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.
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.
Social spending is for taking care of people, taking care of people is what government is for. Of course we may disagree, vote accordingly. There are more voters who are working class and not wealthy than those who are wealthy or allergic to social spending (imho). Support for Medicare and Social Security remain high in the electorate.
This is like complaining about your grocery bill. Do you like to eat and survive? That is what social spending is, at a nation state level.
(US debt is from wealthy tax cuts and decades of unnecessary military conflicts, not social spending, a quick web search will confirm)
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.
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 don't want to waste money bombing Iran either,
Well, that’s interesting. You were more hawkish for this war than the ghost of John McCain. Do you not remember all that time spent arguing that Iran was an imminent, existential threat?
> 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.
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.
> 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."
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.
If your implication is that this is a private vs public spending problem, that's not it. Healthcare in the US (both private and public) costs dramatically more than in other developed countries.
Why that is is a bit complicated and doesn't have a single root cause. It's also a bit tricky because every major component blames the other components for the total cost.
Part of the problem (roughly 10% by one estimation I read) is drug prices. Drug prices in the US are >2x the price as compared to other developed countries [1].
> If your implication is that this is a private vs public spending problem, that's not it.
No, my point is that we couldn't achieve UK costs by doing "single payer." Our publicly funded systems, like schools and transit, are also cost-inefficient (public schools somewhat less so, public transmit somewhat more so).
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.
I’m not an economist but when trillions of dollars are created doesn’t that create an illusion of sorts of economic growth (revenue growth) in the form of inflation while also having the effect of making the general population poorer by reducing their buying power?
> making the general population poorer by reducing their buying power
Exactly. Also known as a tax. You can make someone poorer by taking their money and destroying it, or you can make someone poorer by letting them keep their money and devalue it by creating more. Same coin no matter which side you want to look at it. There is no such thing as a free lunch. The taxes are always going to get paid in the end. The only choice is in exactly how you want to pay it. Each method has its own set of tradeoffs, so, like with everything, different groups understandably believe in different methods. In practice, both methods will be used. Nobody, apart from the previous commenter, is ever completely hardline "money must only be destroyed" or "money must only be created", but groups will still debate over what is the optimal ratio.
Every good aspect of modern life and modern medicine, technology, etc started with fundamental research that can be made to sound silly.
Some grad student studies the effects of alcohol on fish, learns something new about biology, publishes it so that other students and researchers learn about it, and a few years later after some new studies based on that initial research we get a new cancer drug.
Somebody spends $1 million studying the effects of music on dairy cows, learns that they produce more milk if calming music is played and farmers increase revenues by $10 million per year by adding speakers to their milking rooms.
The billions of dollars spent blowing up infrastructure in the middle east is just a loss, but money spent on research is how we've cured diseases, increased crop yields, launched satellites, and made it so that everyone can have a supercomputer in their pocket that can stream HD video through the air.
Another example: Studying bacterial scum in Yellowstone Park leads to the effectiveness of modern Polymerase Chain Reaction tests, the thing most people think of when they visualize a "DNA test."
> $2 million to create an internship program that resulted in the hiring of one full-time employee at the Department of agriculture
Because the private sector doesn't spend any money on things that don't work out.
Sometimes you win, sometimes you lose.
You talk about millions, that's not even a rounding error. Look around you in any private entity, you don't see them spending any tiny fraction on things you don't think are worthwhile?
> $1.7 billion maintaining empty buildings
Assuming they at some point become occupied again, I don't see the issue. The vacancy rate in the private sector isn't anywhere near 0% either.
> In 2021 alone, the government managed to misplace $281 billion in payments
You'll need to be way more specific than 'misplaced'
True that the government spends a lot on stuff that it shouldn't, but these examples don't make much of a case. Single-digit millions are not even pocket change here.
But they're still wastes of money, and based on the one-line description provided by the OP, they are rather absurd.
A few others I can think of:
Government insurance/funding for homes destroyed by natural disasters - why am I bailing out Florida homeowners when their home is destroyed by a hurricane? At best you get the first one free and then you're on your own after that.
Billions for highway construction that is not needed, which then costs more to maintain and results in more spending on cars, more deaths, higher costs for insurance, &c.
Various improper payments, billions in subsidies handed out, COVID-19 bailouts and forgiveness
The broad point wasn't wrong. The government does waste money and frankly is pretty damn well-funded.
