You realize the debt ceiling is about paying old debt, not incurring new debt, yes?
“The debt limit does not authorize new spending commitments. It simply allows the government to finance existing legal obligations that Congresses and presidents of both parties have made in the past.”
This is just double speak to justify never cutting spending. The authorizing spend, is a lot more like add to cart than actually paying for anything.
It really isn’t. The history of the debt ceiling is fascinating. It was invented in 1917 in relation to WWI.
https://time.com/6281003/debt-ceiling-history/
“The first debt limit was established to give the Treasury autonomy over borrowing by allowing it to issue debt up to the ceiling without congressional approval, making it easier to finance mobilization efforts in World War I. Before that, Congress generally had to authorize the Treasury to borrow in smaller increments.”
So what’s different now? Welll…
“In the last two decades, the U.S. has added $25 trillion in debt, spending nearly $1 trillion more than it receives in taxes and other revenue every year since 2001—in large part due to financing wars, tax cuts, emergency responses, and expanded federal spending. To make up the difference, the government has to borrow money to continue to finance payments that Congress has already authorized.”
A large part of that spend were the wars in Afghanistan and Iraq. Under President Bush, the war spending was “off budget”. In other words, it was funded by emergency spending declarations. $1.1 trillion in direct costs and $2.4 trillion in indirect costs and interest.
You realize that the payments on the old debt are becoming unsustainable, yes?
“becoming”? - LOL!
Here’s the thing, nothing substantive will ever be done about the debt until we commit to slashing, and I mean SLASHING the military budget.
Which will never happen because of all the military bases that are in different Congressional districts.
Point of comparison:
In 2022, the feds collected $5 Trillion and spent $6.5 Trillion:
https://usafacts.org/state-of-the-union/budget/
Social Security was $1.22 Trillion, we can’t touch that because people have been paying in their whole lives.
Transfers to States $1.21 Trillion, Medicaid, Transportation dollars, “other”. Same problem as defense, too many Congress critters demanded this money.
Other Spending $1.16 Trillion, Education, “Other”.
Defense $1.03 Trillion - Needs to be cut. What isn’t cut needs to be audited.
Medicare $756 Billion - Needs an audit for fraud and abuse, but won’t come close to balancing everything.
Unemployment, SNAP, etc. “Welfare” - $619 Billion
Interest on debt - $483 Billion
We could make some meaningful changes, but it would annoy a ton of people, such as:
- phase out SS benefits for wealthier people, and increase/eliminate SS income tax cap
- end “use it or lose it” budgeting so agencies don’t feel like they need to spend a ton at the end of the year; perhaps roll over 70% of the unused budget?
- increase IRS budget, and allow them to launch their own tax prep software
- audit spending for defense - we spend way too much, and there’s undoubtedly a ton of corruption
- close down certain foreign military bases and trust our allies to defend themselves
But none of that is going to happen because reasons. I think the above could get us to a balanced budget without too much pain, though we may need to increase taxes a little or make more painful cuts.
Regardless, a lot of the debt is held by the government and US citizens, so it’s not nearly as big of a pound as people make it out to be, but it’s still a problem and nobody seems interested in actually fixing it.
Going back to pre-Reagan tax policy alone would be huge, and like you say, the SS income tax cap.
I don’t think we need to go back to pre-Reagan tax policy. We don’t need to jack up top tax rates to 50% again, we just need to enforce the tax code we already have and eliminate loopholes.
That alone should bring in hundreds of billions. When paired with some cuts and audits, we should be able to balance the budget.
No argument there. Thing is that the military budget is basically a way to funnel taxes away from public spending which they’re intended for such as building infrastructure, providing healthcare, education, and so on. Instead, tax dollars end up being fed into the war industry owned by the oligarchs, which is why the military budget continues to balloon each and every year.
Yup, yup… Exactly what Ike warned about and likely what got JFK and RFK capped.
Seems like a totally sustainable situation.
It is a good thing. You shouldnt look at total debt, but the service costs of holding such debts. A country with massive debt doesnt pay it, it will refinance it. We figured out about 5 years ago that debt isnt finite for a country. Op is a meme poster with zero clue on how money works.
Its free to read and you can inform yourself on why you shouldn’t worry about these things.
Looking at the replies from OP he doesnt really grasp how debt works so I wouldnt listen to his odd takes.
The idea that you can have infinite debt because you can finance it for an infinite length of time only holds true as long as people have faith in the economic system. The point of the post is clearly to show that OP has a decreasing amount of faith that the money will ever be paid back, leading to a declining sentiment towards the dollar.
This works until it doesn’t, and then it really doesn’t.
