There are also some unknowns which puts the US and many western nations in uncharted territory. are are difficult to model: 1) Aging US population with more takers than input into the social security system and medicare which are the largest line items in the budget. 2) Impact of capital vs. labor for taxes -- if AI replaces some workers those income taxes in the short run are gone 3) captured regulation by industry at a large scale -- continued reducing of business taxes, keeping offshore loopholes and creating greater consolidation 4) failing of traditional checks and balances -- i.e. only congress authorizes spending and the federal reserve maintains independence, is very much in question.
A good analogy. PE and Hedge firms care more about immediate returns on equity vs. building businesses that will last. Politicians and the general public don't seem interested in making short term sacrifices to put the country on a long term stable foundation. Raising interest rates is one action that will cause some pain now but avoid much greater impacts later. Inflation is still persistent... lets see what actions are taken. There doesn't seem to be any reduction on the fiscal side of the equation.
Economists talk about Venezuela being a captured state and looting their sole money maker, PDVSA. I wonder where the line is to talk about the US with those terms
AI in this is less something to worry about in the future but about how it actually has infested all areas of debt by now. AI debt is in everything by now, including bonds and venture capital. So there is no real safe heaven for capital any longer and this concentration combined with the overall debt is what should scare the shit out of people. If you subtract all the AI build-up currently from GDP growth, there is not much left, less than a percent or so.
So if just one brick fails or ceases, it might drag everything else with it.
AI has not proven anything real yet, so hating it would be premature. But the entire thing is too hyped and too widespread to be ignored and seen as an issue in the future.
When almost the entire business model of a single country rests on a single industry, that is mostly debt financed and doesnt create meaningful revenues let alone profits yet, but exceeds the debt of several technologies before them that actually had real revenue and profits, then it is time to take a step back and look at the whole picture.
When investors cannot find sectors to invest into without ending in the same pool as the stuff they try to diversify from, than trouble is not just on the horizon. It is basically right in front of you.
> When almost the entire business model of a single country rests on a single industry, that is mostly debt financed and doesnt create meaningful revenues let alone profits yet,
This is in no way a rational or informed understanding of the US economy or whatever might be happening within hyperscalers spending. Be serious lol.
The current administration has given all of our allies good reason to break financial ties. China isn't going to rely on a wishy washy country to secure food from. Just like European countries are moving away from Microsoft as a digital staple for their systems. Because at any moment the diaper baby will throw a tantrum and tariff their logistics software.
In the next ten years these things will be decoupled and those revenue and tax streams will be gone forever.
Canada has a trade deal signed by Trump and the day after the World Cup ends he attacks with 50% tariffs in violation of the deal. Unreliable is a kind word.
There is a good counter to this. The USA could very well pass a wealth tax targeting the top 10%. Reduce their military spending. And raise the income tax on the rich without being uncompetitive with other rich countries. In Europe they already do this so they don’t have any room left. The USA has plenty…
The issuance of short-term govt bonds by the US treasury to purchase long-term govt bonds is a small operation relative to similar operations undertaken in the past (i.e., small volume compared to quantity of long-term US govt bonds). Based on historical operations, it would appear that this alone is unlikely to decrease long-term US govt bond yields beyond 10 b.p.s. It'd be quite a stroke of luck to achieve even a 5 b.p.s decline.
OK but why do the performance? Why now? The bond market did not appear to be in acute distress at the time of the announcement. It was made in between quarterly updates too, which is unusual.
Bessent has been trying to mitigate the effects of the ongoing war supply shocks for months. Iran and Ukraine have pushed the real cost of oil-based energy to near all-time highs. Wheat and beef are following. There is going to be significant inflation, probably worse the initial Ukraine war shock.
This and the Yen intervention are all tied to the supply shock that is happening. The market wants to ignore it and Bessent is trying to help find a way.
As Druckenmiller wrote, this is procrastination, not a solution. And he knows that. A cynical person would see this and think Bessent is just trying to push the consequences of Trump's disasterous Iran war until after the midterms....
I understand all that and agree, but the timing of the announcement feels like a warning that things are worse than they appear. Why couldn't he wait until the quarterly update? The unusual mid quarter timing is causing a Streisand Effect and brining more attention to the problem, which exacerbates it.
A conspiracy minded person would think that by talking about bonds, he's indirectly talking about the price of crude oil, which is something that would drive inflation fears, and there's strong evidence someone is suppressing. That he has $1 trillion general fund is not news to anyone.
He also said he "did not understand" a spike in oil prices recently. Which is a very weird thing for a Treasury Secretary to say.
If you take all of the separate pieces together, it kinda sounded like he's trying to warn big institutional investors against a kind of macro trade that longs oil. So as to not short squeeze the crude oil price that he's been actively intervening to keep tamped down.
so in this situation, since it is likely bessent doing the shorts, would that put the treasury in the same position as Archegos in the gamestonk short squeeze, potentially?
I think Bessent wants the big institutions to think he will pour endless treasury money on the other side of their trades. I don't think he actually will, everyone knows there are limits to what he can do before other things break. It's the same as the currency intervention, he wants people to know he's doing it even though the market will just shrug him off in the long term.
Economically it is incredibly short-sighted, but it is part of a longer-term pollical plan to seize power:
Keep Republican control of house and senate (2026 elections)
Win 2028 presidential election by manipulating elections and the electoral process.
The basic plan is the inject enough chaos into 2028 that there will not be a majority of electoral college votes, and then the Republican House chooses the next president (per the 12th Amendment)
They know they won't likely win in 2028 legitimately after Trump's disastrous term, so they have to find another way. This latest move is just an attempt to buy time until November.
Okay the Trump administration is brazenly and publicly trying to manipulate the electoral process, but it's a huge leap to presume a failure of the electoral college two years from now as an explanation for the Treasury secretary intervening in the bond market.
If there is no majority in the electoral college, the House chooses the president.
There are two ways that there can be no majority:
There is a legitimate election where no one gets the majority (e.g. a three-way split)
There aren't enough electoral college votes certified for anyone to get a majority. Or the certification never happens at all.
Republicans are going for #2. They already tried this on Jan 6, 2021. For 2028 they will try to inject enough chaos into the election so that there is no clear winner. They are doing this because they know a Republican cannot win legitimately after Trump.
The certification process in January 2029 will be a shitshow with the Republican congress refusing to accept electoral college representatives from states they don't like by claiming "election fraud" or that states didn't follow Trump's executive orders restricting mail-in voting, etc.
This will lead to no majority, which means they get to pick the next president.
In order for their 2028 coup to work, they need a strong majority in the House. The 2026 midterms in November will determine this.
Bessent is desperately trying to hold the economy together for a few more months. That's all they need. The country can go to shit after that because then they can stay in power indefinitely without winning elections.
It's just weird to describe the purpose of actions taken to maintain the system as being part of a plan to pull off a long-term nefarious goal. It's like saying that you fired your underperforming IT administrator because his poor digital architecture standards were threatening your plans to pump and dump stock after your IPO.
But it isn't "maintaining the system." Every economist, including Bessent himself, knows this trade accomplishes nothing in the long term. He was hoping it would do something in the short term, but that already failed.
Are you still believing that anyone in the Trump admin does anything in good faith? Trump stopped hiring honest people for his admin less than halfway through his first term.
Sorry, I struggled to find the right phrase there and the wording isn't great, don't read too much into it.
Not disputing this is part of a short term plan, or that the Trump administration is governing in bad faith. It's just like, this is being done to accomplish goal 2, you don't need to bring up goal 7 as an extra ontological motivation.
Put another way - even if they weren't planning to fuck with 2028, they would still be trying to keep the economy afloat until after November because staying in power for this election is a goal they have in and of itself.
I'm also aware of the philosophic complexity of pinning down what causality is and that this sort of logic isn't inconsistent with a variety of casual frameworks.
I'm also aware of the fact that the prospect of catastrophic long-term consequences actually tends to produce inaction rather than change, especially if the solutions are complex or require group action - think global warming.
He's asserting that they will not allow prices to drop below a certain threshold, which I assume is supposed to calm jittery holders worried that if they don't sell now they'll get a worse price later. The problem is that inflation is going to continue to run hot for the reasons the other poster listed elsewhere, and at some point real yields will be too unattractive, and holders will just say "ok, sold to you, Treasury". Which is very bad optics-wise.
Likely midterms. If they can convince people that affordability and high interest rates are being handled they can kick the can. But they don't even need it to be effective. They need to do something so their talking heads can then just lie about the effect of the action.
It's not as small as you think, it amounts to ~2% of daily float give or take. This is mostly because off the run long dated treasuries have much lower volumes, but still it's not a nothing figure and shouldn't be represented as such.
Will it ultimately sort out the yield issue? I'm not convinced, but it's a decent amount.
It's to prevent large auction tails and short-term volatility. Maybe Bessent doesn't see it that way, but that's why Yellen started doing it. These operations are way too small for long-term yield control - like you said.
They were buying short term bonds in hopes the rate would fall and not get locked in. By doing this swap, they are locking in those rates for 30 years.
Bessant's plan to purchase long term bonds using short term notes and bills is QE by another name. It essential does the same thing - injecting additional money into the system (instead of printing it). G
overnment is buying back its own debt because no one else wants it which, in turn, forces up the prices of long term bonds while causing interest rates to fall (his hope). I think this twist operation isn't going to work in the long term.
What should concern them is the fact that the economy is under the control of a demented geriatric child molester in diapers and his cabal of asskissers and morons.
Just to recap, he started multiple trade wars for no apparent reason, plus an expensive real war that's quickly turning into a quagmire, imposed tariffs in such a stupid way that saw him slap a few on an island inhabited by penguins, implemented insane tax cuts at a time the US economy is already on the ropes, and won't stop trying to undermine the independence of the Fed.
The house of cards is coming down in the next 10 years. Possibly 15.
He started the trade wars/tariffs to transfer wealth. The lowly people pay those tariffs. He knew the tariffs were illegal (look what Lutnick and his sons did). He knew they would have to refund the tariffs that the PEOPLE paid for but not to the people but to his corporate buddies. It’s sickening.
To be fair this didn’t start with him. For 50+ years, republicans have been pitching the tax razzle-dazzle to Americans because it sells. We’ll borrow 2 trillion, use 1.8 trillion of that to fund tax breaks for businesses and the ultra-wealthy, which Americans would never go for on its own. But then we’ll use the other $200 billion of it to give you individual tax breaks. And that makes it attractive for Americans to want to get on board.
But it’s just trickle-down. It’s just a shell game to conceal trickle-down without ever having to say the words trickle-down. The central economic building block of republican politics for decades is simply “trickle-down, but call it smaller government.”
