Upsetting how we are reaching these lows while the administration is accusing everyone else of wasting taxpayer money except for themselves. At least under previous administrations you would get something for your money, like science funding and healthcare for the needy, not just bombing runs and posturing.
The Republicans have ran on 'starve the beast' and intentional breaking of our government/programs/etc in order to meet their philosophical aims for 40 years. Republicans actively try to damage our country and do bad fiscal policy because they put their agenda over the the health of the nation.
It's not surprising they don't care because they literally have policy to do damage like this and their explicit goal has been this exact outcome.
Both can be true. The previous administration bailed out the unfunded pension funds of cities and state employees when they did Covid-19 bailouts despite it having nothing to do with Covid-19 and without requiring these local governments to properly fund these pensions moving forward. They bailed these pension programs out many times more than their financial support for restaurants they forced closed. Basically, America has an economy that is buoyed by AI development and infrastructure spending right now but is poised to pop and the national debt has been ballooned by two to three generations of political leadership failing to properly address underlying issues and instead printing money.
It's a difficult tradeoff. By taxing more and more it's easy to send the economy into the death spiral so to grow the revenue without killing the economy you need economic growth. Cutting taxes will not give the growth aromatically but carefully designed tax system with low taxes where it helps should be a part of the strategy.
In practice though tax cuts usually make rich richer without helping the economy to grow (because of lobbying/corruption).
> In practice though tax cuts usually make rich richer without helping the economy to grow (because of lobbying/corruption).
This is being generous. It's much simpler.
The poor don't pay any federal taxes at all so you can't give them a tax cut because they don't pay any. You can give them a credit at best.
Edit:
Some data
> Another 60.3 million returns showed AGIs of less than $30,000. The average effective tax rate for those taxpayers was 1.5%, even before refundable tax credits were applied.
> The poor don't pay any federal taxes at all so you can't give them a tax cut
Even if we exclude poor there are many options how to split taxes between different income brackets, how to tax salaries vs capital gain, how to split taxes between individuals and businesses, how to avoid loopholes e. t. c. (e. g. in the UK I see small business struggling because of rising taxes while multinationals pay little taxes by moving profits offshore and reporting no profits in the UK).
The US spends $2 Trillion dollars on Medicare + Medicaid a year [1][2].
Given that the US has a population of 342.7 million people [3], those two trillion dollars divides out to $5800 per resident per year.
The UK's universal healthcare system costs ~$4700 per person per year (~£3,500)[4].
If we could spend healthcare dollars as efficiently as the UK, the current government spending in the US is enough to support a single payer healthcare system covering every resident without raising taxes.
> Given that the US has a population of 342.7 million people [3], we could have single payer healthcare for every resident without raising taxes if it cost less than $5800 per person per year. The UK's universal healthcare system costs ~$4700 per person per year (~£3,500)[4].
Except we couldn't. For the same reason our public schools can't get Finland's test scores while spending $3,000 less per student pear year than the U.S. For the same reason our public transit systems can't build subways for $100 million per km, like Spain.
They do not think this. They pretend to still believe this in order to continue their 'starve the beast' strategy, but their actual goal is to damage the government/run up debt, not the pretend 'trickle down economics' they claim.
Right they (the politicians) don't actually think that, they just say that to get cooked projections. Once those revenue projections turn out to be false, it doesn't matter because they already have their tax cuts baked in. Then everyone can blame the other side for deficits and campaign on fixing it. Rinse and repeat.
Let's be clear and not do this both sides thing - by "they" we mean Republicans. You may not agree with their policies or what they want to spend money on, but Democrats (at least in aggregate) live in the real world where they acknowledge for the government to spend money they will have to raise taxes.
Republicans are the only party that in the 21st century acts as though we can simultaneously cut taxes and increase spending and everything will be fine.
As far as I have seen, in federal politics, the majority(left and right) spends, while taxes in general have not been significantly increased or decreased(percentage). What you are talking about is their rhetoric, which may be rhetorical itself.
What does change(and is more important) is Debt/Revenue:
The ratio is looking like it is trending in the right direction. If GDP decreases while nominal tax receipts increase, GDP does not change the debt, while the debt/Revenue ratio looks good for paying bills, while not boding well for economic health.