The broad point above by @bilsbie is wrong. Fake made up items completely undermine the point’s credibility, and science spending in the U.S. provides a return on investment, it’s not losing money. That is pure political propaganda and not truth. Your new items have a touch more validity than top comment, but you’re making vast assumptions and stating opinions not shared by all, and not accounting for the economic costs of the alternatives you’re suggesting.
I think it would be more wasteful overall to not give that bailout to florida home owners. A walking migrant crisis and maintaining the refugee camps for impovrished floridians after a hurricane sounds extremely expensive for a long time.
the talk of waste is in service of thw question "is the government well funded enough?"
and so far it does not appear that reducing waste would properly fund the government? a couple patriot missiles worth is not the debt, and would not allow for much more efficient single payer health care - the single biggest opportunity the US government has to reduce waste in american society
Again you can do both - you can cut these wasteful programs, you can have a well-funded government that's already well-funded with trillions of dollars, and then also reform healthcare all without raising taxes. Use your imagination.
Quick search says that list is a mix of misleading and untrue.
That said, 1.5 million on goats, 1 on cows, 1.7 million on fish, these are all perfectly reasonable research costs compared to the potential benefit to agriculture on the scale of the USA, well within the "throw it at the wall and see what sticks" kind of territory; likewise 5 on an anti-smoking campaign and th health burden of smoking in a nation as big as the USA.
Then when we look at the $952 billion in interest, a good chunk of that is due to past military spending.
Plus even more - tens of billions of the military nuclear budget is done via the DoE, not the DoD in the budget line.
There's always a hand waving that previous debts accumulated like veteran's benefits and military related debt interest are not military spending, but they obviously are.
No you forgot the wasted spending on Social Security, Medicaid, and other subsidies! See, other people can throw in snide remarks too.
There's room to debate military spending, but if you view the world as a dangerous place and that the US should not become isolationist, we have to spend the money and have equipment ready and capable whether that's in Europe or in Asia. Alternatively we can disband much of the military, stop paying for this stuff, withdraw from NATO, remove overseas bases in countries like Japan and South Korea, and leave the world to deal with its own problems.
Most of that money is wasted on keeping the military industrial complex fat and happy, it's not going into soldier's pockets. And I say this being pro-US and indeed seeing the world as a dangerous place.
But let's not make some bullshit up about a million dollars wasted on some non-sense, when we have real problems with the DoW, which can't even audit itself, sucking up almost a trillion dollars.
> Most of that money is wasted on keeping the military industrial complex fat and happy, it's not going into soldier's pockets. And I say this being pro-US and indeed seeing the world as a dangerous place.
Hi former active duty soldier here - I'm all for generally increasing pay, but you're just making claims here without any basis for them. It cost a lot of money to maintain the industries capable of producing weapons. We can stop the spending, but then they go out of business and now that capability is lost. Look at Europe. Depends on the details. What specific waste are you talking about? Here's [1] an article that came out recently highlighting how much of our explosives and munitions manufacturing is reliant on just a few locations - cut the DoD budget, and then these are the kinds of things that happen.
Secondly, you have no expertise or authority to make claims as to whether we're spending the right amount of money - whether that's too little or too much, without additional specific logic or factual claims. When you say the DoD is sucking up a trillion dollars you're implying that it's all waste - sorry don't think that's true. And when you look at the performance of equipment that other countries provide versus the US, you know our stuff actually works as advertised. Maybe the US is actually spending too little, and other countries are spending proportionally much less on vaporware?
> you have no expertise or authority to make claims as to whether we're spending the right amount of money
To
> Maybe the US is actually spending too little, and other countries are spending proportionally much less on vaporware?
But more on topic, the real question is if this is spending that is worth going into debt for. No family anywhere in the world can sustain a long period of overspending relative to income.
You talk about weapons and stuff but just understand that you're handing over your bargaining power because the rest of the world controls your debt. And at these ratios thats significant leverage.
By now you can win a war without a single shot being fired.
> It's funny you go within a single paragraph from
You made a general, pedestrian claim about spending, I questioned your claim based on what you wrote. That's all. I wouldn't read in to it more than that.
> But more on topic, the real question is if this is spending that is worth going into debt for. No family anywhere in the world can sustain a long period of overspending relative to income.
Sure but then we can just cut in other areas that aren't the military, if that's what we decide to do. You're not making a serious claim that we're overspending.
> You talk about weapons and stuff but just understand that you're handing over your bargaining power because the rest of the world controls your debt. And at these ratios thats significant leverage.
Not really. Most US debt is owed to Americans, and in the circumstances in which we're worried about some other country amassing so much debt that they can leverage us, well, it's a good thing we bought all those ships, planes, and tanks and whatnot so we can fix the issue with kinetic force.