It’s simply wealth transfer, and it’s no more sophisticated or nuanced than that.
Trump has taken that to a never imagined extreme. Instead of showing up at the wealth transfer table with a trillion in chips, he’s showing up with tens of trillions of chips, billions and billions of which are ending up in the dealer’s pocket. He doesn’t even conceal it, doesn’t bother with the “modified limited hangout” kinds of cover stories any more, he just takes the money, and the courts and congress just wink.
He uses our debt as a wealth transfer vehicle. He uses war as a personal enrichment vehicle by manipulating the markets with weekly good/bad news cycles. He uses tariffs as a wealth transfer vehicle, we pay the tariffs as consumers, but when they are refunded they go only to the companies. It’s wealth transfer, all the way down.
can you imagine the absolute shithole the us will be if this kind of shit continues for 10 more years? i give it til midterms and if things dont flip and no action is taken, im out this bitch 🖕
Actually I don't think even impeaching and convicting Trump tomorrow can reverse it.
Trust is everything in economics. Your allies need to trust you, investors and businesses need to trust that the country is a safe and stable haven for business, and the world needs to trust America's rule of law and the Fed's independence to keep relying on the USD as the global reserve currency.
Literally none of that is intact no more, and once shattered, trust takes generations to rebuild. And like I said before, the American people proved that they're insecure and ignorant and morally bankrupt enough to vote for pedophiles and con artists. It's over.
I agree with you. My gut tells me I am leaving, tough pill to swallow, sort of. But definitely not in it to win it at any cost. I remember being in Italy and having a conversation with a German tourist who overheard my wife and I talking. He was trying to tell us how he didnt agree with my angst at what the US has become. This was during the first term. I sometimes like to wonder what he thinks now.
Jeffries met with Jared to hash out what happens when/if the Dems take the house. What will happen is 'nothing'. They aren't going to go after the graft and corruption. They aren't going to release the Epstein files. They aren't going to upset the status quo because the same oligarchs who are directing the GOP to destroy our country also own the Dems.
I'm never, ever going to vote R - but just saying that the D vote might not get us much, either. In my state, NC, Independents are the majority political party. I've always been an Independent voter. I'd love to be able to vote for a Progressive candidate, someone with some balls and a love of the Constitution.
Americans as a whole have not consistently voted for anyone willing to tackle the debt issue just as an alcoholic will not consistently vote for prohibition or an obese person consistently vote for diets. We are addicted to debt and any way out will be painful.
I can't wait until the preferred party wins and a $40T baseline increasing at $2T/year is not bad -- it's a good thing, actually, and here's why (because... because it's just not bad, okay?).
Is this coming from a position of ignorance? If so, I can recommend some Google searches that will shed light on Democrats efforts over the last 4 decades to reign in deficits during economic boom periods.
But if it's just apathetic talking points because you're too lazy to exercise any intellectual, moral, or ethical scrutiny to distinguish right from wrong - there's not much anyone can do for you. Other than to recommend you find a better fitting subreddit. Maybe the Joe Rogan one?
I support making cuts to the military industrial complex, switching to single payer, and using taxes as a tool to reduce our deficits, reduce our Gini coefficient, and increase the velocity of money.
Republicans normally become deficit hawks when a Dem is in office yes, but the issue has more to do with the trajectory than the size of the deficit and for a few decades now the trajectory has been up under GOP and down under DEM.
You're just another example of the herd of sheep. Republican or Democrat doesn't matter, the country is screwed because people like you are allowed to vote and reproduce.
Although the debt has been in the trillions for decades, not everyone has considered it a problem. The doves argued that as long as the U.S. GDP was growing faster than the interest rate it was paying on its debt, the Treasury would be able to keep rolling over its bonds without too much of a problem. For much of the 2010s, this was essentially the statusquo, and debt panic was muted.
We’re nowhere near a complete failure of the Treasury market, and yet, over the past couple of years, some economists who were once more dovish have switched teams. Martha Gimbel, the executive director of the Budget Lab at Yale and the author of a recent Atlantic story on this issue, told me that part of the reason these economists are pivoting is that they’re starting to realize that interest rates are “probably going to be elevated for quite some time.” The average interest rate on U.S. debt—that second variable the doves look at—has been relatively high for several years now, and it’s only growing. It was hovering around 1.5 percent in 2021, and it’s now roughly 3.4 percent. The yield on the 30-year Treasury bond has more than doubled since 2021. “I was not a deficit hawk, and that reflected the dynamics” of the 2010s, when rates were lower, Gimbel told me. Now, she said, “the environment has changed.”
Why are rates rising? The Fed’s reaction to inflation is one reason. It may also have something to do with the extreme investments being made in AI, and these companies’ demand for credit. And it’s likely connected to the deficit panic—concern about the expansion of the national debt and the government’s ability to sustain it. Investors are starting to think of long-term Treasurys as riskier than they once did, and they’re demanding more money in exchange for taking on America’s debt. At the same time, the federal government has shown no real appetite to pull its two main levers for reducing the debt: cutting spending and raising taxes.
Jared Bernstein, the former head of Joe Biden’s Council of Economic Advisers, wrote in The Atlantic a few months ago that he’d “flipped from dove to hawk”—and told me this week that it was partly the government’s complacency on this issue that spurred this change. “Neither side seems particularly motivated to do much of anything about this,” he said. Rather than attending to the debt problem, politicians of both parties have instituted major tax cuts and increased spending over the past 25 years. The U.S. had its credit downgraded by a major ratings agency last spring, in part because of rising debt. The One Big Beautiful Bill Act will add an estimated $4.7 trillion to the deficit through 2035, and Donald Trump’s efforts to decrease immigration will add another half a trillion to that number over the same period, per the Congressional Budget Office.
— IRS enforcement funding $80 billion spent → $204 billion projected revenue Net savings of ~$124 billion (later revised down to ~$100B after Treasury limited audits below $400K income and reduced IRS hiring/pay flexibility)
Prescription drug pricing reforms ~$160 billion in savings Medicare price negotiation, inflation caps on drug prices, insulin cost limits — counted as savings, not spending
Total spending/tax breaks being offset ~$485 billion (~$433B in final negotiated text) Mostly climate/energy tax credits (~$386B)
Net result (CBO final score) –$238 billion deficit reduction over 2022–2031 Offsets exceeded new spending
> how are you not going to mention the clean tax energy credits ballooned up to waaaaay above projects? it def added to the deficit especially since:
>
>
Of course thats true. things happen like the republicans defunding the IRS to let rich people not pay taxes. Its a drop in the bucket compared to the shitshow of 1 month of the trump admin (tariffs, tax cuts for the rich, war with iran to not talk about epstin)
>actually didnt occur
Yes also the spending went down from 80 billion to about 10 billion while also getting multiple billions so that part becomes revenue neutral.
>no the IRA literally added like a minimum of a hundred billion to the deficit a year
Wrong.
The EV credits were cancelled last year already. Same with solar. Defunded the IRS funding.
The medicare savings are still intact.
Basically its not gonna add anything to the deficit and save money via Medicare negotiations.
So it basically still paid off the debt 300 billion. But since thats only 1 month of trumps war it largely doesnt matter
Its a 10 year projection bubba boy. Medicare savings alone puts above 160 billion in savings. And since you only got literally 2.5 years of tax credits that means its all positive bubba.
> right and those ten year projects are based on shit like the irs stuff generating hundreds of billions when they wont lol
>
>
And? The IRS thing was well on its way generating 1.4 billion in extra tax revenue in 1 year from 1600 millionaires. Too bad republicans like bootlicking the rich too much.
>look at whats actually happened and youll see the projections wildly missed the actual impact
So? If Kamala had won and kept them the usa would have had still wayyyyyyyyyyy more revenue and less cost because bonds were falling and she wouldnt have done something stupid like a tax cut for rich and trade wars.
The point is moot as trump kept the money generating ones like bidens medicare negoitions while cutting the spending ones like tax credits meaning in the end bidens plan paid off 500 billion of the debt.
But that doesnt mean much when trump spend 300 billion on 1 month of war.
I have never understood how the party of fiscal conservatism and small government (ahem the republicans) has been so extraordinarily spendthrift since the late 90s when the government had a balanced budget. Like how could even the most hardcore republicans not see this !!?? Crazy
"Fiscal conservatism" and "small government" were always lies and cover for the transfer of wealth to the wealthiest and the consolidation of power by the powerful. The right wing is not "conservative," they are authoritarian, and always have been, from before the time they got their name by sitting on the right side of the French Parliment in support of the monarch and the principles of the divine right to rule. Balanced budgets, fewer regulations, and more local or state control for their agendas in the 60's, 70's and 80's because following the New Deal and Great Society, federal power and spending were preventing oligarchs from exercising absolute political and economic control. That rhetoric carried it's cultural momentum forward to today. But make no mistake, conservatives were never wedded to balanced budgets or fiscal responsibility, small government or local control. Those were always convenient tropes they latched on to, to sell themselves to voters and conceal who they really are: monarchists.
Both of the uniparty parties have ghouls in office. There need to be term limits and there need to be age limits. Pilots have to retire at 65, I think that's probably a good threshold for federal political offices. That would mean Trump nor Biden would ever have been elected.
Senate: More than half of the 100 senators are 65 or older
House: About 134 voting members (more than 30% of the 435-seat chamber) are 65 or older.
That's 1/3 of the entire legislative branch.
Only Kavanaugh, Gorsuch, Jackson, and Barrett would be on the Supreme court.
They have created their own information sphere with biased media. Their followers are not being told the truth. Foxnews rarely mentions the word "tarrif" for example. Do you seriously think Fox viewers understand the bond markets? Go to their website and see how many in-depth articles they have on the impact of the rising rates of 30 year bonds. 🤣
We don't have a party of small government at all, and haven't in over a century. Fiscal conservative? More so sounds like the Dems, who haven't had much power in decades.
They were not responsible for that balanced budget. They were heavily opposed to the ghwb tax increases and the 1993 tax increases under the clinton administration. This myth i just wish itd die already. They branded themselves thatcway but theyd fully adopted "starve the beast" fiscal theory and were anxious to pass huge tax cuts once clinton was out the way
I swear americans cant recognize a badfaith faction such as this1 even if it was actively punching them in the face
People talk like today's Republican party has any resemblance to Republicans of a generation ago. The 1993 Contract with America group were liberals by today's standards. It's hard to believe. The Tea Party movement sent them down the path that led to a sewer
Bruce Bartlett who worked in the reagan administration on their tax cuts early into their tenure and with kasich in this 2010 vintage article readily points out in spite of all the failures of starve the beast under reagan, successful tax increases under ghwb and clinton, were hellbent on doing more stb.
