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A 'Debt Spiral,' Before a Fiscal Crisis: Interest on the National Debt Will be Growing Faster Than GDP in Just 5 Years, Warns Nonpartisan Committee for a Responsible Federal Budget
Trump sees this as a problem for whomever comes next, and meanwhile he can just treat the government as his own personal infinite piggy bank - what does he care what happens 5 years from now? He'll either be dead or in a nursing home for rich dementia patients.
So just ignoring an emerging problem for 8 years, that was introduced by the Republican Senate and Congress under Clinton, is supposed to be exculpatory?
And then kicking & screaming about the weak rules, put into place by Obama, being to much of a burden on business. And then all but eliminate them the first chance they got. And then do nothing at all to address the problem now 18 years later.
As a matter of fact, they've done countless things to make it worse.
Oh and they will SCREECH about this once anybody nonGOP has any power. It will be the "issue of the century" and "the death of the republic".
Problem is, ANY solution taken to solve it will be "wrong". You could implement the "GOP solution" (privatize every single service and office within the federal government) and theyd still wail and moan and bitch.
That's exactly what they did with 'Obamacare'. The blueprint for that program was essentially based off of a proposal from a conservative think-tank, and the Dems decided it was better than what we had before that and decided to push it thru, figuring they could get the guys who wrote it to back it.
Needless to say, the moment the dems were for it, the GOP was against it, and the dems ended up having to ram it thru anyway - they should have just done a European style single payer program instead, given as they never did get any GOP support.
Since then of course the GOP has held it up as a terrible affront to freedom and capitalism that must be destroyed at any costs - for a program that they themselves designed.
The point is they don't care if any country dies, any currency any people...whatever. they are invested everywhere. Plus more than likely they already have a heads-up and can pre move assets before they crash.
In any case do you think the people of Soviet Union thought they would collapse when it did or do you think the bulk of people said nah they will never collapse
They’re not trying to bankrupt the country because the 1% are loaning the US money. The goal is to erase gov services and just collect all the tax money as interest. They’ve debt trapped the people so it’s time to level up and debt trap the nation. Raising taxes will then become patriotic but the “job creators” will be exempt.
i used to think a balanced budget amendment was a stupid idea because a government needs to be able to stimulate during a recession.
But now i'm not so sure. It's so easy for one administration to just kick the can down the road to the next one. Wouldn't be as big of a problem if administrations would just be mature about representing "the country", but we've got a criminal enterprise running our govt now so...
In the 80's the conservatives came up with a very specific strategy whereby they would increase military spending and cut taxes dramatically, for the purpose of creating deficits large enough that they could then use those same deficits to attack politically popular programs like social security and welfare as 'unsustainable'.
Turns out that the tax cuts were even more devastating to the budget than their military spending sprees, but in combination they certainly had the desired effect. The country is now in dire levels of debt, and they use this condition - that they intentionally created - to attack those programs daily.
It needs to be paid for with taxes on and cuts to service for Republican states and voters as well as billionaires and Churches. Really use that data to identify individual Republicans and raise just their taxes.
Trump doesn't even care what kind of world he's leaving for his own kids, let alone the rest of us. I'm starting to think he might believe there's a way for him to take all his money with him when he dies.
Actually, if you look carefully at the math you can see that much of the current problem we are facing comes from the George Bush tax cuts. Reasonable budget control is a long term problem for conservatives who treasure tax cuts above all else.
It's just been one massive cut after another from the GOP over the last 40 years, every one of which has contributed massively to the deficit while simultaneously funneling vast amounts of wealth into the coffers of giant corporations and billionaires.
Clinton actually managed the only balanced budget since the 80's, while Obama significantly reigned in spending compared to his GOP counterparts, bringing in comparitively small budget deficits.
Even Biden dramatically reduced budget deficits over the course of his four years, after starting at historically high ones smack in the middle of Covid.
This is despite the fact that the GOP's biggest increases to the budget deficit are generally spread out over the next decade every time they pass one of their massive tax cuts for the rich, which forces much of the deficit they create to show up on the Democrats tab even when they have no responsibility for it.
The Dems have a factual track record of far greater fiscal responsibility when they are in power, vs the GOP who have relentlessly pursued both higher spending AND enacted massive tax cuts every time they've held office over the past 20 years, driving the US deficit to its current levels.
The GOP has been a party of utterly reckless financial malfeasance since Regan - with the only exception to that rule being Bush I - and the GOP kicked him out for trying to be more responsible than his fellow presidents. Since then their recklessness has only grown with each term.
>Clinton actually managed the only balanced budget since the 80's, while Obama significantly reigned in spending compared to his GOP counterparts, bringing in comparitively small budget deficits.
Clinton was beyond 20 years ago. Also, his situation was fairly well timed to happen right after both the Cold War ended and it became clear Eastern economies (namely, Japan) weren't actually going to take over the world, as well as when America was basically ground zero for expansion of the internet. That all came crashing down, but not until after he left office.
I don't say that to disparage him on it, but it's not like Democrats balanced the budget under anything other than perfect circumstances not seen since post-war 50's.
> Even Biden dramatically reduced budget deficits over the course of his four years, after starting at historically high ones smack in the middle of Covid.
Those were going to be "reduced" anyway because they were tied to temporary relief during covid, and only if you're talking annual deficits. As for the total deficit, it grew by $5.7 trillion during his presidency.
> This is despite the fact that the GOP's biggest increases to the budget deficit are generally spread out over the next decade every time they pass one of their massive tax cuts for the rich, which forces much of the deficit they create to show up on the Democrats tab even when they have no responsibility for it.
That's a "both sides" issue. The 10 year horizon is common, and in the case of reconciliation bills is actually required as the max. It's not some nefarious tactic to punish dems.
> The Dems have a factual track record of far greater fiscal responsibility when they are in power, vs the GOP who have relentlessly pursued both higher spending AND enacted massive tax cuts every time they've held office over the past 20 years, driving the US deficit to its current levels.
Source? Dems have a history of "tax and spend" type politics, including the shit Hollen and Booker are proposing right now. More often than not, any result of them being "fiscally responsible" has more to do with their inability to pass any legislation than anything else.
> The GOP has been a party of utterly reckless financial malfeasance since Regan - with the only exception to that rule being Bush I - and the GOP kicked him out for trying to be more responsible than his fellow presidents. Since then their recklessness has only grown with each term.
Currently, yeah, but if/when the extreme side of the party is gutted out again, republicans are still ultimately the party that wants a smaller government with fewer taxes -- exactly the sort of thing that the economy and businesses tend to want. The MAGA version, however, is basically unchecked socialism with different priorities.
So to put it very bluntly, the Republicans RUN on smaller government, but literally never implement it. It's nothing but words, and frankly those words border on being outright lies. They have no interest in smaller government, so long as they are the ones in control of it.