> By now you can win a war without a single shot being fired.
Yea true enough in some cases. I'm not sure I'd disband the US military, withdraw from NATO, relocate US personnel from overseas bases supporting allies in the Philippines, Japan, Korea, and elsewhere under the assumption that maybe we can win a war without any weapons. But I'm certainly interested in your view here.
> You made a general, pedestrian claim about spending
I didn't do anything, that wasn't me.
> You're not making a serious claim that we're overspending.
This is the thread about debt to GDP ratio hitting 123%. I don't claim anything, but if this isn't overspending then I think we agree to disagree.
> Not really. Most US debt is owed to Americans, and in the circumstances in which we're worried about some other country amassing so much debt that they can leverage us, well, it's a good thing we bought all those ships, planes, and tanks and whatnot so we can fix the issue with kinetic force.
According to [1], 23.5% is owned by foreign investors. That's a minority of the total, but you don't need a majority to cause a big problem because trust is all that matters (see 2008).
You want to solve that with weapons?? That'll only make everyone drop the dollar, as simple as that.
> But I'm certainly interested in your view here.
The US military is there in all of those countries for influence, more so than for actual defense. The US can defend every NATO country simply by reaffirming article 5, you don't have to be present.
Not even Russia would attempt an attack, they've been in a war of attrition for years now with a non NATO country with no end in sight for limited gains in territory.
They've done this for the past 70 years, starting from 1945. Whether this is something the US has benefitted from can be debated, I think they certainly have.
The Russia vs Ukraine war and the Iran conflict show that super powers can try to use their military power but 'winning' is hard. No matter how superior you are based on the numbers. Iran isn't winning on the battlefield, their most potent weapon is economic, that has turned out to be more powerful than all their weapons combined.
> I don't claim anything, but if this isn't overspending then I think we agree to disagree.
Ok if it's over-spending then let's cut the programs that align with my ideology instead of cutting military spending.
> You want to solve that with weapons?? That'll only make everyone drop the dollar, as simple as that.
Not worried at all - those dollars become worthless in a fire sale. The strength of the dollar is because of the actual physical reality and capabilities of the United States.
> The Russia vs Ukraine war and the Iran conflict show that super powers can try to use their military power but 'winning' is hard. No matter how superior you are based on the numbers. Iran isn't winning on the battlefield, their most potent weapon is economic, that has turned out to be more powerful than all their weapons combined.
You're directionally right but also wrong w.r.t America. What you've shown here isn't a weakness of the US, but a strength of the US. Unlike Russia we spend and that spending (overspending according to some) ensures that our equipment works. That's why when Iran went and bought Russian and Chinese air defense for example, we blew it up with impunity.
Iran is of course hard because we have some political considerations which would only get worse over time as we would have continued to do nothing, Iran would build more missiles and drones and then seize control of the Strait of Hormuz and then it would be too costly to do anything to stop them from doing that or continuing their nuclear weapons program.
Specifically in the case of economic warfare, Iran is losing badly. The worst outcome is some MAGA coal rollers have to pay more for gas. Iran's economy literally doesn't function due to our blockade (which means we also control the Strait of Hormuz). I'd rather pay extra at the pump (well I drive an EV but w/e) then have like 80% of my economy held hostage.
But this also reinforces the need for a higher military budget and the need to spend more to acquire more arms and capabilities. By the way, the military budget isn't actually that high as a percentage of GDP. You're welcome to do that comparison yourself.
> No you forgot the wasted spending on Social Security, Medicaid, and other subsidies!
Most of that money ends up being spent in communities (grocery stores etc) and hospitals. So at least that money flows back into a local community.
There's plenty wrong with the US healthcare system, but since the vast majority gets their healthcare through their employer you'll have to come up with something for when they retire or unable to work. That's just an outcome of how the system was set up.
> No you forgot the wasted spending on Social Security [...] See, other people can throw in snide remarks too.
No, snide and wrong is extremely different!
Social Security spending is already funded by a separate tax and currently running a surplus. It's what our legislators are are debt to when use the discretionary budget to let the President start a game of Battleship in the straight of Hormuz.
Snide and wrong! You must be talking about the OP then and not me.
> Social Security spending is already funded by a separate tax and currently running a surplus.
If someone doesn't want to pay in to it, what difference does whether it's fully-funded or not make?
> It's what our legislators are are debt to when use the discretionary budget to let the President start a game of Battleship in the straight of Hormuz.