What is this "real world" you are referring to? There has to be a balance between current and future expenditures and economic health to facilitate these. Nothing exists in a vacuum.
There are two ways to tax the people: By destroying money or by creating money.
Republicans may generally prefer creating money over destroying money, but that doesn't mean they aren't applying taxation. "Tax cuts" in normal speak just means a reduction in how much money is being destroyed. It does not refer to a reduction in your tax burden.
"Taxing billionaires" is the left's version of "cut Medicaid fraud." It's a message for low-information voters who have a gut feeling that free stuff will require more taxes, but get confused converting from billions to trillions: https://www.washingtonpost.com/opinions/2020/03/06/msnbc-sug...
That's why Democrats say "we're the only developed western country without universal healthcare," but never "we're the only developed western country without a 15%+ VAT."
It's likely not politically feasible for a genuine attempt at right-sizing our budget, although we have had attempts (short-lived) in the past. Blaming a political party for this is pointless, although there is a party that has postured as the fiscal adult in the room.
It could be a very messy bubble if/when it collapses, and I think our way out at this point would have to be AI-driven productivity gains. Hopefully Altman's little wish-granting machine ends up being accurate.
Bailing out workers is okay. They are, by definition, the people who have done the work. Bailing out the wealthy, or tax cuts for them is not. Unless you are very wealthy, you are a worker, and unless you experience a lottery winning type event, will never be very wealthy.
> Basically, America has an economy that is buoyed by AI development and infrastructure spending right now but is poised to pop and the national debt has been ballooned by two to three generations of political leadership failing to properly address underlying issues and instead printing money.
Maybe we shouldn't have spent five decades giving the wealthy tax break after tax break while hollowing out the middle class and suppressing wages with union busting and globalization. Productivity is up ~90% over this time frame, and most of the gains have gone to the top 1%. But here we are. The bill has come due for strip mining the country economically, and taxes will go up to pay down this debt (because only the top ~40% of income earners have enough income to have a federal tax liability). We will fix this eventually through demographic compression (economic growth comes, broadly speaking, from population growth and the US has reached peak population; forward growth will be substantially lower than the past when the population was growing rapidly), politics, and the bond market forcing the US government to raise taxes (“bond vigilantes”).
it won't be the wealthy or cash-under-the-table classes paying these taxes, the increases will be in the income brackets. Which means paycheck receiving working stiffs ( middle and upper-middle class ) and retierees drawing from a 401k/IRA are the ones who will pay just like always.
> Bailing out workers is okay. Bailing out the wealthy, or tax cuts for them is not.
Hell, between PPP and the OBBB tax cuts, rich people are getting $2T over from the YS Governemnt from 2020-2030. It’ll keep happening too, this country is an oligarchy now. Wish it wouldn’t but I don’t see a sea change coming, just further concentration of wealth and power.
There are more than two numbers, so we don't have to force this weird "it's either 0% waste or 100% waste" dichotomy. No one is claiming the Biden admin didn't waste a cent, the claim is that the Trump administration is wasting _orders of magnitude_ more money than the Biden administration.
The hypothesis is that lowering taxes rates will actually increase government revenues.
The Trump cuts don't feel like they're laffer optimal. Instead they feel like political capture by the wealthy class. A cumulative of left of laffer optimal tax strategies over the past years have resulted in a deficit growing at rates which now exceed what a laffer peak rate would now support.
- the rich got their tax breaks, and have contributed to deficits for decades. Now they complain that social security entitlements must be cut to keep within our means.
It's really more that the (narrow, academic, theoretical) Laffer curve provided cover for the Reagan admin to cut taxes in the ways their backers wanted, but this is admittedly unproven AFAIK. But then there's the observable fact that the Reagan cuts weren't Laffer-optimal either (revenues went down, not up). It's not clear that there is a Laffer-optimal tax cut that can currently be made, but instead of making a case for that it has just become "centrist" dogma that lower taxes always increase growth and revenues, and are always optimal no matter the actual fiscal or economic situation.
I think the more interesting observation is that neither Clinton, nor Obama, nor Biden made any effort to roll back the biggest part of Reagan's tax cuts: reducing taxes on the middle class. That's quite remarkable, because that's the area where the U.S. diverges the most in tax policy from other western countries.
