicians and CBs struggling with a deflation, until they winds
change, and all their efforts finally start "paying of" and we have a period
of a very high inflation. Or alternatively ... a severe stagflation for a
decade or two, where it is hard to pay mortgage (afford a new one) despite
prices generally falling - because eating comes before investing.

------
whatshisface
The interest rates on US debt are artificially low because their default risk
is based on the willingness, not the ability, of the USG to repay them. That's
because the ability is a given, since the government can print the currency
the debt is denominated in. Corporate bonds are a bad analogy because their
risk is mostly in defaulting, whereas if something goes sideways in America,
Treasury bonds will fail by causing high inflation.

~~~
NTDF9
There's a difference. The govt doesn't have this ability to print money and
pay debt. The Fed does.

Which means that the Fed has been keeping interest rates already artificially
low by printing money.

It'll take one misstep or one recession for the debt requirements to be so
high that the Fed will have to make a choice between keeping rates low,
causing massive inflation vs high causing massive drop in gdp and jobs.

The govt will have to make a choice between cutting services vs paying the
debt.

~~~
pjc50
The normal management of inflation by raising interest rates works by slowing
economic growth. There's no reason to raise rates in a recession.

~~~
NTDF9
In a recession:

People lose jobs

Govt pays out more social security benefits

Govt earns lesser tax revenue

Govt interest payments on bonds are still at pre recession levels

So, govt has to issue more bonds

Nobody has the money to pay for those bonds

Thus, interest rates would naturally rise.

The fed could print money to buy bonds causing inflation or the fed could not
print money causing rise in interest rates and furthering economic decline.

This is how the deficits have out the fed between a rock and a hard place.

~~~
pjc50
True up to "nobody has the money to pay for those bonds": there's often a
flight to safety in recessions of people moving money out of the stock market.
Plus all the big international investors. Shortage of buyers is a risk but not
one we've been close to so far.

One lesson of QE seems to be that the Fed _can_ print money in a recession
without causing inflation. Or at least only inflation of asset prices, not
wage/consumer goods inflation.

~~~
NTDF9
> One lesson of QE seems to be that the Fed can print money in a recession
> without causing inflation. Or at least only inflation of asset prices, not
> wage/consumer goods inflation.

You nailed it. There was inflation with the last QE. We just changed what
counts towards inflation.

------
JackFr
> But that's misleading. The federal government itself owns more than a
> quarter of U.S. debt, money the government essentially owes itself. It’s an
> accounting entry. As an asset and a liability, it effectively cancels out.

Well, no. These bonds are held in the Social Security Trust Fund, and while
yes in one sense they are both an asset and a liability, they are also funding
a future liability (although not all of it). So you can cancel them out
against the future liability or the current one, but not both.

(As to Social Security being underfunded, I had an econ professor explain
Social Security could be fully funded immediately if the Treasury could just
issue a new class of bonds which cost a penny and are redeemed for a trillion
dollars in ten years, and sell them to the Trust Fund.)

~~~
ThrustVectoring
You cancel them out against the current liabilities. Retiree spending is
entirely funded by current production; the only real question is whether it's
through taxation or savings (savings is, after all, current production that is
sold and not consumed. This is essentially a tax.)

Social Security's funding level is completely irrelevant - what matters is
primarily how wealthy society is when current workers retire, and secondarily
how much future workers will be willing to save and pay taxes.

------
Mikeb85
Of course it won't. Worst case scenario, if the economy tumbles, the
government prints money to pay debt, inflation happens, confidence is shaken
and the economy slows. But at the end of the day, an economy is characterised
by its ability to produce things and keep people busy (working). Money is
simply the value of labour and production shifting hands. The nominal value
doesn't matter as much as the real value (ie. the shit that's actually being
produced).

~~~
Ambele
If you believe that inflating the debt away is a viable strategy then I have a
100 Trillion Zimbabwe dollar note to sell you for 40 cents. The Zimbabwe
government tried that and look at what happened to their dollar! Also, I have
a loaf of bread to sell you for $1,000.

Nowadays, America's largest export isn't soybeans or corn, it's the American
Dollar. See this link for more info on the Petrodollar:
[https://www.thebalance.com/what-is-a-
petrodollar-3306358](https://www.thebalance.com/what-is-a-petrodollar-3306358)

------
cryptica
It seems like the whole financial system depends on the time delay between
people agreeing to get a certain salary/price and then actually getting paid
and spending it. By the time they actually get paid, the money is actually
worth less than what they had originally agreed to. It seems that large
corporations should be able to make a profit on that delay alone, even if they
produce nothing of actual value. I guess it explains why huge powerful
corporations like Apple and Amazon always ask for money up-front and then
delay payment to suppliers for as long as possible. Seems like a vulnerability
in the system.