Or when they enact a pet project you agree with and others disagree with.
I agree but i wouldn't be that upset if that money was spent on soldier's pay and buying things or R/D from US companies built in the United States while employing US citizens. To me, that's a decent tax/spend jobs program. Now, military money flowing overseas and propping up some other economy? There could be valid reasons but that deserves to go under a microscope.
youd be pleasently surprised to find out that same as most aid the US gives out, military aid is mostly in the form of cheques from which to buy US equipment and materiel
the people who came up with these spends thought hard about what to do and how
Are you not aware that science research has a positive return on investment to the economy? Consider reviewing https://www.goldengooseaward.org/
Making fun of science that politicians, wanna be politicians, and conservative media don’t remotely understand in order to deflect and hide actual economic problems they cause is a favorite pastime, but is almost always misleading.
The goat yoga thing isn’t true, it’s pure viral talking point made up nonsense. (And none of the points are made in good faith.) Don’t believe everything you read on the internet, especially if Elon Musk retweets it.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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
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.
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.
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.)
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.
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.
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.
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.
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.
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.
Direct costs are ~$113B as of June 16th, 2026 (per the Pentagon's briefing to Congress, counter stopped on that date):
https://iran-cost-ticker.com/
Iran War Cost Tracker - https://news.ycombinator.com/item?id=47237080 - March 2026 (446 comments)
Pentagon Tells Congress First Week of Iran War Cost More Than $11.3 Billion - https://www.nytimes.com/2026/03/11/world/middleeast/iran-war... | https://archive.today/Q4oDX - March 11th, 2026
Consumer energy excess cost burden is ~$76B as of this comment (indirect regressive consumer tax):
https://iranwarcost.watson.brown.edu/
> 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).
https://usafacts.org/government-spending/
Pentagon Fails Eighth Audit, Eyes 2028 Turnaround - https://www.military.com/feature/2025/12/24/pentagon-fails-e... - December 24th, 2025
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.
Social spending is for taking care of people, taking care of people is what government is for. Of course we may disagree, vote accordingly. There are more voters who are working class and not wealthy than those who are wealthy or allergic to social spending (imho). Support for Medicare and Social Security remain high in the electorate.
This is like complaining about your grocery bill. Do you like to eat and survive? That is what social spending is, at a nation state level.
(US debt is from wealthy tax cuts and decades of unnecessary military conflicts, not social spending, a quick web search will confirm)
What does it buy
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.
They uh… they were open. They were open before we started bombing. We bomb because we bombed. As a consequence of us murdering we are murdering.
> "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.
Holy shit.
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.
[delayed]
> I don't want to waste money bombing Iran either,
Well, that’s interesting. You were more hawkish for this war than the ghost of John McCain. Do you not remember all that time spent arguing that Iran was an imminent, existential threat?
You have me confused with someone else. This was me 3 months ago: https://news.ycombinator.com/item?id=47986799
> 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.
As much as people may dislike Regan, his goal for reducing taxes on the wealthy was based upon the laffer curve. https://en.wikipedia.org/wiki/Laffer_curve
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.
> 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."
> Now they complain that social security entitlements must be cut to keep within our means.
That's the Starve the Beast strategy.
https://en.wikipedia.org/wiki/Starve_the_beast
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.
The problem is that half the political system thinks you can cut taxes and grow revenues.
Which is an intentional strategy to repeal social programs that they’d never get the votes to do so via legislation
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.
From: https://www.pewresearch.org/short-reads/2023/04/18/who-pays-...
> 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).
37% of personal returns below the standard deduction is way more than I would have expected.
> The problem is that half the political system thinks you can cut taxes and grow revenues.
And the other half thinks you can pay for a European-style welfare state without European-style middle class taxes. Americans are Disney adults.
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.
[1] https://www.cms.gov/data-research/statistics-trends-and-repo...
[2] https://www.kff.org/medicaid/medicaid-financing-the-basics/#...
[3] https://www.census.gov/popclock/
[4] https://www.bbc.com/news/articles/cwy7zvp5xrqo
> 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.
If your implication is that this is a private vs public spending problem, that's not it. Healthcare in the US (both private and public) costs dramatically more than in other developed countries.
Why that is is a bit complicated and doesn't have a single root cause. It's also a bit tricky because every major component blames the other components for the total cost.
Part of the problem (roughly 10% by one estimation I read) is drug prices. Drug prices in the US are >2x the price as compared to other developed countries [1].