They inevitably run up spending whenever they are the ones crafting the budget, and on top of that they cram massive tax cuts in whenever they can (the 'Big Beautiful Bill' being a classic example), which impact the deficit considerably more severely than even their spending increases.
And it's not like they are inconsistent about their behavior, they've done it every time they've been in control of the budgetary process for the last 50 years.
Honestly, I'm in the camp that thinks taxes aren't even there to raise revenue - they're there to shape behavior and redistribute enough buying power tokeep wealth inequality from destroying the country.
How many empires have collapsed because their upper class became so wealthy that they fell utterly out of touch with reality and the whole house of cards came tumbling down? Last I checked this is the 'cause of death' of almost all the most powerful societies throughout history.
Extreme wealth results in immunity from consequence and ever more deviant and destructive behavior by its holders. Rome, the French Aristocracy, at least two or three cycles of collapse in China, the fall of the Russian Empire and countless others - and now it's very clearly happening to the US in real-time. Wealth has gone completely amok in the US, and it's warping the entire system to the breaking point while we watch.
Spot on as history has shown, time and time again. Now we vote our own visigoths in to plunder at will without consequence. But hey, it will be different next time.
People also need to do basic critical thinking. Dems could message perfectly and it would achieve nothing with a lot of the population that either lacks or is unwilling to use basic critical thinking. Lots of low information voters.
Dems need to take the fight to the voters. The whole Kamala and Joe Rogan thing says so much and polling really suggests she lost exactly the voters she didn’t put much effort into reaching.
People literally took the Republicans word for what the Democrats were running on over what the Democrats were actually saying.
Kamala gave dozens of speeches. People just believed that they were about whatever conservative media said they were about.
There's a level of not listening that just can't be compensated for. There's a level of willingly just listening to lies that the Democrats can't overcome, especially when most mainstream media at this point is firmly under conservative control.
> Dems need to just get better at throwing blame where it belongs
kamala: "do we really want to elect someone who says they'll 'be a dictator on day one'?"
CNN: "how do you interpret that statement from kamala, todd?"
CNN: "it sounded like more of the same hysterical, i'm-on-my-period lady-babble we've come to expect from the low-T democrats. by the way, did you see how physically fit trump seemed when he casually pwned the libs at every possible moment? is it possible that he is a true sexual tyrannosaurus?"
CNN: "yes, todd, few have seen such an olympian physique on the campaign trail, god is clearly on the side of america today. why are we even bothering with elections when the bible has already foretold of paradise on earth with trump as a permanent fixture of the executive branch?"
voters: "weak messaging by the democrats, yet again"
That is really difficult to get any kind of traction because of the general lack of critical thinking. Obama and Biden both cranked up deportations to record levels and then were accused of having open borders policies.
I for one believe them, because--how do I put it in a way that won't get me banned--because all my life Ive been the victim of blacks, women, people of color, gays, Trans, & c. And the Dems are pushing CRT, DEI, and the newest 3-letter-acronym, ETC, nationwide so of course the nation is being affected, of course they're to blame.
How much money did Noem give to herself to shoot a commercial?
How many private Jet rides has Kash taken to sniff jocks?
How much is that ballroom?
Maga doesn't care, as long as it's not going towards things that people receive already in the rest of the civilized world. Who needs universal healthcare or non-slavery wages when we can enrich a few Billionaires, gut the middle class, and persecute some Brown/Trans folks?
They’d rather be pissed on by a billionaire than give a cent of assistance to someone who they believe doesn’t “deserve” it. There’s a strong indication that they think all poverty is somehow a moral failing, and the obscenely rich have been blessed and chosen by God.
According to a recent analysis from the Committee for a Responsible Federal Budget (CRFB), the Congressional Budget Office’s latest projections show that by the fiscal year 2031, the average interest rate paid on the federal debt will exceed the country’s rate of economic growth. In the dry shorthand of economists, “R will exceed G.” In plain terms, that means that the cost of borrowing will be growing faster than the economy’s ability to pay for it.
“Once interest rates exceed the growth rate…primary deficits will lead debt to grow indefinitely,” the CRFB warned in a blog post published March 9.
The CRFB then describes a self-reinforcing feedback loop. Higher debt pushes interest rates up and slows economic growth. Slower growth reduces tax revenues. Reduced revenues widen deficits. Wider deficits add more debt. More debt pushes rates higher still. “Over time,” the group warns, “this could lead to accelerating growth in the debt, which could eventually be too rapid to correct, absent a major disruption or crisis.”
The only plausible solution to this will be financial repression and higher inflation, lasting at least a decade.
That's how the World War 2 debt burden was solved and that's what will happen again pretty soon. And this will happen in several countries, not just US.
First, Central Bank independence will be eroded to pave the path toward forced negative real interest rates. Simultaneously-ish, commercial banks and insurers (and perhaps some types of investment funds) will be compelled to hold more government debt, despite negative returns.
Some amount of cross-border capital controls might be imposed but it might not even be needed given that a lot of countries will be in this situation soon enough. And the countries that aren't in this situation (Germany, Australia, Russia) don't have deep enough capital markets or have other fundamental issues that'll prevent capital from fleeing there en masse.
Eventually, 3-4% inflation will be the de facto target despite official targets being 2-3%.
Real growth will slow, sectoral imbalances will rise, investments will be driven more so by who can access capital at negative WACC rather than who has good investment ideas, etc.
Guess they're gonna let us have a democratic president next time so it can all be blamed on the dems so a republican can come in in 2032 to "clean up the mess".
Good thing we're investing billions in data centers with hardware that will break in 3 years then.. and starting wars all over the globe (helping GDP LOOK better on record but actually not doing anything for the deficit).. at this rate we're headed to bankruptcy before the end of this decade.
> Good thing we're investing billions in data centers with hardware that will break in 3 years then..
3 years for server lifespan was pre-ai. OAI is still using 6 year old GPUs alongside the H200s, and older GPUs still work great for smaller, non-frontier compute jobs (and training). I realize this wasn't the point of your post, but see this a lot - the 3 year server service life isn't really the golden rule anymore (well, to everybody but the companies that sell servers of course).
Also, the global investment is in the trillions, not billions... that crash is gonna hurt when it comes, though I'm sure the rich will find a way to just extract it out of everybody else while they enrich themselves more, as always.
They know there is zero appetite from basically everyone to cut entitlement programs, by driving up the debt, they are forcing austerity measures and they're going to be done almost certainly by the next president who is going to likely be a Democrat. It doesn't matter how much they end up raising taxes on the ultra rich because by that point they will be earning money not through income.
There's a reason why the inspector generals were all fired, while it is pretty obvious that a lot of theft and misuse of taxpayer resources occurred, it's going to be nigh impossible to prosecute anyone. We won't have an attorney general with integrity for another 2.5 years, and after that the battlecry is going to be political prosecution on the things that they can find evidence of, witch-hunt for the things they look into, and we need to move on from Trump from the moderates and pundits.