~~~
big_chungus
Our government does the same thing. "Tax witholding" means that I lose out
many months of arbitrage. I could have invested that money, saved it an gotten
interest, done any number of things. Tax day is once a year; no one ought to
pay before then. It's a nasty trick to hide just how much people are paying
from those who can't afford fancy financial advisors.

~~~
esoterica
Why do you think you are entitled to not pay a cent before tax day?

~~~
bin0
It's my money, why do you think the gov't should get it early? You're coming
at this from the wrong perspective.

~~~
esoterica
Early compared to what benchmark? You’re treating as axiomatic the idea that
your taxes are only “supposed” to be due on tax day, which is not grounded in
tax law at all.

------
Ambele
Yes this will doom us if it is not taken care of but I expect the American
people will get smart and elect congressional leaders that will care of the
growing national debt before we default.

9.8% of all of our government's revenues (tax dollars) are wasted on paying
interest on the $22 trillion dollars of national debt(1)(2).

1)
[https://www.cbo.gov/publication/55342](https://www.cbo.gov/publication/55342)

2) [https://www.usdebtclock.org/](https://www.usdebtclock.org/)

~~~
Sumaso
Please read the article.

------
simplecomplex
Some say debt to GDP does not matter, because we can print dollars. My
question to them is: Would a 1000% matter? 100000%?

At some point people will start demanding the government provide everything
because they’ve been told debt doesn’t matter and we can print money. It looks
like we’re reaching that point because “Main Street” seeemingly realized in
2008 that there was no limit. That it’s a game of chicken with the Fed. Let’s
give everyone $2000 / mo and free healthcare and education. Why have any limit
on government spending? The Fed will monetize it after all!

Yang might not win this time around, but Yang #2 will be more popular and have
bigger demands. Especially when another downtown and another bailout occurs.
It’s getting very hard to convince Joe Sixpack that the printing press should
only be used for the banks. Yang is the canary in the coal mine.

------
glofish
As the joke goes:

If you owe someone 100K and you cannot pay - you are in deep trouble.

If you owe someone 1 trillion and cannot pay - they are in deep trouble.

------
dusrus
For most households bankruptcy happens slowly, then quickly. I think we need
to be more mindful of our debt. Most people I talk to are like, "It's not a
problem yet." Which implies we will deal with it when it is a problem... which
is dumb.

------
rnernento
This is not a well written or useful article.

First it says debt as a percentage of GDP used to be higher so it should have
been scarier. Then it says current interest rates are low but doesn't give
anywhere near the weight to that statement they should.

Even in the article they state 8% interest was normal 30 years ago but then go
on to say sustained 8% interest going forward is crazy talk. WHY? Why wouldn't
interest rates go up? They certainly can't go much lower...

If they did go up our debt would take a much higher percentage of the budget
than the 18% of the 80's and 90s. This is a very real problem.

------
yasp
What amount of debt _would_ doom us, Mr. Fisher?

------
munk-a
Oh darn, we're talking about the debt again? I guess it's time for Democrats
to be elected, be blamed for letting the debt run away, and cobble together a
half-assed fix that the next Republican presindent blows away.

------
throwaway156503
I no longer know how to view these concerns. The only mechanism I now know of
that creates money in modern economies in order to purchase goods and services
directly, without obtaining funds from circulation from other businesses, is
debt created from financial institutions. In order to have healthy economies
and create money and move capital, you must therefore have debt.

How did western economies function prior to this? I wish I was educated on the
matter. I've not found good reading for this topic outside of the enclave of
academia.

~~~
Mikeb85
Land is a type of capital, landowners could produce agricultural products,
accrue wealth, and debt was a thing back in the day as well. Often projects
would be bank-rolled by wealthy landowners or even royalty (who accrued their
wealth by taxing others). Labour also used to be extraordinarily cheap (or
free). Go back far enough, everything was produced by individual labour, and
things were simply traded for other things.

------
TimPC
The big difference between debt taking 18% of budget at historically high
interest and 8% of budget at very low interest is that if the low interest
ever becomes very high again (say around 9x what it is now, which has happened
historically) you're talking about interest taking 72% of budget which would
be catastrophic. 18% at the historic high would require 4X the historic high
(an 80%+ interest rate, which we have good reasons for believing won't happen
in the US).

------
crusso
Like the housing bubble, our debt hasn't been a problem and it's not going to
be a problem right up until it is a problem. It will be a black swan event and
afterward everyone will claim that they saw it coming and "the other guy"
ignored it.

~~~
MuffinFlavored
In the mean time, are us Americans ever going to get a president that focuses
on paying down the debt?