[1] https://www.ncbi.nlm.nih.gov/books/NBK611301/
> If your implication is that this is a private vs public spending problem, that's not it.
No, my point is that we couldn't achieve UK costs by doing "single payer." Our publicly funded systems, like schools and transit, are also cost-inefficient (public schools somewhat less so, public transmit somewhat more so).
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:
https://fred.stlouisfed.org/graph/?g=TZfm
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.
I’m not an economist but when trillions of dollars are created doesn’t that create an illusion of sorts of economic growth (revenue growth) in the form of inflation while also having the effect of making the general population poorer by reducing their buying power?
> making the general population poorer by reducing their buying power
Exactly. Also known as a tax. You can make someone poorer by taking their money and destroying it, or you can make someone poorer by letting them keep their money and devalue it by creating more. Same coin no matter which side you want to look at it. There is no such thing as a free lunch. The taxes are always going to get paid in the end. The only choice is in exactly how you want to pay it. Each method has its own set of tradeoffs, so, like with everything, different groups understandably believe in different methods. In practice, both methods will be used. Nobody, apart from the previous commenter, is ever completely hardline "money must only be destroyed" or "money must only be created", but groups will still debate over what is the optimal ratio.
The problem is not that we aren’t taxed enough— it’s that our government lights cash on fire
Here is some absurd garbage your US taxes paid for:
•$1.5 Million studying the effects of yoga on goats
•$1.7 billion maintaining empty buildings
•$5 million on a campaign to promote an alternative music scene to get hipsters to stop smoking
•$2 million to create an internship program that resulted in the hiring of one full-time employee at the Department of agriculture
•In 2021 alone, the government managed to misplace $281 billion in payments
•$1 million studying the effects of music on dairy cows
•$1.7 million to study the effects of alcohol on fish
Every good aspect of modern life and modern medicine, technology, etc started with fundamental research that can be made to sound silly.
Some grad student studies the effects of alcohol on fish, learns something new about biology, publishes it so that other students and researchers learn about it, and a few years later after some new studies based on that initial research we get a new cancer drug.
Somebody spends $1 million studying the effects of music on dairy cows, learns that they produce more milk if calming music is played and farmers increase revenues by $10 million per year by adding speakers to their milking rooms.
The billions of dollars spent blowing up infrastructure in the middle east is just a loss, but money spent on research is how we've cured diseases, increased crop yields, launched satellites, and made it so that everyone can have a supercomputer in their pocket that can stream HD video through the air.
Another example: Studying bacterial scum in Yellowstone Park leads to the effectiveness of modern Polymerase Chain Reaction tests, the thing most people think of when they visualize a "DNA test."
> $2 million to create an internship program that resulted in the hiring of one full-time employee at the Department of agriculture
Because the private sector doesn't spend any money on things that don't work out.
Sometimes you win, sometimes you lose.
You talk about millions, that's not even a rounding error. Look around you in any private entity, you don't see them spending any tiny fraction on things you don't think are worthwhile?
> $1.7 billion maintaining empty buildings
Assuming they at some point become occupied again, I don't see the issue. The vacancy rate in the private sector isn't anywhere near 0% either.
> In 2021 alone, the government managed to misplace $281 billion in payments
You'll need to be way more specific than 'misplaced'
True that the government spends a lot on stuff that it shouldn't, but these examples don't make much of a case. Single-digit millions are not even pocket change here.
But they're still wastes of money, and based on the one-line description provided by the OP, they are rather absurd.
A few others I can think of:
The broad point wasn't wrong. The government does waste money and frankly is pretty damn well-funded.The broad point above by @bilsbie is wrong. Fake made up items completely undermine the point’s credibility, and science spending in the U.S. provides a return on investment, it’s not losing money. That is pure political propaganda and not truth. Your new items have a touch more validity than top comment, but you’re making vast assumptions and stating opinions not shared by all, and not accounting for the economic costs of the alternatives you’re suggesting.
I think it would be more wasteful overall to not give that bailout to florida home owners. A walking migrant crisis and maintaining the refugee camps for impovrished floridians after a hurricane sounds extremely expensive for a long time.
Name a huge organization that doesn’t waste money. I’ll give you as much time as you need.
"All organizations waste money, therefore organizations should keep wasting money and it's actually fine" doesn't sound very compelling to me.
the talk of waste is in service of thw question "is the government well funded enough?"
and so far it does not appear that reducing waste would properly fund the government? a couple patriot missiles worth is not the debt, and would not allow for much more efficient single payer health care - the single biggest opportunity the US government has to reduce waste in american society
Again you can do both - you can cut these wasteful programs, you can have a well-funded government that's already well-funded with trillions of dollars, and then also reform healthcare all without raising taxes. Use your imagination.