There won't be austerity, its political unpalatable
There'll be financial repression, like what we had post-WW2 to work off the debt via the inflation channel. Inflation will be allowed to run at 3%+ while real interest rates will forcibly be held down by regulations and capital controls. Unlike austerity, this process lasts much longer and causes larger dislocations, but its easier to swallow politically on a year-to-year basis.
That's why Central Bank independence has become a political target and why there's so much noise about news ways to compel Treasury buying (i.e. stablecoins, loosening supplemental leverage ratios, etc.). All this stuff will carry on into the next administration for sure, as no one has the political will to cut entitlements.
The thing is, we will need to raise taxes and cut spending in ways that will be politically difficult, or interest payments will eat everything.
It's not even a matter of the ultra rich. If we confiscated 100% of billionaire assets (without collapsing the value of those assets somehow), we would pay for five years of our current deficit. That's it.
We are, outside of covid and ww2, at the highest level of federal government spending as a percent of GDP ever in US history. We need to cut spending (relative to GDP) by 30% to get back to Clinton levels of spending (which is the last time we had a balanced budget) while also raising taxes.
Any 2028 candidate who promises big new programs is going to be lying about what they can accomplish, but I'm worried that people won't realize that.
Federal Outlays - https://fred.stlouisfed.org/series/FYONGDA188S
Federal Receipts - https://fred.stlouisfed.org/series/FYFRGDA188S
(Interestingly, federal receipts are still pretty close to their long term averages. Just a little below. Specific tax policies do remarkably little to increase or decrease total receipts.)
I can already see it now. Democrats flip all 3 branches by 2028, but realize they will need to do something drastic to save the country from tipping over the edge. Congress kicked the can down the road too long and now they need to drastically increase taxes on not only billionaires but also the everyday citizens.
This helps avoid catastrophe but as expected the GOP paints the democrats as the bad guys. During the 2030 midterms the democrats lose control of Congress and so begins the cycle again.
He extracted cash from every busisness he touched, then filed for bankruptcy. Why would anyone think this 'businessman' would treat the US government any differently?
“On one side I’ve bet on vaporware that sells itself as being able to do something it can’t do and is totally financed through debt and on the other side I’ve bet on an asset that is essentially a greater fool scam that only has value because fearful idiots are buying it, that way I always come out on top.”
Gold is and always will be rare, useful, and in demand. Unless we crash an asteroid made of gold into the Earth, there will be just enough of it to keep value even if it's not used in jewelry or whatever.
I could go on. The gold standard doesn’t exist anymore. Gold has uses in electrical engineering, but the only reason it holds real monetary value is because people say it does. It is a hunk of metal that does nothing. Silver is worth way less than gold and has similar uses in engineering.
Let me put it to you this way. If it’s advertised on commercial breaks on Fox News, it isn’t something you should be investing in.
You're 100% right about gold but these factors don't prevent the masses from buying into the world's biggest meme-rock since humans first exited their caves.
Brother, you think the guy you're responding to is buying shitty commemorative coins for his gold investments? Dude probably just buying shares through his broker/brokerage app like normal people do. 😝 Gold is a safe-harbor investment, there's a reason why it's been getting so much love since Trump took over. Is it over-valued? probably, as is every fucking thing else on the stock market (which more and more is just really "how are rich people doing today" indicator anyway and totally divorced from main street), but you're talking about gold in a practical usage sense, not as an investment vehicle. Gold is (historically) a safe hedge, and looks like it still is now, even in it's (probably) overvalued form.
This is why we willl default. It’s inevitable. This country will default and collapse. No more military industrial complex. No more global police. No more bases all over the world. No more 11 aircraft carriers by law. We willl collapse. And we will deserve it. The hunts of our nation and the corporations that run it.
Around the same time, the chickens are coming home to roost for social security as well, give or take a few years. Meanwhile these dipshits in Congress keep cutting taxes or doing nothing. The president is spending $2B a day on a pointless war.
Trump is spending like a drunken sailor just to end up with an economy that is basically stalling out. The annual deficit is like 6% of GDP and we barely have postive growth. It's pretty hard to do a worse job than this.
CRFB is not non-partisan. They could be considered bi-partisan, but they are very much fiscally orthodox and appeal to republicans and conservative democrats. They rarely, if at all, discuss allowing the debt to rise in proportion to GDP growth and they push the loanable funds theory pretty hard.
”The Committee for a Responsible Federal Budget is a non-profit, nonpartisan organization committed to educating the public on issues with significant fiscal policy impact.”
I think the fundamental problem I have with this is that treasury rates and GDP growth have been pretty well correlated over the last seventy years. Any long-term projection that suggests otherwise makes me a little skeptical.
I didn’t say they tracked economic growth as opposed to price growth. Interest rates are set against inflation expectations, with a profit margin bearable by the debt sellers, who in this case are ultimately Americans and the American economy in general. This is precisely why I’m skeptical that interest rates can get out of step with nominal GDP growth rates.
If we were actually in a situation where Treasury interest rates were way above nominal growth, like they had an huge real profit, everyone would be investing in them rather than the stock market or anything else. This would bring interest rates way down. Probably also tank the economy. It would be a very weird situation - that’s why I’m having trouble believing that it’ll just stabilize at 3.9% while Treasuries become ever more profitable.
I tend to agree with your assessment, and am increasingly coming to the conclusion that the growth/inflation/interest rate combination is impossibly intertwined.
I do not envy the job of the Federal Reserve.
Will be glad to read any further replies if you wish.
Long enough for this dipshit administration to take a knee in the next presidential election and then come back to blame the dems for crashing the economy in the one that follows
Just in time for a Dem to get into power and be blamed. They need to start talking about this NOW, making sure the public knows who is to blame, and start talking about how hard it’s going to be to get things under control
So let's say that his is 100% going to come to pass. What could you invest in or where could you put your assets to best protect what you have? Foreign stock markets, buy gold, buy crypto, buy land, buy guns...
Let’s forget who to blame for a second. What needs to happen is some kind of plan to deal with the debt. It is almost to the point where there are very few solutions. There’s something called the Mar-a-Lago accord where all those Treasuries are converted into 100 year zero coupon bonds. Or where we go to a digital currency and the USD is a stranded asset. And the dark side is that due to the Iran war and emerging alternatives to the USD and SWIFT that the currency is headed for collapse like the USSR ruble.
This is wrong. They say it themselves in the article when they reference real gdp. Debt and the government’s ability to pay it depends on Nominal gdp, not real gdp. Inflation will pay off the debt. It is basically a flat tax that falls more heavily on the working class. If the standard deduction goes up with inflation then the pain can be managed (keeping the people from revolt).
I assume we are getting an inflationary environment to pay down the debt, just like the 70s. I suppose the government could find religion and raise taxes and reduce spending, but I am an atheist.
