
U.S. National Debt Soars to a Record $22T - pseudolus
https://www.bloomberg.com/news/articles/2019-02-12/u-s-national-debt-soars-to-a-record-22-trillion-chart
======
lkrubner
The national debt belongs to someone, and for them is an asset. The debt is a
source of income for some, and when they spend that income they are spurring
the economy.

For those unable to print their own money, there is a definite limit on how
much debt that one can carry, though the total amount of debt that can be
carried varies based on the prevailing interest rates.

On December 19, 1980, the prime rate hit 21.50% [source: 1], and in such
situations it is difficult to run up large debts. Right now the prime rate is
just over 5%, which makes large debts easier to manage than 39 years ago.

However, the USA government can print as much money as it wants to, and in
that sense it can fund infinite debt. It could issue hundreds of trillions of
dollars of debt and then print the money to pay the debt. The result would be
inflation. For that reason, economists often point out that the only limit on
USA government debt is how much inflation people are willing to tolerate.
Since inflation has been in decline for the last 36 years, the presumption is
that the USA government could print a lot more money, and cover a lot more
debt, than it has so far.

[1]
[http://www.fedprimerate.com/wall_street_journal_prime_rate_h...](http://www.fedprimerate.com/wall_street_journal_prime_rate_history.htm)

~~~
em3rgent0rdr
Inflation has been lower than it was at the very high levels around 1980, but
it has still been greater than zero for every year since, except 2009. [1]

[1]
[https://www.usinflationcalculator.com/inflation/historical-i...](https://www.usinflationcalculator.com/inflation/historical-
inflation-rates/)

------
tabtab
There's not enough disincentives (punishment) for politicians who jack up debt
and pensions. A typical political career having direct power is roughly 7
years. Thus, if you can "borrow" from 8+ years down the road to improve the
here and now, it will benefit your personal political career at the expense of
the next generation.

We thus have to find incentives to punish existing politicians for debt and
future-unfriendly decisions. Maybe require Congress to wear a chicken suit for
1 week for every 1 trillion in debt every year. Embarrassment is a powerful
incentive. (An exception may be made for recessions that need a stimulus.)

~~~
nostrademons
One simpler way of achieving this is to lower the voting age. Younger voters
consistently weight the future higher than older voters, because they'll be
around for more of it. There are active efforts now to lower it to 16; I would
go further and lower it to 10. Combine that with efforts to improve voting
accessibility (eg. make election day a national holiday) and you significantly
shift incentives for politicians to weight future consequences over present
gains.

~~~
redblacktree
16 I kind of understand, but do you know any 10-year-olds? I'm not sure we can
trust their judgment.

~~~
NeedMoreTea
Can we trust the judgement of everyone else then? Voting should maybe expire
at some point, like driving licences.

The head of politics at Cambridge University, who you might think would know
better, made a more extreme suggestion: Voting for 6 year olds.

[https://www.theguardian.com/politics/2018/dec/06/give-six-
ye...](https://www.theguardian.com/politics/2018/dec/06/give-six-year-olds-
the-vote-says-cambridge-university-academic)

------
whitepoplar
This is scary because the more debt one holds, the more accurate one's
predictions of the future need to be to manage that debt. What happens if
we're wrong about our growth predictions? What happens if we have another
market crash (and it's worse than 2008-9)? What happens if we end up fighting
a war? I think if the future is uncertain, and it always is, it's a bad idea
to hold this much debt.

~~~
supermw
Relax. The United States could easily pay off its debt if it should be
necessary. Inflation makes it cheaper to delay paying it off for as long as
possible. There are still debts out there from the 1600s being paid off. In
the 2400s, we will likely still see debt from today being paid off, should we
be alive somehow.

There will be another market crash, it’s not a big deal it happens every so
often and life moves on.

If there is a war, the size and strength of the US Military virtually
guarantees we will win.

It’s not so bad. Nothing can touch us.

~~~
nostrademons
I agree with the points that you did make, but there are significant tail
risks that you _didn 't_ mention.

Historically, the usual failure mode for empires that consistently inflate
their currency is that those entrusted with the empire's military might become
loyal to those who can pay them with hard assets that _don 't_ lose value as
soon as they receive them, whether it be foreign currency, Bitcoin, land, or
private data that they don't want to become public. Basically, you get
warlords and mercenaries, and society reverts to a quasi-feudal system. The
risk isn't war in the sense of Great-Power conflicts, it's war in the sense of
national disintegration, like what happened in Russia, Venezuela, Yugoslavia,
Zaire, Somalia, and Rome.

~~~
supermw
The United States has the greatest reward for those who fight in its military:
You are an American hero, a soldier of the greatest most powerful country in
the world, and not just because we say so.

------
40acres
Not to go all MMT here, but so what? We print our own money, have the biggest
economy in the world, and despite all the pearl clutching we're one of the
most stable economies / governments in the world with a lot of highly skilled
workers and a reputation for innovation.

If you're betting on governments you can do worse than the US. The absolute
number of debt is scary, but do you doubt we'll be able to pay back our dues?

~~~
lsiq
It's simple accounting, as interest payments on the debt become an
increasingly higher part of the budget, the end result becomes insolvency.