> As much as people may dislike Regan, his goal for reducing taxes on the wealthy was based upon the laffer curve.
If this were the case, revenue would have gone up after the tax cuts. They didn't. Receipts as share of GDP fell and the deficit tripled. The debt went from 25% of GDP to 40% of GDP during Reagan. We've never meaningfully been on the wrong side of the Laffer curve. It's basically just conservative propaganda at this point.
As the other post mentioned, the strategy is and was Starve the Beast. We know this because that's what Reagan actually campaigned on.
> "John Anderson tells us that first we've got to reduce spending before we can reduce taxes. Well, if you've got a kid that's extravagant, you can lecture him all you want to about his extravagance. Or you can cut his allowance and achieve the same end much quicker."
I don't want to waste money bombing Iran either, but the total cost of the operation has been $37.5 billion. Meanwhile, Medicare, Medicaid, and Social Security each grew around $100 billion in the last year.
> Meanwhile, Medicare, Medicaid, and Social Security each grew around $100 billion in the last year.
While we should be efficient with these programs, that's what government is for, and what I pay US federal taxes for: to take care of my fellow citizens. Not to bomb innocent people with overpriced military industrial complex hardware on the other side of the world for illegitimate reasons (F-35 program costs now exceed $2T, for example).
Annual net interest on debt is ~$900B/year, as of this comment; we could replace Medicare and Medicaid with Medicare for All for ~$2T/year, which would contribute to constraining healthcare spending increases: https://news.ycombinator.com/item?id=48666290. It is an active choice to continue to operate the entire system inefficiently; we could make other, better choices. The inefficiency and debt growth is a result of operating the system for entrenched interests to profit off of the dysfunction.
A common conceit in these arguments is that you have sole ownership to "what a government is for." Which implicitly denies the opposite argument without addressing it, and attempts to legitimize your own. But social service outlays are absolutely, incontrovertibly a huge & increasing reason for the deficit. All the doge/ Trump/project 2025 cuts have paled in the face of the absolute juggernaut that is domestic spending. And then you realize that state govts spend as much money as the federal govt, while having absolutely no defense budget at all.
For you to deny that social spending is problem (especially for what it does buy) totally denigrates you and your position.
Much less for the money than in western europe--even when limiting the analysis to systems like schools and transit that are publicly operated in both places.
I don't have a basis for evaluating that calculation. I'll point out that their methodology seems to rely on taking various estimates of per-day costs then multiplying things out. It also relies on per-campaign costs from prior conflicts and turns them into per-day costs. I don't think you can do that in an intermittent war that has no boots on the ground.
Regardless, the federal government's job is, in fact, to bomb hostile countries that threaten shipping lanes. That's the federal government's actual job, not social welfare. I agree that we mistakenly precipitated the situation that now threatens the shipping lanes, but we are where we are. And it's not like that dry firewood wasn't already there.
I also don't understand the emotionalism of "fellow citizens." "American" is a label for a group of consumers living within a defined border, who want to get their oil and foreign goods shipped to that location. It's even more clear today that keeping shipping lanes open is the federal government's core responsibility than it was in 1789.
> If American foreign policy was rational, we wouldn’t have been involved in Korea, Vietnam, Iraq, and now Iran. Not to mention Somalia, Kosovo, and Libya, and countless minor skirmishes. We’ve been throwing kids into the meat grinder for 75 years, and lighting dollars on fire, for no good reason. There’s no reason for us to light money on fire having bases all over the world, when we have two huge oceans to protect us.
Except these programs keep your people alive and healthy and able to work and consume and live. The other money just kills people. And it’s also not just about this “operation” (aggression war). It’s about the whole military budget. Come on, now.
I also thought that the military budget was too big... in 1998. But in 2026, Europe is raising defense spending targets to 3.5% of GDP, which is more than what the U.S. spends: https://www.bbc.com/news/articles/clyz4nq91wpo
It turns out that, if the U.S. isn't willing to guarantee your security, you have to spend 3-5% of GDP on defense (just like Europe used to do before 1990). As the U.S. loses hegemony and we move to a multi-polar world, everyone's military budgets will go up.