Since Covid's start US Government income went from $3.6 trillion to $5.6 trillion. That is a $2 trillion increase. That is enough to pay for the interest on more than $40 trillion in debt. So, inflation has basically paid for all the interest on all the U.S. government debt. Yes, the debt and interest payments will continue to grow, but inflation makes that a non issue for many years.
Simply put, if inflation is 10%, and interest rate is kept at 5%, then borrowing more and more money is not a problem.
If you take out more car loans each month with no means to fund them outside of further borrowing, then yes you are utterly swamped in an inescapable debt cycle.
If we had a balanced budget or a debt level that was stable, we could eventually grow our way out of it.
What are you talking about? Federal income has been going up like crazy. That is the "means to fund them". Yes, it is all from inflation, but the math still works out fine for now.
If we weren’t continually adding more to the debt then the increased revenue would indeed cover our growing interest payments.
However, we have borrowed significantly more than the difference, so this current path is unsustainable.
If we balanced the budget each year, then the increased revenue would absolutely shore up this problem.
However, we are adding more debt while simultaneously owing more and more in interest. The growth has been grossly insufficient to cover our ballooning long-term debt burden.
Last year income went up $800 billion. The deficit increased less than $2 trillion. You have to pay 5% of that 2 trillion in interest . That is $100 billion. The increase in income was enough to pay the interest on the new borrowing 8 times over.
Government debt never needs to be "paid off". You just need to ensure interest payments are made in a timely manner. The population suffers price increases and a lower standard of living, but the government goes on fine.
Don’t you think that at some point down the line the growth in interest payments will overcome annual revenue increases?
For example, annual debt obligations are projected to double from $1T in 2025 to $2T in 2035.
If that further doubles to $4T by 2045, we are required to experience a $2T increase in annual revenue to offset that.
Now, think about 2055, and so on…
The cost of accumulating more debt is an explosion of interest owed moving forward. The fact that we can cover it now does not mean it is sustainable long-term.
This is why debt does matter - it comes at an ever-increasing price.
Hasn't Japan's interest on its debt been more than GDP for a long time? Is the US as resilient as Japan on that front or are their economic structures more stable / less prone to panic than ours?
The principal on Japan's debt has been more than its GDP, not more than the interest. Also, for the last several years, Japan's debt to GDP ratio has been going down.
Jesse-359 | 20 hours ago
Trump sees this as a problem for whomever comes next, and meanwhile he can just treat the government as his own personal infinite piggy bank - what does he care what happens 5 years from now? He'll either be dead or in a nursing home for rich dementia patients.
Ada_Pearce | 19 hours ago
He and the gop can just wait for the next dem president and blame him. It will work because people are stupid
greenroom628 | 18 hours ago
They're doing it already. Remember when the GOP blamed Obama for the mortgage collapse?
dogs_gt_cats | 14 hours ago
I remember Obama being blamed for the bumbles Hurricane Katrina reaponse.
Patdub85 | 12 hours ago
He probably shouldn't have invaded Iraq either...
/s
Cyb3rBall00n | 13 hours ago
And 9/11
Famous_Owl_840 | 17 hours ago
No, they blamed Clinton, which was accurate.
AwesomePurplePants | 17 hours ago
So just ignoring an emerging problem for 8 years, that was introduced by the Republican Senate and Congress under Clinton, is supposed to be exculpatory?
cpatterson779 | 14 hours ago
And then kicking & screaming about the weak rules, put into place by Obama, being to much of a burden on business. And then all but eliminate them the first chance they got. And then do nothing at all to address the problem now 18 years later.
As a matter of fact, they've done countless things to make it worse.
Historical-Tough6455 | 12 hours ago
It wil work because mainstream media have been pushing democrat hate for 40 years.
Everything is the democrats fault and the Republicans aree at worst misguided trying to make America strong.
It's been going on all my life
RipComfortable7989 | 11 hours ago
> Everything is the democrats fault and the Republicans aree at worst misguided trying to make America strong.
I mean yes that but also when you look at the leadership we have like Jefferies and Schumer.... it's not hard to hate on them.
KillahHills10304 | 19 hours ago
Oh and they will SCREECH about this once anybody nonGOP has any power. It will be the "issue of the century" and "the death of the republic".
Problem is, ANY solution taken to solve it will be "wrong". You could implement the "GOP solution" (privatize every single service and office within the federal government) and theyd still wail and moan and bitch.
Jesse-359 | 18 hours ago
That's exactly what they did with 'Obamacare'. The blueprint for that program was essentially based off of a proposal from a conservative think-tank, and the Dems decided it was better than what we had before that and decided to push it thru, figuring they could get the guys who wrote it to back it.
Needless to say, the moment the dems were for it, the GOP was against it, and the dems ended up having to ram it thru anyway - they should have just done a European style single payer program instead, given as they never did get any GOP support.
Since then of course the GOP has held it up as a terrible affront to freedom and capitalism that must be destroyed at any costs - for a program that they themselves designed.
47_for_18_USC_2381 | 12 hours ago
Not to mention the petition signed by like 30 republicons to make Obama a 1 term POTUS. Courtesy of glitch mcConnell.
Patdub85 | 12 hours ago
Half measures are always worse and easily open to criticism. Single payer is what we need. Thanks for your good synopsis.
sovereignsekte | 19 hours ago
You mean he'll suck an institution dry, sow the earth with fucking salt and walk away? Hmm, that doesn't seem like something Trump would do.
myrichphitzwell | 19 hours ago
The 1% don't care as they have other countries they are invested in. One asset dies, oh well. Move on
makemeking706 | 19 hours ago
Indeed. When you can be other side of the world in a day and still have access to your finances loyalty to any specific country is obsolete.
mistressbitcoin | 16 hours ago
The dollar doesnt "die", its just purposefully injured more year by year. Its rarely the thing you want to be holding.
myrichphitzwell | 16 hours ago
The point is they don't care if any country dies, any currency any people...whatever. they are invested everywhere. Plus more than likely they already have a heads-up and can pre move assets before they crash.
In any case do you think the people of Soviet Union thought they would collapse when it did or do you think the bulk of people said nah they will never collapse
Apachisme | 11 hours ago
They’re not trying to bankrupt the country because the 1% are loaning the US money. The goal is to erase gov services and just collect all the tax money as interest. They’ve debt trapped the people so it’s time to level up and debt trap the nation. Raising taxes will then become patriotic but the “job creators” will be exempt.
elshizzo | 18 hours ago
i used to think a balanced budget amendment was a stupid idea because a government needs to be able to stimulate during a recession.
But now i'm not so sure. It's so easy for one administration to just kick the can down the road to the next one. Wouldn't be as big of a problem if administrations would just be mature about representing "the country", but we've got a criminal enterprise running our govt now so...