Quick search says that list is a mix of misleading and untrue.
That said, 1.5 million on goats, 1 on cows, 1.7 million on fish, these are all perfectly reasonable research costs compared to the potential benefit to agriculture on the scale of the USA, well within the "throw it at the wall and see what sticks" kind of territory; likewise 5 on an anti-smoking campaign and th health burden of smoking in a nation as big as the USA.
You made a tiny mistake, you forgot the $800 billion for the military!
Even more
$859 billion to DoD
$339 billion Veterans benefits
Then when we look at the $952 billion in interest, a good chunk of that is due to past military spending.
Plus even more - tens of billions of the military nuclear budget is done via the DoE, not the DoD in the budget line.
There's always a hand waving that previous debts accumulated like veteran's benefits and military related debt interest are not military spending, but they obviously are.
No you forgot the wasted spending on Social Security, Medicaid, and other subsidies! See, other people can throw in snide remarks too.
There's room to debate military spending, but if you view the world as a dangerous place and that the US should not become isolationist, we have to spend the money and have equipment ready and capable whether that's in Europe or in Asia. Alternatively we can disband much of the military, stop paying for this stuff, withdraw from NATO, remove overseas bases in countries like Japan and South Korea, and leave the world to deal with its own problems.
Most of that money is wasted on keeping the military industrial complex fat and happy, it's not going into soldier's pockets. And I say this being pro-US and indeed seeing the world as a dangerous place.
But let's not make some bullshit up about a million dollars wasted on some non-sense, when we have real problems with the DoW, which can't even audit itself, sucking up almost a trillion dollars.
> Most of that money is wasted on keeping the military industrial complex fat and happy, it's not going into soldier's pockets. And I say this being pro-US and indeed seeing the world as a dangerous place.
Hi former active duty soldier here - I'm all for generally increasing pay, but you're just making claims here without any basis for them. It cost a lot of money to maintain the industries capable of producing weapons. We can stop the spending, but then they go out of business and now that capability is lost. Look at Europe. Depends on the details. What specific waste are you talking about? Here's [1] an article that came out recently highlighting how much of our explosives and munitions manufacturing is reliant on just a few locations - cut the DoD budget, and then these are the kinds of things that happen.
Secondly, you have no expertise or authority to make claims as to whether we're spending the right amount of money - whether that's too little or too much, without additional specific logic or factual claims. When you say the DoD is sucking up a trillion dollars you're implying that it's all waste - sorry don't think that's true. And when you look at the performance of equipment that other countries provide versus the US, you know our stuff actually works as advertised. Maybe the US is actually spending too little, and other countries are spending proportionally much less on vaporware?
[1] https://www.wsj.com/world/europe/western-powers-race-to-brin...
It's funny you go within a single paragraph from
> you have no expertise or authority to make claims as to whether we're spending the right amount of money
To
> Maybe the US is actually spending too little, and other countries are spending proportionally much less on vaporware?
But more on topic, the real question is if this is spending that is worth going into debt for. No family anywhere in the world can sustain a long period of overspending relative to income.
You talk about weapons and stuff but just understand that you're handing over your bargaining power because the rest of the world controls your debt. And at these ratios thats significant leverage.
By now you can win a war without a single shot being fired.
> It's funny you go within a single paragraph from
You made a general, pedestrian claim about spending, I questioned your claim based on what you wrote. That's all. I wouldn't read in to it more than that.
> But more on topic, the real question is if this is spending that is worth going into debt for. No family anywhere in the world can sustain a long period of overspending relative to income.
Sure but then we can just cut in other areas that aren't the military, if that's what we decide to do. You're not making a serious claim that we're overspending.
> You talk about weapons and stuff but just understand that you're handing over your bargaining power because the rest of the world controls your debt. And at these ratios thats significant leverage.
Not really. Most US debt is owed to Americans, and in the circumstances in which we're worried about some other country amassing so much debt that they can leverage us, well, it's a good thing we bought all those ships, planes, and tanks and whatnot so we can fix the issue with kinetic force.
> By now you can win a war without a single shot being fired.
Yea true enough in some cases. I'm not sure I'd disband the US military, withdraw from NATO, relocate US personnel from overseas bases supporting allies in the Philippines, Japan, Korea, and elsewhere under the assumption that maybe we can win a war without any weapons. But I'm certainly interested in your view here.