It always gives me an ominous feeling to see these headlines. It's like we're walking out further and further on a frozen lake. "Hey, it's OK, the ice hasn't cracked yet! Let's keep going!"
This idea is based on the fantasy idea of "it's fine because the US can just inflate away its currency to reduce its debts". This is also often used as an argument for why countries shouldn't join the Euro because they'd be giving up an important tool.
The reality is that purposefully inflating your currency to reduce your debt burden is going to upset your creditors just as much as if you just defaulted on your debts, but will have the added affect of crippling your economy with inflation. Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% *monthly* inflation like in Argentina or Turkey?
It's not like lenders won't notice if the USA tried to print its way out of debt.
> It's not like lenders won't notice if the USA tried to print its way out of debt.
For historical context, this is exactly what happened when the US was on the brink of leaving the gold standard.
> From 1963 to 1966, France secretly implemented Operation Vide-Gousset to repatriate 3,313 tons of gold reserves from the Bank of England and the New York Federal Reserve. It took over 44 boat trips and 129 flights to export the gold back to the Banque de France. Since France converted its dollar holdings into gold, the French made out well when the dollar fell during the Bretton Woods period and lost 96% of its value against gold. France then withdrew from the London Gold Pool in 1966 after recovering its gold holdings to force the US to endure heavier losses.
To be fair, it wasn't 6%. The consumer basket gets manipulated in all sorts of ways, but in general it's just not an accurate representation of day to day impact. Food and housing went up much much higher than 6%.
Whatever the number is, we know for a fact that it was
1. Extremely painful to Americans, and became one of the main pillars of their election.
2. Nowhere near high enough to cause any reduction in the USA's debt burden.
I think modern Americans are way too soft to even imagine the sort of inflation that'd be required to erase their debts. Things have been too good and too stable for too long to understand what country-wide economic hardship would be like, and even if they somehow decided to choose that path, they'd panic quit it long before it was done long enough to have any effect.
1. Markets are aware of that and lend to China accordingly (the ones who are free to choose who to lend to).
2. Do you think Americans would tolerate having a government that purposefully suppresses their purchasing power through structurally low wages, and buying up foreign assets to supress the value of their own currency?
3. The part where China spends all their cash to buy US Treasuries to supress the value of their currency wouldn't really work as well for the USA when international trade is dollar denominated anyways, and the bulk of their GDP comes from domestic consumption.
4. The USA has a deficit. It'd need to borrow even more in order to finance the suppression of their currency, whereas China just redirects the money they earn from export surpluses.
they might be pissed off, but would lack standing to take land or something else instead. Ultimately you are fine, just without the ability to take on more debt. you get to keep your assets.
the scale of problem is much worse when Haiti was forced to pay France a debt for freeing itself of slavery. Having to produce physical goods and sell them is much harder than giving out paper or adjusting numbers
What you're describing is identical with simply defaulting on loans and say "we're not going to pay you back".
Inflating away your currency has the same effect with the added downside of destroying your economy simultaneously.
________
In fact, the only time I can really see the argument for wanting the ability to inflate away currency to escape debt is if the country is weak and in a precarious enough position that they are legitimately worried that actually formally defaulting would lead to an invasion.
This used to be true, but less so after the US started alienating the rest of the world with tariffs and other erratic behavior. The US military has also been revealed to be incapable of controlling the strait of Hormuz.
The quiet part you're not supposed to say out loud is the "if you don't use our currency to transact for energy and thereby let us tax it via inflation we'll regime change you" implication it comes with.
Except it's not a bank, it's a country with a few hundred million people that need to work and eat. Once the lenders have a problem, it would already be the end for Americans.
Total debt / GDP is the wrong metric for that. There's no limit to the serviceability of debt in a currency you print.
It makes more sense to conceptualise it as the total size of a giant savings account run by the government.
We are walking further out on the ice but that is measured more in other ways - with harder metrics like inflation, access to cheap energy, resources, industrial density and capabilities and access to technology - not this headline number.
Even if we just ignore inflation and other issues, there's still a hard limit because governments don't literally just print money, but sells bonds at market rates. As confidence in the economic stability declines the interest rates the government is required to offer on those bonds trends upward. So right now even 10 year treasuries are selling with just under 5% interest. As a result we're now paying $1.4 trillion per year in interest alone, and that number is going up far faster than the economy is growing. This [1] graph looks quite disconcerting. And it's a vicious cycle. The less confidence there is in the stability of this game, the more the government will have to pay to sell that debt. And the more they have to pay, the more debt they end up needing.