Jesse-359 | 18 hours ago
In the 80's the conservatives came up with a very specific strategy whereby they would increase military spending and cut taxes dramatically, for the purpose of creating deficits large enough that they could then use those same deficits to attack politically popular programs like social security and welfare as 'unsustainable'.
Turns out that the tax cuts were even more devastating to the budget than their military spending sprees, but in combination they certainly had the desired effect. The country is now in dire levels of debt, and they use this condition - that they intentionally created - to attack those programs daily.
dust4ngel | 15 hours ago
> i used to think a balanced budget amendment was a stupid idea
it's much harder to elect a supermajority that would add such an amendment than it is to elect enough congressmen to oppose the spending.
Dull_Bird3340 | 9 hours ago
It's not just preventing a depression, it's for pandemics, environmental catastrophes, invasions or all at once which doesn't seem so unlikely now.
BotherResponsible378 | 18 hours ago
Likely? Anyone who thinks he doesn't see this as the next guy's problem is a moron.
Jesse-359 | 18 hours ago
Yeah, I have no idea why I even added that word. :P
BotherResponsible378 | 15 hours ago
Hahahah.
EagleBigMac | 18 hours ago
It needs to be paid for with taxes on and cuts to service for Republican states and voters as well as billionaires and Churches. Really use that data to identify individual Republicans and raise just their taxes.
Morgannin09 | 18 hours ago
Trump doesn't even care what kind of world he's leaving for his own kids, let alone the rest of us. I'm starting to think he might believe there's a way for him to take all his money with him when he dies.
Apprehensive-Ad9523 | 14 hours ago
They will blame granny, the poor, the infirmed and make them pay. No noodles for you.
Momik | 12 hours ago
Yeah he’s gonna rob this place stupid like Putin robbed Russia
m0llusk | 9 hours ago
Actually, if you look carefully at the math you can see that much of the current problem we are facing comes from the George Bush tax cuts. Reasonable budget control is a long term problem for conservatives who treasure tax cuts above all else.
Jesse-359 | 9 hours ago
It's just been one massive cut after another from the GOP over the last 40 years, every one of which has contributed massively to the deficit while simultaneously funneling vast amounts of wealth into the coffers of giant corporations and billionaires.
Previous_Cattle_5545 | 4 hours ago
Democrats don't control spending either. We are kinda done on that. Default is coming. The best thing to do now is figure out how to prepare for it.
discosoc | 18 hours ago
Not just trump, but every politician for the last 20 years.
Jesse-359 | 17 hours ago
Clinton actually managed the only balanced budget since the 80's, while Obama significantly reigned in spending compared to his GOP counterparts, bringing in comparitively small budget deficits.
Even Biden dramatically reduced budget deficits over the course of his four years, after starting at historically high ones smack in the middle of Covid.
This is despite the fact that the GOP's biggest increases to the budget deficit are generally spread out over the next decade every time they pass one of their massive tax cuts for the rich, which forces much of the deficit they create to show up on the Democrats tab even when they have no responsibility for it.
The Dems have a factual track record of far greater fiscal responsibility when they are in power, vs the GOP who have relentlessly pursued both higher spending AND enacted massive tax cuts every time they've held office over the past 20 years, driving the US deficit to its current levels.
The GOP has been a party of utterly reckless financial malfeasance since Regan - with the only exception to that rule being Bush I - and the GOP kicked him out for trying to be more responsible than his fellow presidents. Since then their recklessness has only grown with each term.
CSalustro | 15 hours ago
Yet every poll seems to say people trust Republicans on the economy. I just don't understand how people can be so naive.
dogs_gt_cats | 14 hours ago
In a word: marketing.
Weapons grade marketing.
discosoc | 15 hours ago
>Clinton actually managed the only balanced budget since the 80's, while Obama significantly reigned in spending compared to his GOP counterparts, bringing in comparitively small budget deficits.
Clinton was beyond 20 years ago. Also, his situation was fairly well timed to happen right after both the Cold War ended and it became clear Eastern economies (namely, Japan) weren't actually going to take over the world, as well as when America was basically ground zero for expansion of the internet. That all came crashing down, but not until after he left office.
I don't say that to disparage him on it, but it's not like Democrats balanced the budget under anything other than perfect circumstances not seen since post-war 50's.
> Even Biden dramatically reduced budget deficits over the course of his four years, after starting at historically high ones smack in the middle of Covid.
Those were going to be "reduced" anyway because they were tied to temporary relief during covid, and only if you're talking annual deficits. As for the total deficit, it grew by $5.7 trillion during his presidency.
> This is despite the fact that the GOP's biggest increases to the budget deficit are generally spread out over the next decade every time they pass one of their massive tax cuts for the rich, which forces much of the deficit they create to show up on the Democrats tab even when they have no responsibility for it.
That's a "both sides" issue. The 10 year horizon is common, and in the case of reconciliation bills is actually required as the max. It's not some nefarious tactic to punish dems.
> The Dems have a factual track record of far greater fiscal responsibility when they are in power, vs the GOP who have relentlessly pursued both higher spending AND enacted massive tax cuts every time they've held office over the past 20 years, driving the US deficit to its current levels.
Source? Dems have a history of "tax and spend" type politics, including the shit Hollen and Booker are proposing right now. More often than not, any result of them being "fiscally responsible" has more to do with their inability to pass any legislation than anything else.
> The GOP has been a party of utterly reckless financial malfeasance since Regan - with the only exception to that rule being Bush I - and the GOP kicked him out for trying to be more responsible than his fellow presidents. Since then their recklessness has only grown with each term.
Currently, yeah, but if/when the extreme side of the party is gutted out again, republicans are still ultimately the party that wants a smaller government with fewer taxes -- exactly the sort of thing that the economy and businesses tend to want. The MAGA version, however, is basically unchecked socialism with different priorities.
Jesse-359 | 11 hours ago
So to put it very bluntly, the Republicans RUN on smaller government, but literally never implement it. It's nothing but words, and frankly those words border on being outright lies. They have no interest in smaller government, so long as they are the ones in control of it.
They inevitably run up spending whenever they are the ones crafting the budget, and on top of that they cram massive tax cuts in whenever they can (the 'Big Beautiful Bill' being a classic example), which impact the deficit considerably more severely than even their spending increases.
And it's not like they are inconsistent about their behavior, they've done it every time they've been in control of the budgetary process for the last 50 years.
discosoc | 10 hours ago
Which is why i say it’s a “both sides” issue. You nut jobs can downvote me for not towing your party line all you want, but it doesn’t change reality.
Jesse-359 | 10 hours ago
Honestly, I'm in the camp that thinks taxes aren't even there to raise revenue - they're there to shape behavior and redistribute enough buying power tokeep wealth inequality from destroying the country.
How many empires have collapsed because their upper class became so wealthy that they fell utterly out of touch with reality and the whole house of cards came tumbling down? Last I checked this is the 'cause of death' of almost all the most powerful societies throughout history.