> You made a general, pedestrian claim about spending
I didn't do anything, that wasn't me.
> You're not making a serious claim that we're overspending.
This is the thread about debt to GDP ratio hitting 123%. I don't claim anything, but if this isn't overspending then I think we agree to disagree.
> Not really. Most US debt is owed to Americans, and in the circumstances in which we're worried about some other country amassing so much debt that they can leverage us, well, it's a good thing we bought all those ships, planes, and tanks and whatnot so we can fix the issue with kinetic force.
According to [1], 23.5% is owned by foreign investors. That's a minority of the total, but you don't need a majority to cause a big problem because trust is all that matters (see 2008).
You want to solve that with weapons?? That'll only make everyone drop the dollar, as simple as that.
> But I'm certainly interested in your view here.
The US military is there in all of those countries for influence, more so than for actual defense. The US can defend every NATO country simply by reaffirming article 5, you don't have to be present.
Not even Russia would attempt an attack, they've been in a war of attrition for years now with a non NATO country with no end in sight for limited gains in territory.
They've done this for the past 70 years, starting from 1945. Whether this is something the US has benefitted from can be debated, I think they certainly have.
The Russia vs Ukraine war and the Iran conflict show that super powers can try to use their military power but 'winning' is hard. No matter how superior you are based on the numbers. Iran isn't winning on the battlefield, their most potent weapon is economic, that has turned out to be more powerful than all their weapons combined.
1: https://www.us-debt-clock.com/blog/who-owns-us-debt-breakdow...
> I didn't do anything, that wasn't me.
Ok you're defending it.
> I don't claim anything, but if this isn't overspending then I think we agree to disagree.
Ok if it's over-spending then let's cut the programs that align with my ideology instead of cutting military spending.
> You want to solve that with weapons?? That'll only make everyone drop the dollar, as simple as that.
Not worried at all - those dollars become worthless in a fire sale. The strength of the dollar is because of the actual physical reality and capabilities of the United States.
> The Russia vs Ukraine war and the Iran conflict show that super powers can try to use their military power but 'winning' is hard. No matter how superior you are based on the numbers. Iran isn't winning on the battlefield, their most potent weapon is economic, that has turned out to be more powerful than all their weapons combined.
You're directionally right but also wrong w.r.t America. What you've shown here isn't a weakness of the US, but a strength of the US. Unlike Russia we spend and that spending (overspending according to some) ensures that our equipment works. That's why when Iran went and bought Russian and Chinese air defense for example, we blew it up with impunity.
Iran is of course hard because we have some political considerations which would only get worse over time as we would have continued to do nothing, Iran would build more missiles and drones and then seize control of the Strait of Hormuz and then it would be too costly to do anything to stop them from doing that or continuing their nuclear weapons program.
Specifically in the case of economic warfare, Iran is losing badly. The worst outcome is some MAGA coal rollers have to pay more for gas. Iran's economy literally doesn't function due to our blockade (which means we also control the Strait of Hormuz). I'd rather pay extra at the pump (well I drive an EV but w/e) then have like 80% of my economy held hostage.
But this also reinforces the need for a higher military budget and the need to spend more to acquire more arms and capabilities. By the way, the military budget isn't actually that high as a percentage of GDP. You're welcome to do that comparison yourself.
> No you forgot the wasted spending on Social Security, Medicaid, and other subsidies!
Most of that money ends up being spent in communities (grocery stores etc) and hospitals. So at least that money flows back into a local community.
There's plenty wrong with the US healthcare system, but since the vast majority gets their healthcare through their employer you'll have to come up with something for when they retire or unable to work. That's just an outcome of how the system was set up.
> No you forgot the wasted spending on Social Security [...] See, other people can throw in snide remarks too.
No, snide and wrong is extremely different!
Social Security spending is already funded by a separate tax and currently running a surplus. It's what our legislators are are debt to when use the discretionary budget to let the President start a game of Battleship in the straight of Hormuz.
> No, snide and wrong is extremely different!
Snide and wrong! You must be talking about the OP then and not me.
> Social Security spending is already funded by a separate tax and currently running a surplus.
If someone doesn't want to pay in to it, what difference does whether it's fully-funded or not make?
> It's what our legislators are are debt to when use the discretionary budget to let the President start a game of Battleship in the straight of Hormuz.
Or when they enact a pet project you agree with and others disagree with.
> you forgot the $800 billion for the military!