>governments don't literally just print money, but sells bonds at market rates
no, sometimes they literally do exactly that.
google for quantitative easing. that's what it is and it's a tool that can always be used by monetarily sovereign countries to bring bond interest rates down by as much as they want.
The reason Federal Reserve banks are independent in most/all countries is precisely to avoid this sort of scenario where the government just relies on their ability to print money to finance infinite deficit spending. Governments want to do this because it's politically beneficial in the short-run (e.g. before an election) but it's catastrophic in the longer term due to inflation, economic instability, and other consequent issues. And QE drives up inflation in a scenario where the US is already having relatively high rates and high inflation. QE in this scenario would be like throwing fuel on a fire.
Maybe you can argue that if the alternative was complete insolvency then the Fed would feel obligated to comply, but you find yourself in a scenario where you're choosing between immediate economic collapse and rapid economic collapse.
Debt-to-GDP ratio is useful for comparing the debt loads of two countries, but not terribly useful in assessing the serviceability of debt for a single country.
That is, suppose two countries both have $100B in debt. One of them is a small island nation; the other is a global superpower. Obviously the global superpower will be better able to handle that - dividing by GDP helps make that clear.
However, this simple division doesn't tell you some important things. How much of the debt comes due very soon? It's worse if the answer is "most of it." How was it incurred? "Winning a war" is much better than "losing a war."
The United States has lots of debt, and personally I'm worried about the long term serviceability of it. But the ratio to GDP isn't why!
Not an American, but I would argue that this level while little bit of a concern is not a huge issue for a superpower that borrows in its own currency and has the military and economic might to crush any party (sovereign or corporate) attempting move away from that system.
Some of that power comes from things like US Treasuries being rock solid, and this is the sort of thing that could change that. There are other players out there and other ways the world could trade and fiance.
There's a LOT of reasons for them to not want to do that, and the status quo benefits a lot of other powerful players as well, but screwing up treasuries would be a quick way to change that math.
We are still too powerful, but we're squandering that power alarmingly fast. We have destroyed diplomatic soft power. Our software industry used to be able to rely on getting 50% of their revenue outside the US, but we can't be trusted now, and that market can no longer be counted on.
One can get away with being an asshole only so long.
Maybe so, but our weakness is that we depend on new debt to finance our government spending. If investors stopped buying that debt, the US government would have to make sudden, dramatic spending cuts.
And that's not a problem that's solvable with military might! "Investors around the world are declining to buy US government bonds" can't be bombed the way an oil refinery can be.
It's not a problem when other nations borrow in the fiat currency. They're being taught to seek alternative, more tolerable regimes to invest in. Once they establish a better alternative they won't come back.
TBF the US military are not magicians. Seemingly everybody except for five people in the White House was aware that you can't successfully invade Iran, no matter how many carriers bombers and bombs you've got. It's peak asymmetrical stupidity to have tried. No amount of additional military spending will fix that. Only 2 1/2 years more to go.
Bingo! Any country borrowing in its own sovereign currency cannot default on debt in that currency, unless it actively decides to do so for political reasons.
This is a fantasy. Do you really think lenders would just not notice if America inflated its currency away to get rid of its debts, and they'd just say "aw shucks you got us. Anyways, here's a new loan at the same terms as last time." ?
And what about the American public? Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?
A government with its own sovereign currency doesn't need lenders. In fact, it is the government that allows lenders to lend money - not the other way around.
> Anyways, here's a new loan at the same terms as last time." ?
Why would they need to get a loan for from a lender?
> How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?
Do you think that printing money automatically causes inflation? How does that work? Do people have some kind of magical device, or is it a physical phenomenon that can be measured? Of course not. Printing money only causes inflation if it is spend in a way exceeds the capacity of the market.
>Relative to the size of the economy, interest costs would reach 3.2 percent of gross domestic product (GDP) this year — eclipsing the previous high set in 1991.
>As a share of federal revenues, federal interest payments rose to 18.5 percent by the end of last year, exceeding the previous high set in 1991.