How much would taxes have to go up (because spending can't go down, right?)
for citizens to contribute their fair share of paying down the debt?

~~~
maxerickson
There were budget surpluses from 1998 through 2001.

One thing you aren't accounting for is tax receipts going up because the
economy grows. It's usually the case that spending goes up at the same time,
but it doesn't have to go up.

~~~
MuffinFlavored
> It's usually the case that spending goes up at the same time, but it doesn't
> have to go up.

I just know I read a lot of headlines about how government programs are
underfunded. I feel like the base of a lot of Democratic candidate campaigns
is about wanting to spend more money for people who need it (impoverished
people, etc.)

~~~
kevin_thibedeau
As opposed to the Republican platform of spending more money while cutting tax
revenue?

~~~
MuffinFlavored
What do Republicans advertise they are going to spend money on? I'm only
familiar with Democrats calling for free health care, free college, universal
basic income, etc.

~~~
smolder
War and enriching military contractors, creating the TSA, subsidies to
businesses that don't need them, etc.
[https://i.ytimg.com/vi/FiW5I95R5xg/hqdefault.jpg](https://i.ytimg.com/vi/FiW5I95R5xg/hqdefault.jpg)

~~~
alfromspace
Say what you want about him, but Trump did run an anti-war and anti-military
spending campaign. The budgets he's approved are a huge betrayal to his base.
There's spending on border security and the wall that's not really happening,
but that's chump change compared to entitlements and broader military
spending.

So it seems like we have the choice of voting for left-wing politicians who
run on increasing spending on new forms of entitlements, and spending will
increase precipitously - or voting for right-wing politicians who run on not
spending like the neocons do, then just do it anyway, and spending will
increase precipitously.

~~~
matthewdgreen
The Senate is largely tilted towards rural areas, and hence Republicans. This
provides a pretty natural check on the spending ambitions of Democratic
presidents, except in rare circumstances. No such check exists for Republican
presidents, which is why our deficits are soaring despite the current record
economic expansion. Take that into account when you vote.

~~~
kevin_thibedeau
The rural Republican base are just the pawns used to build a voting block that
can win elections. The party doesn't actually serve them. That's why it makes
so many appeals to them on election cycles and then always turns around and
only favors policies that benefit wealthy business owners.

------
dandare
“If something cannot go on forever, it will stop.” [Herbert Stein]

Every dollar we spend on interest is not spent on investment.

~~~
wefarrell
When interest rates are lower than inflation you're not spending money on
interest.

------
WalterBright
If the GDP grows faster than the debt, there's no need to ever pay it off.

Similarly, if you borrow money and invest it, and the investment pays more
than the interest on the debt, there's no particular reason to ever pay back
the debt.

------
burke_holland
This is some SERIOUS misrepresentation of the facts. Just as an example: "One-
third of the debt is money the government owes to itself". To itself? And whom
might that be? Oh right, THAT'S US.

That money is owed to the people, and they're probably doing to need it.
Especially considering that Social Security, Medicare, and Medicaid account
for 36% of the federal budget - which is....let me do the math - one third.

[https://www.thebalance.com/u-s-federal-budget-
breakdown-3305...](https://www.thebalance.com/u-s-federal-budget-
breakdown-3305789)

~~~
AnimalMuppet
And they're _probably_ going to need it? Well, when is Social Security
projected to run out of money? I think they're going to need _all_ of it by
then. (Yeah, I know, some is Medicare. It's also projected to run out of
money, just a bit later.)

------
jeffdavis
I don't see the point of talking about the $23T number, which doesn't account
for unfunded liabilities.

I guess the thinking goes that we can it's easier to renegotiate social
security and medicare benefits than to renegotiate the interest payments on a
bond. Not sure that's true -- it seems like inflation is the only reasonable
solution to either of those problems.

------
rrggrr
[https://carnegieendowment.org/chinafinancialmarkets/78304](https://carnegieendowment.org/chinafinancialmarkets/78304)

... the U.S. current account deficit and the country’s high level of income
inequality distort the structure and amount of American savings.

------
mylons
i read some speech from a chinese community party member who's in charge of
some aspect of financial planning, and they're basically counting on this
happening. the speaker said the debt was more or less impossible to recover
from, and it's just a matter of time and patience.

------
bobby444
The debt to GDP ratio has been a major concern for years. That's why I
recently moved me and my family to Texas. Texas is a no income tax state and I
need to keep more of my money and then reinvest it in gold. Maybe I am a
little paranoid but also now have all of my info going to a PO box like a
company, [https://physicaladdress.com](https://physicaladdress.com) just in
case gov goes crazing with trying to take more and more of my hard-earned
income.