I agree but i wouldn't be that upset if that money was spent on soldier's pay and buying things or R/D from US companies built in the United States while employing US citizens. To me, that's a decent tax/spend jobs program. Now, military money flowing overseas and propping up some other economy? There could be valid reasons but that deserves to go under a microscope.
youd be pleasently surprised to find out that same as most aid the US gives out, military aid is mostly in the form of cheques from which to buy US equipment and materiel
the people who came up with these spends thought hard about what to do and how
1.5 trillion next year!
Any sources on the $1.5M effects of yoga on goats study? Google nor ChatGPT could find anything.
Are you not aware that science research has a positive return on investment to the economy? Consider reviewing https://www.goldengooseaward.org/
Making fun of science that politicians, wanna be politicians, and conservative media don’t remotely understand in order to deflect and hide actual economic problems they cause is a favorite pastime, but is almost always misleading.
The goat yoga thing isn’t true, it’s pure viral talking point made up nonsense. (And none of the points are made in good faith.) Don’t believe everything you read on the internet, especially if Elon Musk retweets it.
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”).
> forcing the US government to raise taxes.
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.
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!"
I think that's a pretty solid (pun intended) metaphor.
Past performance is not a predictor of future returns.
I've always heard people say that the US debt doesn't matter when the debt itself is denominated in USD.
It's the old saying, if you owe the bank $1,000 then you have a problem. But if you owe the bank a trillion dollars then the bank has a problem.
Especially when that trillion dollars was spent on an insane fleet of aircraft carriers.
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.
https://www.armstrongeconomics.com/markets-by-sector/preciou...
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.
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.
currency manipulation seems to be working for China though.
https://home.treasury.gov/news/press-releases/sm751
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.
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.
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.
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.
end is probably ww btw. so are you all ready? last time it did work and lost of war debt was paid
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.
[1] - https://fred.stlouisfed.org/series/A180RC1A027NBEA
>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.
insolvency thus isnt possible.
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!
But the doesn't come due. So long as you can cough up the interests.
There are short term and long term bonds.
Effectively the debt does not mature, as bonds get refinanced.
The problem is if nobody wants to buy new bonds, of course.
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.
You guys are too powerful.
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.
Reserve status is based on confidence. The US can't bomb markets into trusting the dollar. They've already begun diversifying away from it.
Some things feel impossible until they happen.
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.
We seem to be lacking in military might lately, and are increasingly losing economic might.
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?
Sure, but it can still have hyperinflation.
Slaps the hood of a cybertruck
This bad boy can hold a LOT of debt.
This country is a cybertruck.
Wait, I thought we were a gun.
You are Brian Bilston, and I claim my £5
...stuck in a half inch of snow on a public road.
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
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.
Let the market decide
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.
Everyone hates regulations until they realize every regulation actually does something. Everyone hates spending until they realize the money goes towards something.
None of this will get solved until a crisis
The wisdom was that the US dollar due to its exorbitant privilege (https://en.wikipedia.org/wiki/Exorbitant_privilege#Origin) can afford these debts.
Countries put up with it because the US "provided protection" and insured maritime freedom of navigation. Oh wait ...
Dangerously close to discovering the premise of Accidental Superpower from first principles.
accidental is a strange word for actively breaking down the british and french empires, and taking over their base locations
This Is Probably Fine! by Patrick Boyle - https://www.youtube.com/watch?v=5nvsDmwZWdM - May 29th, 2026
> 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.
It is the ultimate tragedy of the commons.
Japan is at well over 200%, and has a very real population crisis. Italy is 138%, France is at 117%, Canada is at 110%. UK and China are around 100%.
123% comparatively speaking isn't great, but it's not shockingly terrible.
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.)
Are we looking at the same graph?
It appeared to drop from the 2020 highs, yes.
But it's definitely trending upward.
The GDP was a little smaler during Covid. https://fred.stlouisfed.org/series/GDP/
This still isn’t too bad compared to other countries, also, most of the AI industry profits are still yet to be fully realized.
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.
No, those times are not fading. We are constantly opening up new revenue streams, like Venezuela, and maybe soon Iran too.
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.
Assuming it doesn't mirror the dotcom bubble
time to buy bitcoin
If you think bitcoin will hold value as economies are collapsing, I have some beachfront property to sell you.
...Actually I have an NFT of some beachfront property.
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.
Sounds like you should short it then!
Pardons go for $3M these days.
I wonder what the exit plan is. One time conversion of social security into Trump accounts and call it a day?
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.
Load all of your debt onto another enormous country. Go to war with them, make debt elimination one of the terms of peace
I remember something, like gold taken from Iraq.