Extreme wealth results in immunity from consequence and ever more deviant and destructive behavior by its holders. Rome, the French Aristocracy, at least two or three cycles of collapse in China, the fall of the Russian Empire and countless others - and now it's very clearly happening to the US in real-time. Wealth has gone completely amok in the US, and it's warping the entire system to the breaking point while we watch.
Piod1 | an hour ago
Spot on as history has shown, time and time again. Now we vote our own visigoths in to plunder at will without consequence. But hey, it will be different next time.
EtheusRook | 19 hours ago
The party that does infinite tax cuts and even more infinite money for wars would like you to know that this is somehow only the Democrats' fault.
benskieast | 19 hours ago
Just wait until they are voted out of office in 3 years just in time to pin the blame on a new Democrat.
EtheusRook | 19 hours ago
Dems need to just get better at throwing blame where it belongs.
Responsible-Set-8705 | 19 hours ago
People also need to do basic critical thinking. Dems could message perfectly and it would achieve nothing with a lot of the population that either lacks or is unwilling to use basic critical thinking. Lots of low information voters.
Maxpowr9 | 18 hours ago
Anyone at this point believing Republicans are fiscally responsible might as well believe in ghosts too.
anchorwind | 18 hours ago
48% of american adults believe in psychic or spiritual healing and 39% believe in ghosts already
39% of adults say they believe “we are living in the end times”
trump's approval rating floats round 40% right now
I'm sure that ~40% is pure coincidence. ^^^/s ^^^for ^^^those ^^^in ^^^the ^^^back ^^^who ^^^need ^^^it
benskieast | 18 hours ago
Dems need to take the fight to the voters. The whole Kamala and Joe Rogan thing says so much and polling really suggests she lost exactly the voters she didn’t put much effort into reaching.
TerraceState | 18 hours ago
People literally took the Republicans word for what the Democrats were running on over what the Democrats were actually saying.
Kamala gave dozens of speeches. People just believed that they were about whatever conservative media said they were about.
There's a level of not listening that just can't be compensated for. There's a level of willingly just listening to lies that the Democrats can't overcome, especially when most mainstream media at this point is firmly under conservative control.
dust4ngel | 15 hours ago
> Dems need to just get better at throwing blame where it belongs
kamala: "do we really want to elect someone who says they'll 'be a dictator on day one'?"
CNN: "how do you interpret that statement from kamala, todd?"
CNN: "it sounded like more of the same hysterical, i'm-on-my-period lady-babble we've come to expect from the low-T democrats. by the way, did you see how physically fit trump seemed when he casually pwned the libs at every possible moment? is it possible that he is a true sexual tyrannosaurus?"
CNN: "yes, todd, few have seen such an olympian physique on the campaign trail, god is clearly on the side of america today. why are we even bothering with elections when the bible has already foretold of paradise on earth with trump as a permanent fixture of the executive branch?"
voters: "weak messaging by the democrats, yet again"
NoFanksYou | 19 hours ago
Yes they need to work on messaging
shearedAnecdote | 8 hours ago
they're sooooo bad at it!
m0llusk | 9 hours ago
That is really difficult to get any kind of traction because of the general lack of critical thinking. Obama and Biden both cranked up deportations to record levels and then were accused of having open borders policies.
JohnSith | 19 hours ago
I for one believe them, because--how do I put it in a way that won't get me banned--because all my life Ive been the victim of blacks, women, people of color, gays, Trans, & c. And the Dems are pushing CRT, DEI, and the newest 3-letter-acronym, ETC, nationwide so of course the nation is being affected, of course they're to blame.
/s for stupid
EtheusRook | 19 hours ago
"All of those acronyms cost too much to print."
JohnSith | 18 hours ago
So that's why they forget about them by the time the next election cycle comes around.
ThrasymachianJustice | 18 hours ago
> this is somehow only the Democrats' fault.
I mean, did you hear that Kamala laugh?
Pitiful_Option_108 | 17 hours ago
Because mmmm Dems something something Dems. They did it but no maga can tell you exactly what they did. They just know Dems did something wrong
Cambwin | 19 hours ago
How much money did Noem give to herself to shoot a commercial?
How many private Jet rides has Kash taken to sniff jocks?
How much is that ballroom?
Maga doesn't care, as long as it's not going towards things that people receive already in the rest of the civilized world. Who needs universal healthcare or non-slavery wages when we can enrich a few Billionaires, gut the middle class, and persecute some Brown/Trans folks?
lopix | 16 hours ago
> persecute some Brown/Trans folks
Being the most important part
_theRamenWithin | 13 hours ago
How much did Hegseth spend on lobster?
Taman_Should | 7 hours ago
They’d rather be pissed on by a billionaire than give a cent of assistance to someone who they believe doesn’t “deserve” it. There’s a strong indication that they think all poverty is somehow a moral failing, and the obscenely rich have been blessed and chosen by God.
[OP] T_Shurt | 20 hours ago
From the article:
According to a recent analysis from the Committee for a Responsible Federal Budget (CRFB), the Congressional Budget Office’s latest projections show that by the fiscal year 2031, the average interest rate paid on the federal debt will exceed the country’s rate of economic growth. In the dry shorthand of economists, “R will exceed G.” In plain terms, that means that the cost of borrowing will be growing faster than the economy’s ability to pay for it.
“Once interest rates exceed the growth rate…primary deficits will lead debt to grow indefinitely,” the CRFB warned in a blog post published March 9.
The CRFB then describes a self-reinforcing feedback loop. Higher debt pushes interest rates up and slows economic growth. Slower growth reduces tax revenues. Reduced revenues widen deficits. Wider deficits add more debt. More debt pushes rates higher still. “Over time,” the group warns, “this could lead to accelerating growth in the debt, which could eventually be too rapid to correct, absent a major disruption or crisis.”
QuietRainyDay | 17 hours ago
The only plausible solution to this will be financial repression and higher inflation, lasting at least a decade.
That's how the World War 2 debt burden was solved and that's what will happen again pretty soon. And this will happen in several countries, not just US.
First, Central Bank independence will be eroded to pave the path toward forced negative real interest rates. Simultaneously-ish, commercial banks and insurers (and perhaps some types of investment funds) will be compelled to hold more government debt, despite negative returns.
Some amount of cross-border capital controls might be imposed but it might not even be needed given that a lot of countries will be in this situation soon enough. And the countries that aren't in this situation (Germany, Australia, Russia) don't have deep enough capital markets or have other fundamental issues that'll prevent capital from fleeing there en masse.
Eventually, 3-4% inflation will be the de facto target despite official targets being 2-3%.
Real growth will slow, sectoral imbalances will rise, investments will be driven more so by who can access capital at negative WACC rather than who has good investment ideas, etc.
cellocaster | 19 hours ago
Guess they're gonna let us have a democratic president next time so it can all be blamed on the dems so a republican can come in in 2032 to "clean up the mess".