"
When Bill Clinton became president in 1993, one of his first acts in office was to push through Congress–with no Republican support–a big tax increase. Starve the beast theory predicted a big increase in spending as a consequence. But in fact, federal outlays fell from 22.1% of GDP in 1992 to 18.2% of GDP by the time Clinton left office."
Its that key phrase "No Republican Support". I swear theres a much longer version of this same article where house minority leader newt gingrich is predicting a new great depression too.
Sht had it your way, every states economy be like mississippi, alabama and W. Virginia. No thanks.
If the top 10 shttiest states in the country like on poverty, lacking higher education, teen moms, life expectency, incarcerated citizen rate, if they werent consistently majority republican ran, you might actually have a point.
I tell you what, if i want a state to turn into a shithole, you got some good ideas bro.
The timeline to achieve a balanced federal budget under the Balanced Budget Act of 1997 was five years (1997 to 2002), though the budget actually reached a surplus ahead of schedule.
Maybe you're confusing it for something like a balanced budget amendment. Which has been attempted multiple times but has never passed.
> The timeline to achieve a balanced federal budget under the Balanced Budget Act of 1997 was five years (1997 to 2002), though the budget actually reached a surplus ahead of schedule.
Right. Because of--in part--Bush's tax hike and--primarily--the Omnibus Budget Reconciliation Act of 1993. There's not even any acceleration after the 1997 bill was passed. Stop trying to give Republicans credit for something Democrats did without any Republican votes.
The real issue is we doubled the debt in a decade. We did more than a couple hundred years of existing and only wracked up half of what we have now ten years later
Real issue is deficits exceeding 5% of gdp since 2020. You can deflate the impact of large debt balances via nominal gdp growth, but you cannot do so if you’re growing the debt massively and consistently in real terms.
I think the invisible hand also sees a potential end to cyclical waves of high government deficit (in favor of always excessive spending). The problem with the current level of new debt financing the US government is that both traditional models (which say the economy is doing well and the foot should be off the gas) and modern monetary theory (which isn’t mentioned much anymore because it also says that increasing interest rates are a sign that government spending should be reduced) essentially agree that US government spending net of receipts is excessive.
And yet here we are talking about ways to spend more and raise less.
It's worse than your last sentence implies: Trump is pushing for a debt ceiling increase to beyond 50 Trillion, because he doesn't want to have to negotiate anything with Congress and there's no longer a guarantee by the Treasury that debt can avoid hitting 45 Trillion before 2028.
Don't offer enough interest to offset the risk? No one buys. Offer too much interest? H
uge swathes of the market skip out, because of the degree of risk thoses rates imply.
MMT also isn’t mentioned much anymore because most economists don’t take MMT seriously.
Persistent government deficits putting upward pressure on interest rates is not a unique outcome to MMT. “Crowding out” and seigniorage have been acknowledged as risks long before MMT was popularized
MMT completely rejects financial crowding out. Interest rates are a policy choice. Monopolies have monopoly pricing power. A currency issuing government can pick its interest rate and nobody else can do anything about it. In the MMT framework the choice is permanent ZIRP.
Deficits put downward pressure on interest rates because adding reserve liquidity lowers the cost to borrow reserves. Interest rates do not correlate with debt levels. The fact that the mainstream claims they do is a huge indictment against their claims that they're empirically driven.
> modern monetary theory (which isn’t mentioned much anymore because it also says that increasing interest rates are a sign that government spending should be reduced)
That's not MMT. Interest rates are a policy choice and should be left at zero. Demand driven inflation is the sign that government spending should be reduced (or that taxes should be increased if it's structural spending for the public purpose).
In the past, I've posted in this very sub that the US debt is at the edge of insanity. A Keynesian Endpoint is clearly in the making.
They are have hit that magical point where they are taking cash advances on their credit card to make monthly minimum payments on that same creditcard.
I suspect this will last longer than people think. Very much like an old aristocratic family can burn the furniture to keep the mansion warm; and there will be fool economists who will point to the temperature and say, "The mansion is just as warm as it has always been."
I think the implications of this debt crisis are far more interesting than the debt itself. There will be situations where the US can torture some players into taking their crap debt. But, more importantly, there will be players who can tell the US to sit down and shut up or they will blow their debt up.
Very much like the US regularly tried to do to the UK in the 1950s.
Also, there will be other players the US has been propping up, and that money is going to be pulled (furniture to burn), and those players are going to collapse.
The fun part of this is that the US has long been able to use their military to spank countries who don't cooperate, and to defend those who do. Drones are entirely changing this. The US Navy can not go into the Persian Gulf because they would be turned into Submarines. If the US tried to invade Afghanistan next week, the weekly death toll would soon reach the same as their losses for that entire misadventure.
One last factoid is that there is no "unsustainable" debt level. What there is a dangerous level where if other countries enter a financial crisis, the other weak players tend to go like dominos (Asian tigers collapse).
The whole reason we are in this debt crisis is because of Republicans. Reagan gutting the top tax rate. George W Bush and Donald Trump passing multiple huge tax cuts for the one percenters.
Government still has to be paid for, while those morons were gutting the IRS’s revenue stream. And each time we cut taxes for the wealthy, that revenue has to be made up for with debt.
I disagree. There is no intention of ever paying off or even down the debt, regardless of who is in office. The debt is needed and part of the natural order of things under Modern Monetary Theory (MMT). MMT had been wholly embraced inside the beltway for decades. There is zero fiscal discipline in the Congress. Democrats and Republicans are just two sides of the same literal coin.
It’s no coincidence that the Godfather of MMT(Keynesian Economics on Steroids), Warren Mosler, introduced it in 1993 with ‘Soft Currency Economics’, right before the last time there was a regular order balanced budget with all 12 appropriation bills debated and passed by both houses of the Congress in 1997 during Bill Clinton’s last term. It has just been one continuing (spending) resolution after another ever since.
Liquidity is not a constraint according to MMT. The only constraints are real resources and inflation. The U.S. dollar is an unsecured fiat currency with a variable rate since Nixon took it off the gold standard. A government that issues its own fiat currency is never bankrupt, it just issues more. Your federal tax dollars are not used or needed to pay for any government spending. If you go to your closest IRS service center and pay your federal income taxes in cash, that cash doesn’t go into some account to pay for government spending. It goes straight to a shredder and that’s a fact. Tax rates are just another monetary tool to manage inflation and regulate the economy.
It’s a centrally planned economy not much different than the USSR’s Gosplan circa 1985. The U.S. is way past the point of no return. Time will be short, however, when the dollar loses its “extraordinary privilege” as the world’s default reserve currency. It’s not a matter of if but when. It will take a couple of decades to replace the systems and processes surrounding world trade that have been built around the dollar since Bretton Woods, but it’s happening. The dollar will collapse within 10 years after that.
I think this is more to due with the Dems will be gaining control soon, and they want to start astroturfing the hysterical need for austerity. Typical American political cycle. Ruin everything and ignore the problems until the Dems can be blamed for the crimes of the Republicans.
a new wrinkle: AI megas are issuing bonds at a very high number to build AI stuff. This competes with treasuries. the effect is driving up rates.
In a way, elon musk made his trillion with the help of US taxpayers and electric car rebates. These handouts drove up the deficit, driving up rates. AND he is now using that money to get credit, which is driving up interest rates even higher.
The Military Industrial Complex has no idea what things actually cost because the ultra rich that run it are detached from reality (and corrupt), so most of the increase in rate of increase of the debt is just from blatant corruption. That corruption is what should concern them.
Every startup I've had isn't competing in a free and open market, it's competing against whoever has the biggest government connections and can snag a free $5 million grant from the taxpayers.
The government can't comprehend a couple of guys with gumption starting a business using an old rusty skid steer, if they don't have a $1 million cutting edge Caterpillar machine courtesy of the taxpayers however will they operate? 🥲
I noticed something funny recently. With all of these data centers, they claim they could not possibly operate without the infrastructure being subsidized by the taxpayers. The funny thing is no one I know had their driveway built by the taxpayers! Their well wasn't drilled by the taxpayers! They built their infrastructure themselves, either physically or by paying with their own money.
We have corporate communism in America, the poor CEO needs the public to cough up money, otherwise however will he work? Poor billionaire, could not possibly build a road without the taxpayer. Bullshit is what that is.
Easiest way to fix the debt is to bring back the top tac bracket of 70%!! It can be set to $50 Million for both capital gains and W-2. Then set the corporate level at around say $10 Billion.
Please realize this tax bracket has always existed until Reagan and it is actually created to to never actually get paid but it will significantly increase the tax revenue and get rid of the deficit in 2-3 decades. How?? Just take a min and think ;)
Way back, the top tax bracket was 91%, and over time it got eroded by both parties, because they really serve the wealthy and not all the people. So the progressive tax system has gotten less and less progressive over time. The lower and middle class pay a far greater % of their earnings in tax than the wealthy.
True, those tax brackets were a cap on the accumulation of wealth that encouraged a greater distribution of the wealth created by the products of labor. Think how much better our lives would be if CEO pays were basically capped at $50 Mil !!
Somewhat arbitrary but I think the biggest fault line was when servicing the debt became the single biggest budget item.
Whatever you might think of his other views, Niall Ferguson's observation that any great power that spends more on debt-servicing interest than on national defense enters a path of geopolitical decline, seems relevant.
This article raises good points, but one that they miss is that Trump is actively pursuing policies that harm the economy and depress receipts. Tariffs slow down imports, which hurt businesses and reduce consumption. The Iran war has created a lot of shakiness in fuel market, which is pushing inflation higher. Trump's mad-dictator approach to foreign policy (and especially tariffs) leaves everyone hedging their bets and holding on to what they can.
Bessent's desire to stimulate the economy could be fairly easily achieved if Trump could simply resist the urge to bully the rest of the world in ways that indirectly harm us.
Well, thing is that economy is subject to a long circles. In a so big system as US economy that especially long. And it is so long that creates whole big culture behind it. For many - many years government enjoyed spending that bigger then income. And that became a norm that every government now wanted and considered fear game. When in reality answer to a question "what is going to be with a debt grow" newer really existed. Whole thing been started in Reagan era and answer from the beginning was same as today "we are going to grow our way out" - grow that created by economy stimulation will pay debt. So debt is just an investment that will bring related profit to pay for it. 45 years later we know it is not happening. Not only in US but in no place. It is not going down on grow without particular measures to cut on spending. Same way as loosing weight not working only on exercises without cutting on food consumption 😄 That just fact of life. But nobody want to face it because it is politically really ugly.
