[Diederich]

The current US federal debt is roughly 110% of GDP. In a few weeks, I'm going to borrow about 350% of my yearly income in the form of a home loan. I'm currently paying about 30% of my pre-tax income on rent, and this future mortgage will be about 22% of my pre-tax income, so on that basis alone it makes a lot of sense.

Less than 10% of the total federal budget goes into debt payments.

The absolute numbers don't really matter, but the percentages do. Trends also matter, as long as they're considered carefully.

[mumblemumble]

One interesting thing about the federal government's debt is that it behaves very little like an individual's debt.

A pretty decent 10-year student loan right now is at 4% interest. And you generally have to pay it back with actual money that you earn.

A 10-year treasury note is at more like 1%, and nobody bats an eye at the government covering payments by issuing more notes. Meaning that, in effect, the US government is getting an indefinite interest-only loan at a pretty low rate.

Actual humans don't get to do that because of a sticky problem: eventually we age out of our money-earning years, and (hopefully some time later) we die. Lenders, understandably, have an interest in getting their money back before that happens. Or at least in getting to the point where the loan is collateralized by assets that are worth more than the loan's balance by the time that happens. And that's the ultimate reason why revolving debt gets worrisome: It's running down the clock.

The US government, on the other hand, is theoretically immortal. There's a risk that it might become insolvent at some point in the future, but there's not the same reason to worry about handling debt by endlessly revolving it, because there's no proverbial clock for it to run out.

[Diederich]

This is all true and on target. Comparing US federal debt to personal debt beyond anything but the most surface level is inappropriate.

Another class of entities that have a kind of 'forever debt' are large corporations. In general, they never want to be debt free. As I said elsewhere, it's about the percentages and trends.

To be clear: even this comparison has weaknesses. Indeed, US federal debt truly has no direct parallels.

[atemerev]

Of GDP in the largest economic boom, enabled by past borrowings.

[Diederich]

Yup, all true.

I'm not necessarily defending past or present fiscal policy. I'm pretty concerned about this stuff as well.

[baxtr]

What exactly are you concerned about?

[Diederich]

I'm fine with the US Government printing money when it makes sense to, such as during an economic downturn. However, since 2016, generally regressive federal tax policies without commensurate spending cuts during an economic boom have un-necessarily increased the national debt.

(To be clear: I don't think we should have been cutting social spending. But we definitely should not have been giving huge tax breaks to the most wealthy.)

[baxtr]

Got it thanks. And you think that’s something to be concerned about because the ability to print money is reduced by every bill printed and thus should be used modestly / wisely?

[Diederich]

I don't think anybody knows how much money the US can 'safely' print. My guess is that we can print quite a bit more, but who knows.

So to answer your question: it's likely that the future probability of safely printing money goes down as more money is printed, thus making that ability a scarce resource.

My intuition is that the federal government giving additional money to the wealthy (as it has done since 2016) is of less marginal value to society than retaining the future ability to print equivalent additional debt.

I could be wrong of course.