------
coliveira
The end of the American empire is determined by the fact that the USA won't be
able to pay for the expenses of maintaining its military force. The US is
already wasting more than half of its discretionary spending on the military.
These military expenses already account for 89% of the federal government
deficit, which will be $1.101T in 2020 [1]. These expenses are going up faster
than GDP growth, and are not expected to go down, since this administration
refuses to close the 20-years old wars on Afghanistan and Iraq, and is now
actively operating in other fronts of the general war on the Middle East. The
US also has to maintain more than 800 military basis in 70 countries. It takes
huge amounts of money to keep a military force of this kind, especially when
the country is under severe deficits, which is the current situation of the US
government. It seems that it will take a few years for the shoe finally drop,
but all the bravado of the Trump era is moving the US into a situation in
which it cannot afford to maintain its empire.

[1] [https://www.thebalance.com/u-s-federal-budget-
breakdown-3305...](https://www.thebalance.com/u-s-federal-budget-
breakdown-3305789)

------
boyadjian
Yes, of course. Every Ponzi scheme has an end. It is just a question of time.

------
EGreg
After Bretton-Woods, there is a lot of demand for US dollars as a reserve
currency. And due to the petrodollar, US dollars are also needed to buy oil.

The US is in a unique situation that lets it print a lot more money than other
countries. At the end of the day, we will end this debt by printing money.
Anyone buying bonds has to factor in the possibility that the US dollar the
coupons are paid in will be devalued. It's not a "risk-free asset". It just
depends on when and how the US will start printing money, and where that money
will go. We did quantitative easing for years, but the banks didn't increase
lending very much.

A good economy is when we should have been raising taxes and paying down our
debt. But instead, the Trump administration presides over the biggest debt,
deficit and trade deficit in our country's history. So it seems to me that the
next Bernie administration will absolutely need to do large infra projects a
la FDR, Green New Deal etc. because the recession may be severe.

~~~
tabtab
Re: _At the end of the day, we will end this debt by printing money._

Normally this risks runaway inflation, but inflation has been subpar of late
such that some "printing" may not hurt. However, it's a bad habit to get into.

To force discipline, we need something similar to a balanced budget amendment
that allows Keynesian stimulus when warranted. However, it will probably have
to have a "timer clause" to kick in several years away and gradually, because
the side-effects could be a dampening of the economy, hurting current law-
maker's reelection. Spreading the bitter medicine out over time may make it
more politically acceptable.

------
SomeOldThrow
The only real problem is resource distribution. While we have the resources
we’re gonna be fine. So power adjusts and America has less. As long as I’m
eating I don’t care. If the government won’t feed its people, well, that
leaves something truly magical in the air.

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ur-whale
Legend has it Picasso used to pay as much as he could using checks [1]

TLDR: not many of these were cashed, because people loved the idea of having
his signature on a piece of paper and kept the checks.

So, effectively, every time he paid with a check, he essentially got products
and services for free.

Now, if you take the dollar - essentially a fed IOU - and in theory ultimately
redeemable against some sort of tangible piece of American property (real
estate, infrastructure, intellectual property, etc ...), it is very tempting
to draw a parallel, namely;

As long as the dollar is the world's currency reserve and people stockpile it,
greenbacks are just like Picasso's checks: the IOU never gets exercised.

And America can keep on issuing debt for ever ...

[1] [https://www.fool.com/investing/small-
cap/2004/12/08/picassos...](https://www.fool.com/investing/small-
cap/2004/12/08/picassos-checks.aspx)

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omani
dont know why people would want to pay back debt.

without debt there is no money. the art is to not inflate too much too quick.

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zarro
crypto will save us

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pjc50
Betteridge's law says no.

Less glibly, this article presents a good set of arguments for why not. The
doomsayers need to be clearer with exactly how their proposed doom would come
about - and why there would be no effective government response, _and_ how
this could happen without the rest of the world economy also getting into
trouble and fleeing to the safety of the US dollar.

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PeterStuer
What stands between the USD and the Zimbabwean Dollar is the worlds largest
military/intelligence power not just prepared but using it's full strength to
enforce the petrodollar.

~~~
PeterStuer
I don't mind the downvotes, but I would rather see rebuttals that would change
my mind.

~~~
Corazoor
Since you specifically asked for it: What really stands between the USD and
the Zimbabwean Dollar is printing press funded spending.

The Fed is doing something similar with quantitative easing, but at a by far
smaller scale, and the money mostly goes to banks anyway. It's injecting
printed money into the real economy that spells trouble, and that is currently
not happening in the US.

Also, while the military is definitely a boon to the US economy, most of that
is indirect via guaranteed jobs and income, not via projected force.

Plus, in case of a hyperinflation, the military would become unmaintainable
very quickly, exactly because of it's size.

All that said, your comment had basically nothing to do with the topic (debt),
so there is where the downvotes come from.