As AI agents replace the majority of white collar jobs over the next few years, surely the tax base will also crater. I wonder if we’ll have any kind of massive tax reform as a result. I doubt it. I can only see the debt climbing due to that.
In the past, one of the explanations for low Treasury debt yields was petrodollar recycling from the Persian Gulf protectorates. How is that deal working out?
Is it ALL the things? Bond buy backs to influence interest rates? Debt payments equal to the national budget? Total debt ($40t) way over GDP ($30t)? Debt growing like a cancer? Spending totally out of control? Just off the top of my head, from the outside looking in.
>Their perspective was that as long as the U.S. GDP was growing faster than the interest rate it was paying on its debt, the Treasury would be able to keep rolling over its bonds without too much of a problem.
I think this is pretty bad paraphrasing of what most economists have been saying regarding the debt. The US can continue to deficit spend as long as our debt-to-GDP doesn't increase. That's not as simple as GDP > interest rate.
The debt is worrisome, but it's not time to panic. Debt-to-GDP is relatively stable despite our nominal debt increasing rapidly. That's mostly because of strong GDP growth, which is already adjusted for inflation in case anyone wasn't aware.
It would not take much for our debt-to-GDP to begin decreasing; Trump's policies have given the next president plenty of opportunities to become more fiscally responsible.
Our budget deficit has been greater than $1T annually for around 15 years.
the fact that economists are only calling out this warning NOW calls the entire profession into doubt considering plenty of people that weren't economists called out the issue decades ago and were patted on the head and told to trust the experts.
The GOP does nothing about this, and also increases the debt.
The main problem is that Leftists and most liberals are for increasing taxes and spending even more, with no concern that spending is already too high. What we should be focussed on are not billionaires but what the govt is doing spending $7T an year (most of it is social spending). And this is ultimately why the fiscal discipline/reform won't happen.
Look at this fapper cucking for the Billionaires... keep it up buddy, i'm sure they'll let you in to their cabal as the rest of us drown in a society (and planet) destroyed by the obvious reality of what happens when rich people take over the government and get to do whatever they want. Be more human!
I'm not panicking. Every leader in the industrial world knew that as long as the system in place forced a trade deficit on the US it would force an ever growing fiscal deficit on the US and eventually that fiscal deficit would reach critical mass. The leaders of the various countries of the industrial world were warned this would happen and they all didn't care because the consequences for that were not going to happen under their watch. Ultimate irony is both Xi and Trump were in power at the critical juncture to get us off this path.
So now here we are the US is over extended and the money markets is calling bullshit on the both the pile of debt and the ability for that debt pile to keep growing at the pace that it is because there isn't enough free capital in the world. And now the economist panick because they bill is finally coming due the way it must be address is extreme.
The first way the US can address it is simply increasing the m0/m1 money supply directly. This gets followed up with 20 percent interest rates 25 percent bank holding rates and 25 percent taxes. The consequences of this are high inflation and higher unemployment until we clear the debt all the will the value of the dollar declines until the surplus cash we injected into the system gets destroyed.
The second way is through currency redenomination and a forced tax on redenomination the debt into the new currency of 75 percent. Painful as well but interest rates likely peak at 10 percent and you dont get as high of unemployment. You also will have to raise taxes to run a responsible deficit of no more than 2 percent. You get some unemployment with this but it's the less painful than an out right money printing scheme.
The you can do a growth inflationary model where you boost immigration to like 6 to 10 million and stumble through a hyper growth period. You'll need to rais taxes and lower the deficit but you could in theory get 8 to 10 percent real growth and another 8 to 10 percent inflation whilst we go through the transition. Its painful but it rapidly brings down the debt to gdp ratio.
But make no mistake which ever model you run to correct the problem it will come with social instability. You will need to increase social welfare program in the aftermath to rebuild trust in our institutions. Likely Medicare for all and other schemes for a couple of decades at a minimum.
I'm not worried because the solutions are there but the longer you take to pick a poison the more extreme the correction period will be. So pick your poison swallow it quick and sweat it out as best you can.
ptarmigan_direct | 17 hours ago
There are also some unknowns which puts the US and many western nations in uncharted territory. are are difficult to model: 1) Aging US population with more takers than input into the social security system and medicare which are the largest line items in the budget. 2) Impact of capital vs. labor for taxes -- if AI replaces some workers those income taxes in the short run are gone 3) captured regulation by industry at a large scale -- continued reducing of business taxes, keeping offshore loopholes and creating greater consolidation 4) failing of traditional checks and balances -- i.e. only congress authorizes spending and the federal reserve maintains independence, is very much in question.
Usr_name-checks-out | 11 hours ago
All this reads like a country that is being ‘looted’ by a hedge fund, and seeing how much more debt can be loaded before cashing out.
ptarmigan_direct | 11 hours ago
A good analogy. PE and Hedge firms care more about immediate returns on equity vs. building businesses that will last. Politicians and the general public don't seem interested in making short term sacrifices to put the country on a long term stable foundation. Raising interest rates is one action that will cause some pain now but avoid much greater impacts later. Inflation is still persistent... lets see what actions are taken. There doesn't seem to be any reduction on the fiscal side of the equation.
lock_robster2022 | 8 hours ago
Economists talk about Venezuela being a captured state and looting their sole money maker, PDVSA. I wonder where the line is to talk about the US with those terms
CrackingToastGromet | 10 hours ago
We are the Toys R Us to this regime’s Bain Capital for sure.
bricklab | 8 hours ago
We are being looted but not like a hedge fund. It's more like the looting the oligarchs did in Russia after the wall fell.
Everything is being broken on purpose and they are going to buy everything up in a fire sale.
Minute-Tone9309 | 4 hours ago
Goodfellas on steroids
toolkitxx | 16 hours ago
AI in this is less something to worry about in the future but about how it actually has infested all areas of debt by now. AI debt is in everything by now, including bonds and venture capital. So there is no real safe heaven for capital any longer and this concentration combined with the overall debt is what should scare the shit out of people. If you subtract all the AI build-up currently from GDP growth, there is not much left, less than a percent or so.
So if just one brick fails or ceases, it might drag everything else with it.
Protect-Their-Smiles | 15 hours ago
People do not hate AI enough, but they might finally get the idea, once they realize how much it has infested their financial security.
Living_Knowledge_783 | 9 hours ago
your 401k is tied to ai
toolkitxx | 14 hours ago
AI has not proven anything real yet, so hating it would be premature. But the entire thing is too hyped and too widespread to be ignored and seen as an issue in the future.
When almost the entire business model of a single country rests on a single industry, that is mostly debt financed and doesnt create meaningful revenues let alone profits yet, but exceeds the debt of several technologies before them that actually had real revenue and profits, then it is time to take a step back and look at the whole picture.
When investors cannot find sectors to invest into without ending in the same pool as the stuff they try to diversify from, than trouble is not just on the horizon. It is basically right in front of you.
BasvanS | 9 hours ago
You can hate it for being valued like this while not having proven anything. It’s easy, and rational.
RIP_Soulja_Slim | 13 hours ago
> When almost the entire business model of a single country rests on a single industry, that is mostly debt financed and doesnt create meaningful revenues let alone profits yet,
This is in no way a rational or informed understanding of the US economy or whatever might be happening within hyperscalers spending. Be serious lol.
toolkitxx | 12 hours ago
I'll get back to you when things have crashed :)
Notiefriday | 9 hours ago
The tulip crash all over?
SkoobySnacs | 12 hours ago
The current administration has given all of our allies good reason to break financial ties. China isn't going to rely on a wishy washy country to secure food from. Just like European countries are moving away from Microsoft as a digital staple for their systems. Because at any moment the diaper baby will throw a tantrum and tariff their logistics software.
In the next ten years these things will be decoupled and those revenue and tax streams will be gone forever.
NetAnon579 | 6 hours ago
Canada has a trade deal signed by Trump and the day after the World Cup ends he attacks with 50% tariffs in violation of the deal. Unreliable is a kind word.
Brooklynhoosier | 9 hours ago
Is the aging US population really an unknown? Hasn’t this demographic trend been a known factor for quite some time?
Abracadaniel95 | 8 hours ago
Its an unknown as to how we'll deal with it. It's another unprecedented factor.
kg747kg101 | 2 hours ago
There is a good counter to this. The USA could very well pass a wealth tax targeting the top 10%. Reduce their military spending. And raise the income tax on the rich without being uncompetitive with other rich countries. In Europe they already do this so they don’t have any room left. The USA has plenty…
tripongo3 | 12 hours ago
Excellent comment
geeky-gymnast | 18 hours ago
The issuance of short-term govt bonds by the US treasury to purchase long-term govt bonds is a small operation relative to similar operations undertaken in the past (i.e., small volume compared to quantity of long-term US govt bonds). Based on historical operations, it would appear that this alone is unlikely to decrease long-term US govt bond yields beyond 10 b.p.s. It'd be quite a stroke of luck to achieve even a 5 b.p.s decline.
Sip_py | 16 hours ago
It's entirely performative and anyone that knows what it is can see it blindly
Alfador8 | 15 hours ago
OK but why do the performance? Why now? The bond market did not appear to be in acute distress at the time of the announcement. It was made in between quarterly updates too, which is unusual.
rage_panda_84 | 15 hours ago
Bessent has been trying to mitigate the effects of the ongoing war supply shocks for months. Iran and Ukraine have pushed the real cost of oil-based energy to near all-time highs. Wheat and beef are following. There is going to be significant inflation, probably worse the initial Ukraine war shock.
This and the Yen intervention are all tied to the supply shock that is happening. The market wants to ignore it and Bessent is trying to help find a way.
As Druckenmiller wrote, this is procrastination, not a solution. And he knows that. A cynical person would see this and think Bessent is just trying to push the consequences of Trump's disasterous Iran war until after the midterms....
Alfador8 | 15 hours ago
I understand all that and agree, but the timing of the announcement feels like a warning that things are worse than they appear. Why couldn't he wait until the quarterly update? The unusual mid quarter timing is causing a Streisand Effect and brining more attention to the problem, which exacerbates it.
rage_panda_84 | 14 hours ago
A conspiracy minded person would think that by talking about bonds, he's indirectly talking about the price of crude oil, which is something that would drive inflation fears, and there's strong evidence someone is suppressing. That he has $1 trillion general fund is not news to anyone.
He also said he "did not understand" a spike in oil prices recently. Which is a very weird thing for a Treasury Secretary to say.