Of course, an actual default for a country like the U.S. is a very unlikely
outcome for a variety of reasons. What is more likely, is that inflation is
allowed to rise and 'eat' up the debt. The "hope" is that a mild rate of
inflation is sufficient to do so. I doubt it though, there have always been
periods of high inflation, and there is no reason to think they will not
return.

~~~
redblacktree
US central bankers have had the opposite problem in recent decades. Inflation
rates are below target.

------
xchaotic
The only thing that's new is that the debt keeps getting higher during growth
stage. Previously the idea was we loosen the policy and borrow some money when
the economy is slow and we tighten when things are moving better again. But
there is no proof that the austerity actually is a good thing for the country
or the economy - after a sovereign debt, especially in the case of US which is
still denominated in USD is a bit of a fictional concept - an act of law could
abolish it, for example. Also the interest rates are still so low that it kind
of does make sense to keep expanding the balance sheet further as it's easy to
service such low rated debt.

------
dkskskdkxmzn
I encourage everyone in this thread to read about Modern Monetary Theory, an
economic framework becoming more and more popular among professional
economists that provides the clearest way to understand the nature and purpose
of the national debt — which by the most sensible measure is much too small.

[https://www.nytimes.com/2017/10/05/opinion/deficit-tax-
cuts-...](https://www.nytimes.com/2017/10/05/opinion/deficit-tax-cuts-
trump.html)

------
dumbquestions
What's the best way to conceptualize the national debt? How does it compare to
personal debt, where racking up a high figure would make it difficult to get
loans, etc.?

~~~
toomuchtodo
Sovereign debt isn’t the same as personal debt. You wouldn’t want the country
to operate with zero debt. With that said, debt is a claim on future
productivity. Do you believe that we will be productive enough in the future
to service this debt? Or that there will be more workers to pay for this debt
than there is today? If not, consider how that changes the risks involved, as
well as the risk the federal reserve inflates away the debt (ie your
purchasing power drops through the printing of money to pay for the debt).

Politicians today keep spending my kids’ future (both their inheritance and a
claim on their time through US tax policy on foreign earned income), and
that’s unsustainable.

~~~
ForHackernews
Assuming climate change keeps going the way it looks like it will, servicing
the national debt will be the least of your children's concerns.

------
brink
One thing I often wonder about is how far the world's financial system can be
stretched with debt before it just simply breaks. I know it seems far fetched,
but could a global debt reset be a thing?

------
dagoat
Perhaps there's a strategy to reducing debt in the long run that involves
taking on more debt in the short term? Spend money to make money as they say.

Slightly off the beaten path, but:

IIRC, roughly, the U.S began transitioning from a creditor nation to a debtor
nation around the time of the Nixon handshake. Some argue that period marked
the beginning of the end for the U.S as a superpower. Of course, that result
has not fully materialized yet - if it will at all.

------
fishingisfun
i still dont understand how the debt system works. if someone lends you a
dollar and expects 2 dollars back - then somewhere in the system the extra
dollar needs to exist. All the debt in the world is more than the available
money due to interest. So debt can never go away right?

~~~
Retric
Think of juggling you don’t touch all the balls at the same time.

Debt is useually paid back over time. I borrow 100$ and pay you 1$ in interest
and 1$ in principle. You now spend, loan, or invest that 2$ to somone that I
can trade somone for to get one of these 2$ to pay you another 2$.

Over time I end up paying you 200$ even if there are never actually 200
different dollars around at any one time.

The only confusing bit is assuming when you loan banks actual money (A.K.A.
deposit money) the amount listed in your account is also actual money vs a
simple IOU. The difference is only important when the bank runs out, so mostly
it’s irrelevant until something unusual happens and it’s not.

------
nrclark
Out of curiosity, do new debt records surprise anybody? We've been running a
deficit for a long time now. So we'll have higher debt every year until that
changes (or until it all crashes down).

------
gammateam
I don't get the impression that this headline and metric is useful.

My understanding is that there are various ways of calculating the National
Government's long term and short term financial obligations. This particular
metric excludes large underfunded obligations, while containing obligations
that are never intended to be paid? The proportion of debt to GDP is also only
marginally useful and it is unknown if there is a level where market
confidence is shaken. Isn't that the direction all threads on this topic go?

------
0x54D5
The math: We currently bring in 3.34 trillion in tax revenue per year. Our
outstanding debt is 22 trillion with a yearly 2% interest payment of $440
billion.

If the debt hits 174.2 trillion (which is only x8 what it is now) then we will
have to spend the entire budget just to make interest payments.

If we default the dollar is likely to collapse. The value of the US dollar is
propped up by US Government bonds.

------
jngreenlee
But will this gather enough attention to give Schultz a push? I think Perot
based his campaign on something similar.

I'm not sure how this all plays out in the long run. But I often suspect we
are stealing from our future (or children's future) with this much debt
becoming an "anchor" on future productivity gains.

I think there was older writings about "the work week shrinking"
eventually...but it hasn't...is this to make up for the 'stolen' productivity
gains needed to pay for increased national debt? Are we in a giant pyramid
scheme?

~~~
lkrubner
The national debt belongs to someone, and for them is an asset. The debt is a
source of income for some, and when they spend that income they are spurring
the economy.

For those unable to print their own money, there is a definite limit on how
much debt that one can carry, though the total amount of debt that can be
carried varies based on the prevailing interest rates.

On December 19, 1980, the prime rate hit 21.50% [source: 1], and in such
situations it is difficult to run up large debts. Right now the prime rate is
just over 5%, which makes large debts easier to manage than 39 years ago.

However, the USA government can print as much money as it wants to, and in
that sense it can fund infinite debt. It could issue hundreds of trillions of
dollars of debt and then print the money to pay the debt. The result would be
inflation. For that reason, economists often point out that the only limit on
USA government debt is how much inflation people are willing to tolerate.
Since inflation has been in decline for the last 30 years, the presumption is
that the USA government could print a lot more money, and cover a lot more
debt, than it has so far.

[1]
[http://www.fedprimerate.com/wall_street_journal_prime_rate_h...](http://www.fedprimerate.com/wall_street_journal_prime_rate_history.htm)