FeelingPixely | 19 hours ago
Good thing we're investing billions in data centers with hardware that will break in 3 years then.. and starting wars all over the globe (helping GDP LOOK better on record but actually not doing anything for the deficit).. at this rate we're headed to bankruptcy before the end of this decade.
jellyhessman | 17 hours ago
And they fucking lied about how fast those assets depreciate to the banks, so that's great.
SanDiegoDude | 18 hours ago
> Good thing we're investing billions in data centers with hardware that will break in 3 years then..
3 years for server lifespan was pre-ai. OAI is still using 6 year old GPUs alongside the H200s, and older GPUs still work great for smaller, non-frontier compute jobs (and training). I realize this wasn't the point of your post, but see this a lot - the 3 year server service life isn't really the golden rule anymore (well, to everybody but the companies that sell servers of course).
Also, the global investment is in the trillions, not billions... that crash is gonna hurt when it comes, though I'm sure the rich will find a way to just extract it out of everybody else while they enrich themselves more, as always.
R3luctant | 19 hours ago
They know there is zero appetite from basically everyone to cut entitlement programs, by driving up the debt, they are forcing austerity measures and they're going to be done almost certainly by the next president who is going to likely be a Democrat. It doesn't matter how much they end up raising taxes on the ultra rich because by that point they will be earning money not through income.
NoFanksYou | 19 hours ago
It would help if the current administration wasn’t spending money like a drunken sailor while grifting as much as possible
R3luctant | 18 hours ago
There's a reason why the inspector generals were all fired, while it is pretty obvious that a lot of theft and misuse of taxpayer resources occurred, it's going to be nigh impossible to prosecute anyone. We won't have an attorney general with integrity for another 2.5 years, and after that the battlecry is going to be political prosecution on the things that they can find evidence of, witch-hunt for the things they look into, and we need to move on from Trump from the moderates and pundits.
QuietRainyDay | 17 hours ago
There won't be austerity, its political unpalatable
There'll be financial repression, like what we had post-WW2 to work off the debt via the inflation channel. Inflation will be allowed to run at 3%+ while real interest rates will forcibly be held down by regulations and capital controls. Unlike austerity, this process lasts much longer and causes larger dislocations, but its easier to swallow politically on a year-to-year basis.
That's why Central Bank independence has become a political target and why there's so much noise about news ways to compel Treasury buying (i.e. stablecoins, loosening supplemental leverage ratios, etc.). All this stuff will carry on into the next administration for sure, as no one has the political will to cut entitlements.
devliegende | 16 hours ago
Tax is not limited to just income
mcsul | 13 hours ago
The thing is, we will need to raise taxes and cut spending in ways that will be politically difficult, or interest payments will eat everything.
It's not even a matter of the ultra rich. If we confiscated 100% of billionaire assets (without collapsing the value of those assets somehow), we would pay for five years of our current deficit. That's it.
We are, outside of covid and ww2, at the highest level of federal government spending as a percent of GDP ever in US history. We need to cut spending (relative to GDP) by 30% to get back to Clinton levels of spending (which is the last time we had a balanced budget) while also raising taxes.
Any 2028 candidate who promises big new programs is going to be lying about what they can accomplish, but I'm worried that people won't realize that.
Federal Outlays - https://fred.stlouisfed.org/series/FYONGDA188S Federal Receipts - https://fred.stlouisfed.org/series/FYFRGDA188S
(Interestingly, federal receipts are still pretty close to their long term averages. Just a little below. Specific tax policies do remarkably little to increase or decrease total receipts.)
Taako_Cross | 13 hours ago
I can already see it now. Democrats flip all 3 branches by 2028, but realize they will need to do something drastic to save the country from tipping over the edge. Congress kicked the can down the road too long and now they need to drastically increase taxes on not only billionaires but also the everyday citizens.
This helps avoid catastrophe but as expected the GOP paints the democrats as the bad guys. During the 2030 midterms the democrats lose control of Congress and so begins the cycle again.
Fucking goldfish brains.
OldEnoughToKnowButtr | 18 hours ago
He extracted cash from every busisness he touched, then filed for bankruptcy. Why would anyone think this 'businessman' would treat the US government any differently?
lqIpI | 20 hours ago
Everything is bet on an AI BOOM
I don't think it is gonna launch the growth rate near enough. My portfolio is 50/50 AI and Gold, because it really is one way or the other
ProfessionalOil2014 | 19 hours ago
“On one side I’ve bet on vaporware that sells itself as being able to do something it can’t do and is totally financed through debt and on the other side I’ve bet on an asset that is essentially a greater fool scam that only has value because fearful idiots are buying it, that way I always come out on top.”
drasb | 18 hours ago
> I’ve bet on vaporware that sells itself as being able to do something it can’t do and is totally financed through debt
Betting 50/50 on another AI Winter or Butlerian Jihad
jellyhessman | 17 hours ago
You had me in the first half.
Gold is and always will be rare, useful, and in demand. Unless we crash an asteroid made of gold into the Earth, there will be just enough of it to keep value even if it's not used in jewelry or whatever.
ProfessionalOil2014 | 17 hours ago
The demand is artificial.
lqIpI | 19 hours ago
>an asset that is essentially a greater fool scam
😂 😂
Please tell me what other indestructible asset has held its value for ten thousand years?
ProfessionalOil2014 | 19 hours ago
Diamonds, oh wait.
Steel, oh wait.
Rubies and sapphires, oh wait.
Aluminum, oh wait.
I could go on. The gold standard doesn’t exist anymore. Gold has uses in electrical engineering, but the only reason it holds real monetary value is because people say it does. It is a hunk of metal that does nothing. Silver is worth way less than gold and has similar uses in engineering.
Let me put it to you this way. If it’s advertised on commercial breaks on Fox News, it isn’t something you should be investing in.
Calm_Situation_1131 | 17 hours ago
You're 100% right about gold but these factors don't prevent the masses from buying into the world's biggest meme-rock since humans first exited their caves.
ProfessionalOil2014 | 17 hours ago
Yeah, gold is a greater fool scam at this point.
frzrbrnd | 9 hours ago
If it’s advertised on commercial breaks on Fox News, it isn’t something you should be investing in.
Tell that to the world's central banks.
ProfessionalOil2014 | 2 hours ago
Which modern currency still has the gold standard again?
SanDiegoDude | 18 hours ago
Brother, you think the guy you're responding to is buying shitty commemorative coins for his gold investments? Dude probably just buying shares through his broker/brokerage app like normal people do. 😝 Gold is a safe-harbor investment, there's a reason why it's been getting so much love since Trump took over. Is it over-valued? probably, as is every fucking thing else on the stock market (which more and more is just really "how are rich people doing today" indicator anyway and totally divorced from main street), but you're talking about gold in a practical usage sense, not as an investment vehicle. Gold is (historically) a safe hedge, and looks like it still is now, even in it's (probably) overvalued form.