If you take all of the separate pieces together, it kinda sounded like he's trying to warn big institutional investors against a kind of macro trade that longs oil. So as to not short squeeze the crude oil price that he's been actively intervening to keep tamped down.
Alfador8 | 13 hours ago
That's an interesting perspective I hadn't considered, thanks.
toothpicks-galore | 12 hours ago
so in this situation, since it is likely bessent doing the shorts, would that put the treasury in the same position as Archegos in the gamestonk short squeeze, potentially?
rage_panda_84 | 12 hours ago
I think Bessent wants the big institutions to think he will pour endless treasury money on the other side of their trades. I don't think he actually will, everyone knows there are limits to what he can do before other things break. It's the same as the currency intervention, he wants people to know he's doing it even though the market will just shrug him off in the long term.
skinnybuddha | 12 hours ago
He has to be able to tell the president that he is doing *something* to lower interest rates.
Own-Chemist2228 | 14 hours ago
>OK but why do the performance? Why now?
2026 midterms.
Economically it is incredibly short-sighted, but it is part of a longer-term pollical plan to seize power:
The basic plan is the inject enough chaos into 2028 that there will not be a majority of electoral college votes, and then the Republican House chooses the next president (per the 12th Amendment)
They know they won't likely win in 2028 legitimately after Trump's disastrous term, so they have to find another way. This latest move is just an attempt to buy time until November.
Sonamdrukpa | 12 hours ago
Okay the Trump administration is brazenly and publicly trying to manipulate the electoral process, but it's a huge leap to presume a failure of the electoral college two years from now as an explanation for the Treasury secretary intervening in the bond market.
Own-Chemist2228 | 10 hours ago
Read the 12th Amendment.
If there is no majority in the electoral college, the House chooses the president.
There are two ways that there can be no majority:
Republicans are going for #2. They already tried this on Jan 6, 2021. For 2028 they will try to inject enough chaos into the election so that there is no clear winner. They are doing this because they know a Republican cannot win legitimately after Trump.
The certification process in January 2029 will be a shitshow with the Republican congress refusing to accept electoral college representatives from states they don't like by claiming "election fraud" or that states didn't follow Trump's executive orders restricting mail-in voting, etc.
This will lead to no majority, which means they get to pick the next president.
In order for their 2028 coup to work, they need a strong majority in the House. The 2026 midterms in November will determine this.
Bessent is desperately trying to hold the economy together for a few more months. That's all they need. The country can go to shit after that because then they can stay in power indefinitely without winning elections.
Sonamdrukpa | 10 hours ago
It's just weird to describe the purpose of actions taken to maintain the system as being part of a plan to pull off a long-term nefarious goal. It's like saying that you fired your underperforming IT administrator because his poor digital architecture standards were threatening your plans to pump and dump stock after your IPO.
Own-Chemist2228 | 10 hours ago
But it isn't "maintaining the system." Every economist, including Bessent himself, knows this trade accomplishes nothing in the long term. He was hoping it would do something in the short term, but that already failed.
Are you still believing that anyone in the Trump admin does anything in good faith? Trump stopped hiring honest people for his admin less than halfway through his first term.
Sonamdrukpa | 9 hours ago
Sorry, I struggled to find the right phrase there and the wording isn't great, don't read too much into it.
Not disputing this is part of a short term plan, or that the Trump administration is governing in bad faith. It's just like, this is being done to accomplish goal 2, you don't need to bring up goal 7 as an extra ontological motivation.
Put another way - even if they weren't planning to fuck with 2028, they would still be trying to keep the economy afloat until after November because staying in power for this election is a goal they have in and of itself.
spaztwelve | 8 hours ago
Are you aware of the Powell Memorandum?
Sonamdrukpa | 8 hours ago
Yes.
I'm also aware of the philosophic complexity of pinning down what causality is and that this sort of logic isn't inconsistent with a variety of casual frameworks.
I'm also aware of the fact that the prospect of catastrophic long-term consequences actually tends to produce inaction rather than change, especially if the solutions are complex or require group action - think global warming.
stigs007 | 11 hours ago
They're doing it for the midterms, which they need to accomplish 2028 goals.
Gamer_Grease | 14 hours ago
I agree. Most people also frankly do not understand bonds in the first place. Who is this supposed performance for?
Alfador8 | 14 hours ago
He's asserting that they will not allow prices to drop below a certain threshold, which I assume is supposed to calm jittery holders worried that if they don't sell now they'll get a worse price later. The problem is that inflation is going to continue to run hot for the reasons the other poster listed elsewhere, and at some point real yields will be too unattractive, and holders will just say "ok, sold to you, Treasury". Which is very bad optics-wise.
KnowledgeMediocre404 | 10 hours ago
Wasn't it because Japenese bond holders are finally seeing a good option in Japanese bonds and were looking to offload US bonds to purchase them?
Sip_py | 6 hours ago
Likely midterms. If they can convince people that affordability and high interest rates are being handled they can kick the can. But they don't even need it to be effective. They need to do something so their talking heads can then just lie about the effect of the action.
RIP_Soulja_Slim | 16 hours ago
It's not as small as you think, it amounts to ~2% of daily float give or take. This is mostly because off the run long dated treasuries have much lower volumes, but still it's not a nothing figure and shouldn't be represented as such.
Will it ultimately sort out the yield issue? I'm not convinced, but it's a decent amount.
geeky-gymnast | 15 hours ago
> ~2% of daily float give or take
thanks for pointing this out, the size of the operation as a fraction of traded volume is a pertinent point I haven't considered :)
Sryzon | 12 hours ago
It's to prevent large auction tails and short-term volatility. Maybe Bessent doesn't see it that way, but that's why Yellen started doing it. These operations are way too small for long-term yield control - like you said.
Here's a chart of 10-Year tails. Buybacks started in 2024.
TenderfootGungi | 6 hours ago
They were buying short term bonds in hopes the rate would fall and not get locked in. By doing this swap, they are locking in those rates for 30 years.
jan1of1 | 5 hours ago
Bessant's plan to purchase long term bonds using short term notes and bills is QE by another name. It essential does the same thing - injecting additional money into the system (instead of printing it). G
overnment is buying back its own debt because no one else wants it which, in turn, forces up the prices of long term bonds while causing interest rates to fall (his hope). I think this twist operation isn't going to work in the long term.
DaMentalis | 17 hours ago
What should concern them is the fact that the economy is under the control of a demented geriatric child molester in diapers and his cabal of asskissers and morons.
Just to recap, he started multiple trade wars for no apparent reason, plus an expensive real war that's quickly turning into a quagmire, imposed tariffs in such a stupid way that saw him slap a few on an island inhabited by penguins, implemented insane tax cuts at a time the US economy is already on the ropes, and won't stop trying to undermine the independence of the Fed.
The house of cards is coming down in the next 10 years. Possibly 15.
dcdem1163 | 17 hours ago
He started the trade wars/tariffs to transfer wealth. The lowly people pay those tariffs. He knew the tariffs were illegal (look what Lutnick and his sons did). He knew they would have to refund the tariffs that the PEOPLE paid for but not to the people but to his corporate buddies. It’s sickening.
ArrowheadDZ | 16 hours ago
Exactly this.
To be fair this didn’t start with him. For 50+ years, republicans have been pitching the tax razzle-dazzle to Americans because it sells. We’ll borrow 2 trillion, use 1.8 trillion of that to fund tax breaks for businesses and the ultra-wealthy, which Americans would never go for on its own. But then we’ll use the other $200 billion of it to give you individual tax breaks. And that makes it attractive for Americans to want to get on board.
But it’s just trickle-down. It’s just a shell game to conceal trickle-down without ever having to say the words trickle-down. The central economic building block of republican politics for decades is simply “trickle-down, but call it smaller government.”
It’s simply wealth transfer, and it’s no more sophisticated or nuanced than that.
Trump has taken that to a never imagined extreme. Instead of showing up at the wealth transfer table with a trillion in chips, he’s showing up with tens of trillions of chips, billions and billions of which are ending up in the dealer’s pocket. He doesn’t even conceal it, doesn’t bother with the “modified limited hangout” kinds of cover stories any more, he just takes the money, and the courts and congress just wink.
He uses our debt as a wealth transfer vehicle. He uses war as a personal enrichment vehicle by manipulating the markets with weekly good/bad news cycles. He uses tariffs as a wealth transfer vehicle, we pay the tariffs as consumers, but when they are refunded they go only to the companies. It’s wealth transfer, all the way down.
dcdem1163 | 16 hours ago
To me, it started with Reagan and never stopped. It’s gotten worse admin after admin.
HumorAccomplished611 | 15 hours ago
Its not that. Its a control thing.
He had country leaders, biggest corporations groveling to him and giving him gifts and if he felt like it you saved billions.
It was a personal grift.
grispindl | 12 hours ago
What did Lutnick do? Ootl here
AddanDeith | 8 hours ago
https://fortune.com/2026/03/07/winners-supreme-court-tariff-ruling-hedge-funds-creating-100-billion-secondary-market-refunds-brandon-howard-lutnick/
Seems like abusing a cabinet position to steal.
SplitEar | 13 hours ago
If we consider how Putin could impose sanctions on the US, Trump’s blanket tariffs are a genius way to do it.
WhiteHeatBlackLight | 15 hours ago
I think it's coming to roost far quicker than fifteen. Try two
OriginalHappyFunBall | 12 hours ago
Don't forget the attacks on our universities and the fundamental change where foreign students are not welcome in the US anymore.
Trump is pouring sand in the gearbox of our economy.
councilmember | 9 hours ago
Brain drain + science and climate denial.
HMCtripleOG | 15 hours ago
Possibly 2
ooooogirlshedonealre | 15 hours ago
can you imagine the absolute shithole the us will be if this kind of shit continues for 10 more years? i give it til midterms and if things dont flip and no action is taken, im out this bitch 🖕
DaMentalis | 15 hours ago
I don't think the midterms can reverse it.
Actually I don't think even impeaching and convicting Trump tomorrow can reverse it.
Trust is everything in economics. Your allies need to trust you, investors and businesses need to trust that the country is a safe and stable haven for business, and the world needs to trust America's rule of law and the Fed's independence to keep relying on the USD as the global reserve currency.