In economics it’s hard to say something for certain until it has been carried out by a big macroeconomical subject, and if what you mean is something of infinite debt accumulation, it’s even harder to measure it because it can mean that at any point there could be a non prevented scenario where things didn’t go as planned. I doubt there has ever been a case in history of an entity with so much debt, and while maybe it works as is described here, it can also mean that it could act in a totally different way under a different scenario. For example one where a country who’s currency is used globally stops being so. Time will tell, I guess. I’d love to see some quotes about how this paper says things work, if you have read it.
Imagine peddling QE while claiming other people have zero clue how money works. 😃
You should learn a bit about how debt works yourself. US has been able to effectively create unlimited debt by virtue of the dollar being the global reserve and being needed for countries to buy essential things like oil that modern economies need to function. When US prints money, it gets absorbed by other countries. That’s the magic trick US has been using. Now, countries are starting to dedollaraize and demand for US currency is dropping. Meanwhile, you don’t need dollars to buy things like oil now either. And that’s where the problem for US comes in. Actual economists, such as Micheal Hudson, have explained this dynamic in great detail. One example being here https://valdaiclub.com/a/valdai-papers/valdai-papers-116/
Maybe try educate yourself a bit on the subject before making personal attacks on people out of sheer ignorance.
Maybe try educate yourself a bit on the subject before making personal attacks on people out of sheer ignorance
Do you really believe you can make conclusions based on 2 or 3 factors? Or are you mad most people that studied for this dont support your outrageous claim?
You are delusional red funny fellow.
What an amazing counterpoint you’ve mustered there.
Im not arguing with people that argue in bad faith. Have a nice day.
😂
Yeah, not many are actually dedollarizing. The big ones are China, Russia, Brazil, Argentina, S. Africa, and Iran, and there are a few others. But most of these already don’t do a ton of trade with the US because they’re not on good terms politically and economically.
The common thread here is that most of these countries have one or more of the following:
- poor monetary policy - e.g. in Argentina, the President has pretty much direct control over the Treasury
- authoritarian leaders
- poor fiscal policy
In other words, they’re not turning to the yuan because they think it’s better than the dollar, but because they’re desperate, and I’m guessing they have deals with China that are likely more beneficial to China than the countries themselves (i.e. China may be helping bail them out in exchange for some leverage).
So I’m not too worried about the yuan or another currency supplanting the dollar in a real, meaningful sense. That said, I do think it’s concerning that the US has such a large amount of deficit spending. However, I trust the US dollar more than the yuan.
BRICS has already surpassed G7 in terms of GDP when adjusted for PPP, and that’s the main force behind dedollarization. What is likely to happen is that there will be two parallel economies for global trade. One will be based on the US dollar and another on the BRICS currency.
What that means for US is that dollar based trade is shrinking, and along with it the demand for dollar. So, when US does a bunch of QE, there won’t be the same level of demand for the dollar as there war previously.
Meanwhile, the yuan in particular is valuable to countries for the simple reason that China is the biggest trading partner for majority of the countries now. Countries can always convert yuan into something tangible they need from China. The dollar has no inherent value behind it.
China is the best trading partner of the majority of the countries now
I’d like a source for that, because I’m pretty sure the EU is the biggest trading partner for a majority of countries. Yeah, it’s not a country per se, but it acts as one when it comes to trade.
And I’m not sure what you mean by the yuan having more inherent value. Fiat currencies have no inherent value, they’re only worth what you can trade them for. So it really doesn’t matter if you hold yuan, dollars, or pounds, they can be easily exchanged for another reserve currency for transactional purposes.
How much the country backing the currency exports isn’t particularly important. Maybe it was hundreds of years ago when mercantilism was relevant, but it isn’t relevant today.
As the yuan grows in popularity, the dollar will certainly lose some status, but it’s not likely to crash. Look at what happened to the pound when the dollar supplanted it, or the yen when Japan’s economic growth slowed, both are still valuable and stable currencies today. So the yuan gaining popularity doesn’t spell doom for the US, it just means monetary policy will need to adjust to manage changes in demand. That’s it.
https://www.wilsoncenter.org/blog-post/china-top-trading-partner-more-120-countries
And I’m not sure what you mean by the yuan having more inherent value.
I mean that countries buy products from China which means that they can always convert yuan into something they need. This was basically the premise behind petrodollar as well. When you could only buy oil in dollars, that made dollar valuable as an international currency.
How much the country backing the currency exports isn’t particularly important.
Of course it’s important, it’s why Russia is currently trading with India in yuan instead of rupees. They can’t spend rupees on anything they need, but they can spend yuan.
As the yuan grows in popularity, the dollar will certainly lose some status, but it’s not likely to crash.
Both UK and Japan are in an incredibly precarious economic situation right now, and US has astronomic debt servicing of which is directly tied to global demand for dollars. If this demand starts shrinking then US will not be able to service the debt and will be forced to default.