The stock and real estate market, huge sources of wealth for the us population, are still near all-time highs and many people, tens of millions at least, have way more real money than they’ve ever had in their lives, and yet a massive number of those people would rather not take a hit to their wealth when it’s easiest to absorb the hit and instead prefer cutting things that even they like the government providing (medicare this week the latest example in an endless number of examples these past months). It really is crazy how wealth-obsessed many Americans are.
And I say that as an absolute hater of how the pols run the place (yes both sides. One for having no sense of how to manage money and the other having some sense but ignoring it; one of these is objectively worse than the other (yep, I said it, objectively!)).
Seems like the end goal is not to have a country left but instead a bunch of factions more likely to be at war fighting over cash, resources and culture issues. Depressing as fuck for those of us not excited about that end goal.
Why is this a meaningful figure? It's not debt that matters its how much it costs to finance it. It's Finance 101 that if you manage to borrow below inflation rate, and you have the luck that what you paid for appreciates, then your debt will disappear over time.
On the contrary, trivial amounts of money with usury can ruin you financially.
This Finance 101 perspective is too clever by half.
Sounds like a great idea, right? But what if something out of your control[1] happens, and average interest rates on the debt burden go up from 2% to 14%? The USA can't afford to just pay off all of its debts. It must continuallly roll over it's old debts to new debts, and could easily find itself in a situation where debt servicing costs go up by an order of magnitude if the fiscal situation changes for long enough.
[1] Or in the case of the United States, you do something very stupid and very inside of your control
Not a finance person, but my understanding is that the US govt is indebted via bonds which pay according to their issued yields.
So the interest rates are the yield rates of said bonds, and if the dollar were undergo hyperinflation, then said debt would inflate away.
Sure, that would mean getting future financing would be difficult and expensive for the US, but that's a problem down the line, and goes beyond just the current debt.
For the record, I do not agree with current US foreign or domestic policy, but I wouldn't say it doesn't serve current US financial interests.
Copy-pasting my comment from elsewhere in the thread:
This is a fantasy. Do you really think lenders would just not notice if America inflated its currency away to get rid of its debts, and they'd just say "aw shucks you got us. Anyways, here's a new loan at the same terms as last time." ?
And what about the American public? Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?
In almost all cases, you're better off just defaulting on loans than pursuing hyperinflation. The reason to go for hyperinflation is if you're worried about your creditors invading you for defaulting.
> It's Finance 101 that if you manage to borrow below inflation rate
And when was the last time that happened? Pretty much only during inflation spikes. The vast majority of time, inflation is around 2% or maybe 3 or 4 recently, 10 year Treasury yields is well above 4.5%.
So maybe you have 40T USD lying around, and you're willing to lend it all to uncle Sam for inflation -.1%. if that's not the case then it's finance 101, and wishful thinking
While I also disagree with the person you're responding to, there's more leeway than just borrowing below inflation.
Roughly, so long as a government can borrow cheaper than nominal GDP growth (assuming a relatively constant ability to tax that growth), then the debt burden doesn't really grow, because your ability to finance the debt grows faster than the debt.
But the problem is that the USA hasn't even cleared this bar, and its debt burden is growing, and there's also the additional risk that if borrowing costs go up due to a lack of confidence in the US government or global instability, even the current debt pile could be unmanageable.
Applies only if you are the reserve currency, label everyone else who don't use your currency the way you want it as currency manipulators and you can take whatever debt you want because well the printer can pay everything back in the future.
The US Dollar is chronically over-valued because of its reserve currency status. The US wanted it that way, opposing Keynes proposal of an international clearing union using a clearing currency (which he called the Bancor) that is independent of any specific country. This automatically means that US companies suffer a huge competitive disadvantage which results in an external deficit. The foreign sector accumulates dollar savings. Now the US household sector naturally also runs a surplus. This only leaves the companies and the government which must by logic of sectoral balances run a deficit for the economy not to shrink. The companies are in aggregate also running a surplus since the neoliberal shift and that leaves only one sector that must have a matching deficit if you want to at least keep up economic activity. If the government sector wants to run a surplus that automatically and necessarily must mean that one of the other sectors must run a deficit by logic of accounting. Which one should that be and how do you want to force it to run a deficit? The foreign sector is not an option as long as the US Dollar is the dominant reserve currency because it is overvalued. The households are a natural saver almost always running a surplus. That leaves only the companies to run a deficit. Now how do you get the companies to run a deficit (in aggregate of course, we are not talking about a single company)? You need to make them invest more than they earn. This used to be the role the company sector had until the 70s. Since then we got Thatcher and Reagan with financialization, deregulation, pressure on wages (they fell from about 70% of GDP to about 60%). The government will have to run massive deficits just to keep the economy going unless we roll that back.