Literally none of that is intact no more, and once shattered, trust takes generations to rebuild. And like I said before, the American people proved that they're insecure and ignorant and morally bankrupt enough to vote for pedophiles and con artists. It's over.
ooooogirlshedonealre | 14 hours ago
I agree with you. My gut tells me I am leaving, tough pill to swallow, sort of. But definitely not in it to win it at any cost. I remember being in Italy and having a conversation with a German tourist who overheard my wife and I talking. He was trying to tell us how he didnt agree with my angst at what the US has become. This was during the first term. I sometimes like to wonder what he thinks now.
sowhat4 | 14 hours ago
Jeffries met with Jared to hash out what happens when/if the Dems take the house. What will happen is 'nothing'. They aren't going to go after the graft and corruption. They aren't going to release the Epstein files. They aren't going to upset the status quo because the same oligarchs who are directing the GOP to destroy our country also own the Dems.
I'm never, ever going to vote R - but just saying that the D vote might not get us much, either. In my state, NC, Independents are the majority political party. I've always been an Independent voter. I'd love to be able to vote for a Progressive candidate, someone with some balls and a love of the Constitution.
EclecticEuTECHtic | 13 hours ago
Independents are not a political party. That's the point.
Alaska_Engineer | 10 hours ago
Americans as a whole have not consistently voted for anyone willing to tackle the debt issue just as an alcoholic will not consistently vote for prohibition or an obese person consistently vote for diets. We are addicted to debt and any way out will be painful.
variegated68409 | 17 hours ago
I can't wait until the preferred party wins and a $40T baseline increasing at $2T/year is not bad -- it's a good thing, actually, and here's why (because... because it's just not bad, okay?).
TekDragon | 16 hours ago
Is this coming from a position of ignorance? If so, I can recommend some Google searches that will shed light on Democrats efforts over the last 4 decades to reign in deficits during economic boom periods.
But if it's just apathetic talking points because you're too lazy to exercise any intellectual, moral, or ethical scrutiny to distinguish right from wrong - there's not much anyone can do for you. Other than to recommend you find a better fitting subreddit. Maybe the Joe Rogan one?
variegated68409 | 16 hours ago
Do you or do you not support austerity? Taxation alone can't fix this.
TekDragon | 15 hours ago
I support making cuts to the military industrial complex, switching to single payer, and using taxes as a tool to reduce our deficits, reduce our Gini coefficient, and increase the velocity of money.
variegated68409 | 15 hours ago
Yes I also support good thing and do not support bad thing.
TekDragon | 14 hours ago
Why are you on this subreddit?
devliegende | 14 hours ago
Republicans normally become deficit hawks when a Dem is in office yes, but the issue has more to do with the trajectory than the size of the deficit and for a few decades now the trajectory has been up under GOP and down under DEM.
DaMentalis | 15 hours ago
You're just another example of the herd of sheep. Republican or Democrat doesn't matter, the country is screwed because people like you are allowed to vote and reproduce.
[OP] Naurgul | 18 hours ago
Excerpts:
Although the debt has been in the trillions for decades, not everyone has considered it a problem. The doves argued that as long as the U.S. GDP was growing faster than the interest rate it was paying on its debt, the Treasury would be able to keep rolling over its bonds without too much of a problem. For much of the 2010s, this was essentially the status quo, and debt panic was muted.
We’re nowhere near a complete failure of the Treasury market, and yet, over the past couple of years, some economists who were once more dovish have switched teams. Martha Gimbel, the executive director of the Budget Lab at Yale and the author of a recent Atlantic story on this issue, told me that part of the reason these economists are pivoting is that they’re starting to realize that interest rates are “probably going to be elevated for quite some time.” The average interest rate on U.S. debt—that second variable the doves look at—has been relatively high for several years now, and it’s only growing. It was hovering around 1.5 percent in 2021, and it’s now roughly 3.4 percent. The yield on the 30-year Treasury bond has more than doubled since 2021. “I was not a deficit hawk, and that reflected the dynamics” of the 2010s, when rates were lower, Gimbel told me. Now, she said, “the environment has changed.”
Why are rates rising? The Fed’s reaction to inflation is one reason. It may also have something to do with the extreme investments being made in AI, and these companies’ demand for credit. And it’s likely connected to the deficit panic—concern about the expansion of the national debt and the government’s ability to sustain it. Investors are starting to think of long-term Treasurys as riskier than they once did, and they’re demanding more money in exchange for taking on America’s debt. At the same time, the federal government has shown no real appetite to pull its two main levers for reducing the debt: cutting spending and raising taxes.
Jared Bernstein, the former head of Joe Biden’s Council of Economic Advisers, wrote in The Atlantic a few months ago that he’d “flipped from dove to hawk”—and told me this week that it was partly the government’s complacency on this issue that spurred this change. “Neither side seems particularly motivated to do much of anything about this,” he said. Rather than attending to the debt problem, politicians of both parties have instituted major tax cuts and increased spending over the past 25 years. The U.S. had its credit downgraded by a major ratings agency last spring, in part because of rising debt. The One Big Beautiful Bill Act will add an estimated $4.7 trillion to the deficit through 2035, and Donald Trump’s efforts to decrease immigration will add another half a trillion to that number over the same period, per the Congressional Budget Office.
Also, here's a link to a copy of the article in full.
HumorAccomplished611 | 15 hours ago
> Rather than attending to the debt problem, politicians of both parties have instituted major tax cuts and increased spending over the past 25 years.
What tax cuts have democrats did in 25 years?
Off the top of my head you have obama allowed bushs tax cuts expire for the wealthy but keeping them for those making less than 250K.
Even the ACA has saved medicare a ton of money since people covered by it enter age 65 a lot healthier than they used to.
Biden did an excise tax on stock buybacks. Also his Landmark Inflation reduction act was self funded.
Own-Chemist2228 | 13 hours ago
The tombstone for the United States of America will have "But both sides!" engraved on it.
naijaboiler | 15 hours ago
Thanks for pointing out lies
Patchrikc | 15 hours ago
but but but boat sides bad 😢 - cries the "independent" voter, that's voting for pedophiles.
WhiteHeatBlackLight | 15 hours ago
Massive cope here. Trump runs up the debt faster than anyone in history. But the Democrats. Y'all are so fucked
truthinessembargo | 13 hours ago
It’s really a shame that commentators here can’t read your remarks correctly
TheGracefulCrane | 14 hours ago
>Also his Landmark Inflation reduction act was self funded.
well they claimed it was in reality no it wasnt lol
it relied heavily on the idea that fundnig the irs would generate an insane amount of extra revenue which didnt materialize
HumorAccomplished611 | 13 hours ago
IRS was only one of the things (spend 80 billion and get 200 billion)
The big one was medicare pharma negoiations which turns out are even bigger than expected
CBO-Scored Offset (How the IRA Paid for Itself) Amount Notes
Total revenue offsets ~$790 billion Combines tax provisions + IRS enforcement revenue
— Tax provisions (JCT-scored) ~$739 billion 15% corporate minimum tax, carried interest treatment changes, prescription drug pricing savings, 1% stock buyback tax
— IRS enforcement funding $80 billion spent → $204 billion projected revenue Net savings of ~$124 billion (later revised down to ~$100B after Treasury limited audits below $400K income and reduced IRS hiring/pay flexibility)
Prescription drug pricing reforms ~$160 billion in savings Medicare price negotiation, inflation caps on drug prices, insulin cost limits — counted as savings, not spending
Total spending/tax breaks being offset ~$485 billion (~$433B in final negotiated text) Mostly climate/energy tax credits (~$386B)
Net result (CBO final score) –$238 billion deficit reduction over 2022–2031 Offsets exceeded new spending
TheGracefulCrane | 13 hours ago
how are you not going to mention the clean tax energy credits ballooned up to waaaaay above projects? it def added to the deficit especially since:
>$80 billion spent → $204 billion projected revenue
actually didnt occur
no the IRA literally added like a minimum of a hundred billion to the deficit a year
HumorAccomplished611 | 13 hours ago
> how are you not going to mention the clean tax energy credits ballooned up to waaaaay above projects? it def added to the deficit especially since: > >
Of course thats true. things happen like the republicans defunding the IRS to let rich people not pay taxes. Its a drop in the bucket compared to the shitshow of 1 month of the trump admin (tariffs, tax cuts for the rich, war with iran to not talk about epstin)
>actually didnt occur
Yes also the spending went down from 80 billion to about 10 billion while also getting multiple billions so that part becomes revenue neutral.
>no the IRA literally added like a minimum of a hundred billion to the deficit a year
Wrong.
The EV credits were cancelled last year already. Same with solar. Defunded the IRS funding.
The medicare savings are still intact.
Basically its not gonna add anything to the deficit and save money via Medicare negotiations.
So it basically still paid off the debt 300 billion. But since thats only 1 month of trumps war it largely doesnt matter
TheGracefulCrane | 13 hours ago
it def didnt pay off 300 billion in debt it added like 300 billion in debt lol
HumorAccomplished611 | 12 hours ago
Its a 10 year projection bubba boy. Medicare savings alone puts above 160 billion in savings. And since you only got literally 2.5 years of tax credits that means its all positive bubba.
The corporate minimum tax another 250 billion.
1% excise tax on buybacks is 75 billion
TheGracefulCrane | 12 hours ago
right and those ten year projects are based on shit like the irs stuff generating hundreds of billions when they wont lol
look at whats actually happened and youll see the projections wildly missed the actual impact
HumorAccomplished611 | 12 hours ago
> right and those ten year projects are based on shit like the irs stuff generating hundreds of billions when they wont lol > >
And? The IRS thing was well on its way generating 1.4 billion in extra tax revenue in 1 year from 1600 millionaires. Too bad republicans like bootlicking the rich too much.
>look at whats actually happened and youll see the projections wildly missed the actual impact
So? If Kamala had won and kept them the usa would have had still wayyyyyyyyyyy more revenue and less cost because bonds were falling and she wouldnt have done something stupid like a tax cut for rich and trade wars.
The point is moot as trump kept the money generating ones like bidens medicare negoitions while cutting the spending ones like tax credits meaning in the end bidens plan paid off 500 billion of the debt.
But that doesnt mean much when trump spend 300 billion on 1 month of war.
Xtj8805 | 13 hours ago
Largely because republcian rescinded that funding.
HumorAccomplished611 | 13 hours ago
quinipet | 17 hours ago
I have never understood how the party of fiscal conservatism and small government (ahem the republicans) has been so extraordinarily spendthrift since the late 90s when the government had a balanced budget. Like how could even the most hardcore republicans not see this !!?? Crazy
slo1111 | 17 hours ago
They live in a fantasy world where not one if them could even tell the truth that tariffs are paid by the importer.