If you have any reserve currency, you can convert it to something you need because many other countries accept it for trade. That’s the whole point of being a reserve country.
If you hold dollars, you can use them to buy things from the EU, Mexico, etc because they accept dollars for trade. You aren’t locked in to buying from the US, and the US honestly doesn’t export that much anyway. The reason people like trading in dollars isn’t because of the things you can buy from the US with it, but because it’s an established currency that isn’t likely to see surprising changes in valuation or monetary policy. It has nothing to do with the US producing a ton of physical goods.
The yuan will only “win” if they can prove that their currency is more stable than other currencies, and that will take decades to establish trust.
Russia… India
The Indian rupee isn’t a reserve currency, the yuan is. So Russia can use yuan to trade with other countries easier than it can rupees, and both countries will have yuan on hand because it’s a reserve currency.
That’s the same way with pounds, yen, and euros. People use them not because they intend to buy things with them from the UK, Japan, or the EU, but because both parties in the transaction have them since they’re established reserve currencies.
UK and Japan are in an incredibly precarious economic situation
That’s a bit hyperbolic.
Japan is seeing stagflation largely because their population is dropping, and that’s due to cultural and policy choices. If you look at their domestic policy, they’re actively trying to increase the birth rate to get things back on track. If they can’t, they’ll need to loosen up their immigration policies, which is culturally unattractive to them.
The UK is having issues because of “Brexit,” yet the economy remains relatively strong despite half-committing to exiting the EU. It’s a temporary thing.
Both countries have a clear reason for the economic situation they’re in, and they’re both reversible. Also, their respective currencies have remained relatively stable during that time as well. They’re both still incredibly prosperous, they’re just not growing as much as they’d like to.
the BRICS currency.
Which currency might that be though? Don’t get me wrong, I’d love to see a world where we don’t have to pitch in to US spending by solely using dollars for trade, but I don’t see any BRICS currencies being able to rise in the next 30 years to be even in the same league as the dollar.
The plan is to have a currency that’s backed by a basket of commodities that BRICS countries produce. Given that BRICS countries are where most of commodities and manufacturing is located, I definitely see a rapid rise for such a currency. Especially coupled with projects like BRI that China is aggressively pushing. China will be building infrastructure in developing countries on a massive scale, and all the trade that will result from that will most likely be done in the BRICS currency.
So?
So, Americans can expect more austerity policies, and higher interest rates.
That’s because the dollar is declining as the world reserve currency as a result of the US declining as the hegemon .
The debt will only become relevant after the petrodollar is dead and after countries stop pegging their own currency to the dollar and after SWIFT becomes irrelevant and all the other things that prop up the dollar, and we’ve already long passed the point where the debt could be reduced enough to save the dollar after it loses its status. The high global demand for dollars meant the debt was irrelevant, but now that demand is on the decline the dollar is fucked and it can not be saved.
Exactly, US has been able to finance its debt at the expense of the rest of the world up to now, and those days are quickly coming to an end.
In what sense does that follow from what you posted? Did you mean to post a different article?
I see you don’t understand the implications of national debt.
I do; do you?
But of course what I’m actually doing is showing that posting pure statistical data, and then using it to make strong unsourced unattributed assertions, is very silly. If you have something to say, say it and post proof for it. A screenshot of number going up is meaningless.
Except it’s not numbers going up, it’s statistical data about the US debt, such as the titled implied. In neoliberal right wing governments such as the one in the US, the way they fight this kind of scenarios is austerity policies such as not raising wages as inflation goes up, the lowering of the living standards of the working class, and so on, instead of making the actual culprits pay the price.
This and the current trend of dedolarisation, plus the recent failure of China buying US debt, and a lot of other factors could indicate some bad times for the US economy.
I think it would have been more useful if you would have asked about the consequences of unsustainable debt or some other thing related to economy, since none of us are experts probably, were we could have created a meaningful debate, rather than acting arrogantly. The title says what the body shows, what you can get from that data depends on your field of study, but statistical data is not useless numbers going up, even in something like Cookie Clicker mean things that can be interpreted.
None of what you said is supported by either the screenshot itself or anything else that’s been cited by the OP (or anyone else in this thread). Even calling it “statistical data about the US debt” is overselling it since it’s literally just a screenshot and a link to a paper that (presumably?) the screenshot came from.
Anything you mentioned would be interesting to talk about, perhaps with sources? Interviews? Anything? But no; instead we’re being told that the screenshot is sufficient context to ground any assertion we care to make.
My point is the post is vacuous and any discussion around it unmoored from anything objective or of interest.
The only silly thing here is claiming that the huge amount of debt increase is not indicative of anything. I recommend reading up on what this has meant historically to understand what to expect going forward.
Why not post that, instead of posting screenshots of numbers and claiming it means whatever you want it to?
Because this is a world news community as opposed to historical literacy community.