Everyone hates regulations until they realize every regulation actually does something. Everyone hates spending until they realize the money goes towards something.
> US 30-year Treasury yields just hit 5.2% — the highest level since July 2007. UK gilt yields are at levels not seen since 1998. Japanese bond yields are at record highs. Something is happening in global bond markets, and it's not just about inflation. In this video I explain what's driving the global rise in long-term borrowing costs, why the era of free money is probably over, and what fiscal dominance means for central bank independence. I cover the history of US presidents fighting with the Federal Reserve — including LBJ shoving his Fed Chair against a wall — the 1970s UK economic collapse, the Liz Truss mini-budget crisis, the role of private credit and off-balance-sheet SPVs in financing the AI boom, and what all of this means for the new Federal Reserve Chair Kevin Warsh.
It's hard to imagine a political solution to this problem. Both parties are playing chicken, each daring the other to fall on their sword for the good of the country, with neither willing to commit political suicide. Republicans don't have the stomach for the (unpopular) spending cuts that would be required to reduce the deficit, and of course they don't want to raise taxes. They reasonably fear that, even if they gutted the core programs to balance the budget, the next Democrat administration (whose election would be essentially guaranteed by massive cuts) would turn around and use the savings to fund new and exciting ways to buy votes. On the flip side, Democrats shriek in horror at the slightest spending cuts and even advocate for massive increases in spending ("Medicare for all" alone would cost another $1.5 Trillion per year) yet they are afraid to acknowledge, let alone levy, the (unpopular) broad-based taxes required to cover the current deficit, let alone pay for new programs.
The entire world is super leveraged at levels generally seen during major recessions or wars.
And that's excluding the huge amount of multi tiered private credit.
While this is not an indication of anything bad on its own it definitely creates the conditions for cataclysms.
It's like being on a very very dry hay field, it does not mean that you're bound to die on fire, it just means that the risks of a fire being extremely destructive are high.
On the bright side it isn't growing and is down from the pandemic-era 132% of GDP. (Although maybe that was because GDP shrank rather than any change in fundamental debt.)
just want to say, whether you like the name/admin or not those accounts are a very good deal. Setting up one for a new born is a get-out-financial-mistakes (cc/student loan debt etc) free card when they grow up and get access to the money. If you're smart and can make some decent deposits in the first year or two that could easily become a buy-a-house-for-free card which would be an absolute treasure for kickstarting a young person's financial life.
It's too late for my kids but if i'm ever lucky enough to have grandkids part of their bday and Christmas gifts will be deposits.
An executive order declaring a newly created legal entity is now the holder of all previous debt. The new entity has no assets or revenues, other than Trumpcoin.
Haha, so you can bribe the President? I hope this comment is satire.
The "masses" are well aware of crypto at this point and BTC is down 47% over this past year. It's just not that useful unless you're trying to skirt laws/regulations[1] or LARPing as a sovereign citizen.
1: Yes, I know, BTC is not even good pick for financial crimes either.
I think you're being sarcastic, but can't quite tell.
If you're not - this is the 10th worst ratio in the world. The only countries worse are: Venezuela, Japan, Sudan, Singapore, Eritrea, Bahrain, Greece, Lebanon, and Italy. The difference has historically been that we've been able to exploit the dollar, export our inflation, and so on - but those times are fading.
Because sarcasm well done, in other words with some reasonable degree of subtlety and without straw-manning, can be a good way of demonstrating the irrationality of certain positions, or the severity of an issue (as in this case). Unless I'm getting whoofed again lol.
AI industry profits have and will continue to be privatized while the enormous costs of job displacement (to name just one of many negative externalities) will be gleefully socialized. We've seen this film before.