The entire conservative base lacks coyrage and integrity
Thrasymachus77 | 14 hours ago
"Fiscal conservatism" and "small government" were always lies and cover for the transfer of wealth to the wealthiest and the consolidation of power by the powerful. The right wing is not "conservative," they are authoritarian, and always have been, from before the time they got their name by sitting on the right side of the French Parliment in support of the monarch and the principles of the divine right to rule. Balanced budgets, fewer regulations, and more local or state control for their agendas in the 60's, 70's and 80's because following the New Deal and Great Society, federal power and spending were preventing oligarchs from exercising absolute political and economic control. That rhetoric carried it's cultural momentum forward to today. But make no mistake, conservatives were never wedded to balanced budgets or fiscal responsibility, small government or local control. Those were always convenient tropes they latched on to, to sell themselves to voters and conceal who they really are: monarchists.
lqIpI | 16 hours ago
Grandpa penny-pincher pulling the purse strings is not a popular political look.
That party has only a few ghosts left in office
Darkpriest667 | 16 hours ago
Both of the uniparty parties have ghouls in office. There need to be term limits and there need to be age limits. Pilots have to retire at 65, I think that's probably a good threshold for federal political offices. That would mean Trump nor Biden would ever have been elected.
Senate: More than half of the 100 senators are 65 or older
House: About 134 voting members (more than 30% of the 435-seat chamber) are 65 or older.
That's 1/3 of the entire legislative branch.
Only Kavanaugh, Gorsuch, Jackson, and Barrett would be on the Supreme court.
toggiz_the_elder | 14 hours ago
Fox doesn’t tell them. If it isn’t on Fox it isn’t real to half of America.
Elderwastaken | 11 hours ago
The real answer is they are so busy attacking their opponents they can’t actually function in their role as leaders.
Tribe303 | 11 hours ago
They have created their own information sphere with biased media. Their followers are not being told the truth. Foxnews rarely mentions the word "tarrif" for example. Do you seriously think Fox viewers understand the bond markets? Go to their website and see how many in-depth articles they have on the impact of the rising rates of 30 year bonds. 🤣
Sibs | 9 hours ago
The party of small government that creates two new sprawling federal agencies for reactionary politic points.
UngodlyPain | 7 hours ago
We don't have a party of small government at all, and haven't in over a century. Fiscal conservative? More so sounds like the Dems, who haven't had much power in decades.
hardsoft | 17 hours ago
I mean they were responsible for that balanced budget. Thing is they need a Dem president or all pretense of caring goes out the window.
bluestlouismr2 | 16 hours ago
They were not responsible for that balanced budget. They were heavily opposed to the ghwb tax increases and the 1993 tax increases under the clinton administration. This myth i just wish itd die already. They branded themselves thatcway but theyd fully adopted "starve the beast" fiscal theory and were anxious to pass huge tax cuts once clinton was out the way
I swear americans cant recognize a badfaith faction such as this1 even if it was actively punching them in the face
Ask_Individual | 15 hours ago
People talk like today's Republican party has any resemblance to Republicans of a generation ago. The 1993 Contract with America group were liberals by today's standards. It's hard to believe. The Tea Party movement sent them down the path that led to a sewer
xdre | 15 hours ago
*1995, not 1993. Gingrich didn't get into office until 1995.
Also, eff Gingrich and those Republicans too. They knew what they were doing.
Ask_Individual | an hour ago
Good catch!
hardsoft | 16 hours ago
Yep, John Kasich basically made it his life's mission to balance the budget. And succeeded.
Props to Clinton for not vetoing the budget I guess, but not like he really had a choice.
And the the likes of Bernie Sanders were claiming the austerity measures were going to lead to people freezing to death and shit like that...
bluestlouismr2 | 15 hours ago
Bruce Bartlett who worked in the reagan administration on their tax cuts early into their tenure and with kasich in this 2010 vintage article readily points out in spite of all the failures of starve the beast under reagan, successful tax increases under ghwb and clinton, were hellbent on doing more stb.
" When Bill Clinton became president in 1993, one of his first acts in office was to push through Congress–with no Republican support–a big tax increase. Starve the beast theory predicted a big increase in spending as a consequence. But in fact, federal outlays fell from 22.1% of GDP in 1992 to 18.2% of GDP by the time Clinton left office."
Its that key phrase "No Republican Support". I swear theres a much longer version of this same article where house minority leader newt gingrich is predicting a new great depression too.
https://www.forbes.com/2010/05/06/tax-cuts-republicans-starve-the-beast-columnists-bruce-bartlett.html
In practice austerity is usually aimed at the poor and working class, never the wealthy, ceos or corporations.
hardsoft | 15 hours ago
Democrats raising taxes alone works great to solve budget issues as we can see in Blue controlled localities across the US, lol
And I mean anyone can Google it. The Balanced Budget Act of 1997 isn't a conspiracy theory.
bluestlouismr2 | 13 hours ago
Sht had it your way, every states economy be like mississippi, alabama and W. Virginia. No thanks.
If the top 10 shttiest states in the country like on poverty, lacking higher education, teen moms, life expectency, incarcerated citizen rate, if they werent consistently majority republican ran, you might actually have a point.
I tell you what, if i want a state to turn into a shithole, you got some good ideas bro.
xdre | 15 hours ago
Anyone can Google it. The Balanced Budget Act was largely performative.
hardsoft | 14 hours ago
The timeline to achieve a balanced federal budget under the Balanced Budget Act of 1997 was five years (1997 to 2002), though the budget actually reached a surplus ahead of schedule.
Maybe you're confusing it for something like a balanced budget amendment. Which has been attempted multiple times but has never passed.
xdre | 14 hours ago
> The timeline to achieve a balanced federal budget under the Balanced Budget Act of 1997 was five years (1997 to 2002), though the budget actually reached a surplus ahead of schedule.
Right. Because of--in part--Bush's tax hike and--primarily--the Omnibus Budget Reconciliation Act of 1993. There's not even any acceleration after the 1997 bill was passed. Stop trying to give Republicans credit for something Democrats did without any Republican votes.
Epic_Tea | 17 hours ago
The real issue is we doubled the debt in a decade. We did more than a couple hundred years of existing and only wracked up half of what we have now ten years later
insightful_pancake | 8 hours ago
Real issue is deficits exceeding 5% of gdp since 2020. You can deflate the impact of large debt balances via nominal gdp growth, but you cannot do so if you’re growing the debt massively and consistently in real terms.
Epic_Tea | 7 hours ago
Unless you're Japan.
themiracy | 17 hours ago
I think the invisible hand also sees a potential end to cyclical waves of high government deficit (in favor of always excessive spending). The problem with the current level of new debt financing the US government is that both traditional models (which say the economy is doing well and the foot should be off the gas) and modern monetary theory (which isn’t mentioned much anymore because it also says that increasing interest rates are a sign that government spending should be reduced) essentially agree that US government spending net of receipts is excessive.
And yet here we are talking about ways to spend more and raise less.
OrangeJr36 | 17 hours ago
It's worse than your last sentence implies: Trump is pushing for a debt ceiling increase to beyond 50 Trillion, because he doesn't want to have to negotiate anything with Congress and there's no longer a guarantee by the Treasury that debt can avoid hitting 45 Trillion before 2028.
Z3r0sama2017 | 17 hours ago
It's great.
Don't offer enough interest to offset the risk? No one buys. Offer too much interest? H uge swathes of the market skip out, because of the degree of risk thoses rates imply.
devliegende | 16 hours ago
Pretty sure the rates are set by the markets, not the Treasury
ironteddybear | 16 hours ago
MMT also isn’t mentioned much anymore because most economists don’t take MMT seriously.
Persistent government deficits putting upward pressure on interest rates is not a unique outcome to MMT. “Crowding out” and seigniorage have been acknowledged as risks long before MMT was popularized
AnUnmetPlayer | 3 hours ago
MMT completely rejects financial crowding out. Interest rates are a policy choice. Monopolies have monopoly pricing power. A currency issuing government can pick its interest rate and nobody else can do anything about it. In the MMT framework the choice is permanent ZIRP.
Deficits put downward pressure on interest rates because adding reserve liquidity lowers the cost to borrow reserves. Interest rates do not correlate with debt levels. The fact that the mainstream claims they do is a huge indictment against their claims that they're empirically driven.
AnUnmetPlayer | 3 hours ago
> modern monetary theory (which isn’t mentioned much anymore because it also says that increasing interest rates are a sign that government spending should be reduced)
That's not MMT. Interest rates are a policy choice and should be left at zero. Demand driven inflation is the sign that government spending should be reduced (or that taxes should be increased if it's structural spending for the public purpose).
EmperorOfCanada | 17 hours ago
In the past, I've posted in this very sub that the US debt is at the edge of insanity. A Keynesian Endpoint is clearly in the making.
They are have hit that magical point where they are taking cash advances on their credit card to make monthly minimum payments on that same creditcard.
I suspect this will last longer than people think. Very much like an old aristocratic family can burn the furniture to keep the mansion warm; and there will be fool economists who will point to the temperature and say, "The mansion is just as warm as it has always been."
I think the implications of this debt crisis are far more interesting than the debt itself. There will be situations where the US can torture some players into taking their crap debt. But, more importantly, there will be players who can tell the US to sit down and shut up or they will blow their debt up.
Very much like the US regularly tried to do to the UK in the 1950s.
Also, there will be other players the US has been propping up, and that money is going to be pulled (furniture to burn), and those players are going to collapse.
The fun part of this is that the US has long been able to use their military to spank countries who don't cooperate, and to defend those who do. Drones are entirely changing this. The US Navy can not go into the Persian Gulf because they would be turned into Submarines. If the US tried to invade Afghanistan next week, the weekly death toll would soon reach the same as their losses for that entire misadventure.
One last factoid is that there is no "unsustainable" debt level. What there is a dangerous level where if other countries enter a financial crisis, the other weak players tend to go like dominos (Asian tigers collapse).
HaiKarate | 11 hours ago
The whole reason we are in this debt crisis is because of Republicans. Reagan gutting the top tax rate. George W Bush and Donald Trump passing multiple huge tax cuts for the one percenters.
Government still has to be paid for, while those morons were gutting the IRS’s revenue stream. And each time we cut taxes for the wealthy, that revenue has to be made up for with debt.
3seconddelay | 11 hours ago
I disagree. There is no intention of ever paying off or even down the debt, regardless of who is in office. The debt is needed and part of the natural order of things under Modern Monetary Theory (MMT). MMT had been wholly embraced inside the beltway for decades. There is zero fiscal discipline in the Congress. Democrats and Republicans are just two sides of the same literal coin.
It’s no coincidence that the Godfather of MMT(Keynesian Economics on Steroids), Warren Mosler, introduced it in 1993 with ‘Soft Currency Economics’, right before the last time there was a regular order balanced budget with all 12 appropriation bills debated and passed by both houses of the Congress in 1997 during Bill Clinton’s last term. It has just been one continuing (spending) resolution after another ever since.
Liquidity is not a constraint according to MMT. The only constraints are real resources and inflation. The U.S. dollar is an unsecured fiat currency with a variable rate since Nixon took it off the gold standard. A government that issues its own fiat currency is never bankrupt, it just issues more. Your federal tax dollars are not used or needed to pay for any government spending. If you go to your closest IRS service center and pay your federal income taxes in cash, that cash doesn’t go into some account to pay for government spending. It goes straight to a shredder and that’s a fact. Tax rates are just another monetary tool to manage inflation and regulate the economy.
It’s a centrally planned economy not much different than the USSR’s Gosplan circa 1985. The U.S. is way past the point of no return. Time will be short, however, when the dollar loses its “extraordinary privilege” as the world’s default reserve currency. It’s not a matter of if but when. It will take a couple of decades to replace the systems and processes surrounding world trade that have been built around the dollar since Bretton Woods, but it’s happening. The dollar will collapse within 10 years after that.
Sibs | 9 hours ago
I think this is more to due with the Dems will be gaining control soon, and they want to start astroturfing the hysterical need for austerity. Typical American political cycle. Ruin everything and ignore the problems until the Dems can be blamed for the crimes of the Republicans.
aquavelva23 | 17 hours ago
a new wrinkle: AI megas are issuing bonds at a very high number to build AI stuff. This competes with treasuries. the effect is driving up rates.
In a way, elon musk made his trillion with the help of US taxpayers and electric car rebates. These handouts drove up the deficit, driving up rates. AND he is now using that money to get credit, which is driving up interest rates even higher.
But Eln isnt the only one here.
fvccboi_avgvstvs | 16 hours ago
The Military Industrial Complex has no idea what things actually cost because the ultra rich that run it are detached from reality (and corrupt), so most of the increase in rate of increase of the debt is just from blatant corruption. That corruption is what should concern them.
Every startup I've had isn't competing in a free and open market, it's competing against whoever has the biggest government connections and can snag a free $5 million grant from the taxpayers.
The government can't comprehend a couple of guys with gumption starting a business using an old rusty skid steer, if they don't have a $1 million cutting edge Caterpillar machine courtesy of the taxpayers however will they operate? 🥲
I noticed something funny recently. With all of these data centers, they claim they could not possibly operate without the infrastructure being subsidized by the taxpayers. The funny thing is no one I know had their driveway built by the taxpayers! Their well wasn't drilled by the taxpayers! They built their infrastructure themselves, either physically or by paying with their own money.
We have corporate communism in America, the poor CEO needs the public to cough up money, otherwise however will he work? Poor billionaire, could not possibly build a road without the taxpayer. Bullshit is what that is.
Verumsemper | 15 hours ago
Easiest way to fix the debt is to bring back the top tac bracket of 70%!! It can be set to $50 Million for both capital gains and W-2. Then set the corporate level at around say $10 Billion.
Please realize this tax bracket has always existed until Reagan and it is actually created to to never actually get paid but it will significantly increase the tax revenue and get rid of the deficit in 2-3 decades. How?? Just take a min and think ;)
staycurious72 | 15 hours ago
Way back, the top tax bracket was 91%, and over time it got eroded by both parties, because they really serve the wealthy and not all the people. So the progressive tax system has gotten less and less progressive over time. The lower and middle class pay a far greater % of their earnings in tax than the wealthy.
Verumsemper | 12 hours ago
True, those tax brackets were a cap on the accumulation of wealth that encouraged a greater distribution of the wealth created by the products of labor. Think how much better our lives would be if CEO pays were basically capped at $50 Mil !!
aurelorba | 13 hours ago
Somewhat arbitrary but I think the biggest fault line was when servicing the debt became the single biggest budget item.
Whatever you might think of his other views, Niall Ferguson's observation that any great power that spends more on debt-servicing interest than on national defense enters a path of geopolitical decline, seems relevant.
BangBangMeatMachine | 13 hours ago
This article raises good points, but one that they miss is that Trump is actively pursuing policies that harm the economy and depress receipts. Tariffs slow down imports, which hurt businesses and reduce consumption. The Iran war has created a lot of shakiness in fuel market, which is pushing inflation higher. Trump's mad-dictator approach to foreign policy (and especially tariffs) leaves everyone hedging their bets and holding on to what they can.
Bessent's desire to stimulate the economy could be fairly easily achieved if Trump could simply resist the urge to bully the rest of the world in ways that indirectly harm us.
vovap_vovap | 16 hours ago
Well, thing is that economy is subject to a long circles. In a so big system as US economy that especially long. And it is so long that creates whole big culture behind it. For many - many years government enjoyed spending that bigger then income. And that became a norm that every government now wanted and considered fear game. When in reality answer to a question "what is going to be with a debt grow" newer really existed. Whole thing been started in Reagan era and answer from the beginning was same as today "we are going to grow our way out" - grow that created by economy stimulation will pay debt. So debt is just an investment that will bring related profit to pay for it. 45 years later we know it is not happening. Not only in US but in no place. It is not going down on grow without particular measures to cut on spending. Same way as loosing weight not working only on exercises without cutting on food consumption 😄 That just fact of life. But nobody want to face it because it is politically really ugly.
getmeoutoftax | 17 hours ago
As AI agents replace the majority of white collar jobs over the next few years, surely the tax base will also crater. I wonder if we’ll have any kind of massive tax reform as a result. I doubt it. I can only see the debt climbing due to that.
Mirageswirl | 17 hours ago
In the past, one of the explanations for low Treasury debt yields was petrodollar recycling from the Persian Gulf protectorates. How is that deal working out?
lopix | 15 hours ago
Is it ALL the things? Bond buy backs to influence interest rates? Debt payments equal to the national budget? Total debt ($40t) way over GDP ($30t)? Debt growing like a cancer? Spending totally out of control? Just off the top of my head, from the outside looking in.
Sryzon | 12 hours ago
>Their perspective was that as long as the U.S. GDP was growing faster than the interest rate it was paying on its debt, the Treasury would be able to keep rolling over its bonds without too much of a problem.
I think this is pretty bad paraphrasing of what most economists have been saying regarding the debt. The US can continue to deficit spend as long as our debt-to-GDP doesn't increase. That's not as simple as GDP > interest rate.
The debt is worrisome, but it's not time to panic. Debt-to-GDP is relatively stable despite our nominal debt increasing rapidly. That's mostly because of strong GDP growth, which is already adjusted for inflation in case anyone wasn't aware.
It would not take much for our debt-to-GDP to begin decreasing; Trump's policies have given the next president plenty of opportunities to become more fiscally responsible.
Substantial-Elk4531 | 12 hours ago
> Economists Who Weren’t Worried About the Debt Are Now Panicking
Does this mean Keynesian economists have to admit that Austrian economics was right about something?
Alt4816 | 9 hours ago
Keynesian economics hasn't been practiced in the US for some time.
Following Keynesian economics would mean that during economic booms the government would raise taxes, cut spending, and pay down national debt.
Clinton did that during the dot com boom but the 90s were over a quarter century ago.
Test-User-One | 5 hours ago
Our budget deficit has been greater than $1T annually for around 15 years.
the fact that economists are only calling out this warning NOW calls the entire profession into doubt considering plenty of people that weren't economists called out the issue decades ago and were patted on the head and told to trust the experts.
fap_fap_fap_fapper | 15 hours ago
The GOP does nothing about this, and also increases the debt.
The main problem is that Leftists and most liberals are for increasing taxes and spending even more, with no concern that spending is already too high. What we should be focussed on are not billionaires but what the govt is doing spending $7T an year (most of it is social spending). And this is ultimately why the fiscal discipline/reform won't happen.
BikeStackerNYC | 13 hours ago
You could raise taxes, not increase spending, and pay down the debt, no?
Tribe303 | 11 hours ago
Correct.
fap_fap_fap_fapper | 11 hours ago
Is there anyone with remotely such a plan? Is this the focus of people who want to raise taxes?
BikeStackerNYC | 10 hours ago
I would settle for not providing any more $4T tax cuts. That would have wiped 10% off the debt right there. A good start.
bendub556 | 13 hours ago
Look at this fapper cucking for the Billionaires... keep it up buddy, i'm sure they'll let you in to their cabal as the rest of us drown in a society (and planet) destroyed by the obvious reality of what happens when rich people take over the government and get to do whatever they want. Be more human!
haveilostmymindor | 15 hours ago
I'm not panicking. Every leader in the industrial world knew that as long as the system in place forced a trade deficit on the US it would force an ever growing fiscal deficit on the US and eventually that fiscal deficit would reach critical mass. The leaders of the various countries of the industrial world were warned this would happen and they all didn't care because the consequences for that were not going to happen under their watch. Ultimate irony is both Xi and Trump were in power at the critical juncture to get us off this path.
So now here we are the US is over extended and the money markets is calling bullshit on the both the pile of debt and the ability for that debt pile to keep growing at the pace that it is because there isn't enough free capital in the world. And now the economist panick because they bill is finally coming due the way it must be address is extreme.
The first way the US can address it is simply increasing the m0/m1 money supply directly. This gets followed up with 20 percent interest rates 25 percent bank holding rates and 25 percent taxes. The consequences of this are high inflation and higher unemployment until we clear the debt all the will the value of the dollar declines until the surplus cash we injected into the system gets destroyed.
The second way is through currency redenomination and a forced tax on redenomination the debt into the new currency of 75 percent. Painful as well but interest rates likely peak at 10 percent and you dont get as high of unemployment. You also will have to raise taxes to run a responsible deficit of no more than 2 percent. You get some unemployment with this but it's the less painful than an out right money printing scheme.
The you can do a growth inflationary model where you boost immigration to like 6 to 10 million and stumble through a hyper growth period. You'll need to rais taxes and lower the deficit but you could in theory get 8 to 10 percent real growth and another 8 to 10 percent inflation whilst we go through the transition. Its painful but it rapidly brings down the debt to gdp ratio.
But make no mistake which ever model you run to correct the problem it will come with social instability. You will need to increase social welfare program in the aftermath to rebuild trust in our institutions. Likely Medicare for all and other schemes for a couple of decades at a minimum.
I'm not worried because the solutions are there but the longer you take to pick a poison the more extreme the correction period will be. So pick your poison swallow it quick and sweat it out as best you can.