ProfessionalOil2014 | 18 hours ago
Yes.
lqIpI | 18 hours ago
Rubies? Diamonds?
Those aren't indestructible
You mean oxygen, aluminum and carbon?
You want to sit on aluminum at ~$1/lb
You know what's even more destructible than gems? Those bytes on a computer that tell you you own some form of real estate, debt or equity.
When the government's paper assets are collapsing, guess what's happening to yours
ProfessionalOil2014 | 18 hours ago
If that happens your gold will be worthless because someone will simply take it from you by force.
lqIpI | 17 hours ago
Yes people can kill each other
Not sure what that has to do with asset classes
Magmakidreddit | 16 hours ago
Just to be clear you aren’t holding on to… actual gold are you?
MattWalshStuntDouble | 16 hours ago
>When the government's paper assets are collapsing, guess what's happening to yours
r/iamhighschooleducatedandthisisdeep
Rizzanthrope | 19 hours ago
mr wallstreetbets over here
Chemical-Fault-7331 | 14 hours ago
This is why we willl default. It’s inevitable. This country will default and collapse. No more military industrial complex. No more global police. No more bases all over the world. No more 11 aircraft carriers by law. We willl collapse. And we will deserve it. The hunts of our nation and the corporations that run it.
shoot_your_eye_out | 13 hours ago
We are so fucked.
Around the same time, the chickens are coming home to roost for social security as well, give or take a few years. Meanwhile these dipshits in Congress keep cutting taxes or doing nothing. The president is spending $2B a day on a pointless war.
turb0_encapsulator | 9 hours ago
Trump is spending like a drunken sailor just to end up with an economy that is basically stalling out. The annual deficit is like 6% of GDP and we barely have postive growth. It's pretty hard to do a worse job than this.
Big_F_Dawg | 19 hours ago
CRFB is not non-partisan. They could be considered bi-partisan, but they are very much fiscally orthodox and appeal to republicans and conservative democrats. They rarely, if at all, discuss allowing the debt to rise in proportion to GDP growth and they push the loanable funds theory pretty hard.
[OP] T_Shurt | 19 hours ago
FOR FACTS SAKE: ✅
”The Committee for a Responsible Federal Budget is a non-profit, nonpartisan organization committed to educating the public on issues with significant fiscal policy impact.”
devliegende | 15 hours ago
Think tanks are people with opinions. Just like everyone else.
MisinformedGenius | 14 hours ago
I think the fundamental problem I have with this is that treasury rates and GDP growth have been pretty well correlated over the last seventy years. Any long-term projection that suggests otherwise makes me a little skeptical.
Prestigious_Load1699 | 10 hours ago
That looks like nominal GDP.
Do you happen to access to the same comparison using real GDP growth?
MisinformedGenius | 9 hours ago
Real GDP wouldn’t make sense in this situation - debt is a nominal figure. The CRFB’s analysis is using nominal GDP as well.
Prestigious_Load1699 | 9 hours ago
Wouldn’t accounting for inflation allow us to properly surmise how much interest rates actually track economic growth, as opposed to price growth?
In general, interest rates are set against inflation expectations.
These are all certainly intertwined, but the Fed’s dual mandate is price stability and maximum employment.
MisinformedGenius | 9 hours ago
I didn’t say they tracked economic growth as opposed to price growth. Interest rates are set against inflation expectations, with a profit margin bearable by the debt sellers, who in this case are ultimately Americans and the American economy in general. This is precisely why I’m skeptical that interest rates can get out of step with nominal GDP growth rates.
If we were actually in a situation where Treasury interest rates were way above nominal growth, like they had an huge real profit, everyone would be investing in them rather than the stock market or anything else. This would bring interest rates way down. Probably also tank the economy. It would be a very weird situation - that’s why I’m having trouble believing that it’ll just stabilize at 3.9% while Treasuries become ever more profitable.
Prestigious_Load1699 | 8 hours ago
Appreciate the detailed response.
I tend to agree with your assessment, and am increasingly coming to the conclusion that the growth/inflation/interest rate combination is impossibly intertwined.
I do not envy the job of the Federal Reserve.
Will be glad to read any further replies if you wish.
shidderbean | 11 hours ago
Long enough for this dipshit administration to take a knee in the next presidential election and then come back to blame the dems for crashing the economy in the one that follows
Catodacat | 4 hours ago
Just in time for a Dem to get into power and be blamed. They need to start talking about this NOW, making sure the public knows who is to blame, and start talking about how hard it’s going to be to get things under control
koranuso | 2 hours ago
So let's say that his is 100% going to come to pass. What could you invest in or where could you put your assets to best protect what you have? Foreign stock markets, buy gold, buy crypto, buy land, buy guns...
Lord_Vesuvius2020 | 18 hours ago
Let’s forget who to blame for a second. What needs to happen is some kind of plan to deal with the debt. It is almost to the point where there are very few solutions. There’s something called the Mar-a-Lago accord where all those Treasuries are converted into 100 year zero coupon bonds. Or where we go to a digital currency and the USD is a stranded asset. And the dark side is that due to the Iran war and emerging alternatives to the USD and SWIFT that the currency is headed for collapse like the USSR ruble.
BlueGalangal | 16 hours ago
My Boomer mom who voted for him plans to die. She sounds almost gleeful about it.
dontrackonme | 19 hours ago
This is wrong. They say it themselves in the article when they reference real gdp. Debt and the government’s ability to pay it depends on Nominal gdp, not real gdp. Inflation will pay off the debt. It is basically a flat tax that falls more heavily on the working class. If the standard deduction goes up with inflation then the pain can be managed (keeping the people from revolt).
devliegende | 15 hours ago
The working class is protected while real wages go up.
The burden of inflation falls on people with treasury bonds, bank deposits, fixed rate annuities and such. Savers.
dontrackonme | 15 hours ago
Do you expect real wages to go up?
devliegende | 14 hours ago
They did over the last 50 years.
dontrackonme | 12 hours ago
From what I could find they did not go up during the 70s (high inflation period where debt was inflated away).
Prestigious_Load1699 | 10 hours ago
And since then?
https://fred.stlouisfed.org/series/LES1252881600Q
dontrackonme | 9 hours ago
I assume we are getting an inflationary environment to pay down the debt, just like the 70s. I suppose the government could find religion and raise taxes and reduce spending, but I am an atheist.
devliegende | 5 hours ago
Sounds like you don't care about the working class afterall. They tend to suffer when the government raise taxes and reduce spending
Prestigious_Load1699 | 10 hours ago
“Inflation will pay off the debt.”
I’m really glad to hear this, because it must mean our debt shrank considerably during the inflation spike in 2022/2023.
Oh wait…
dontrackonme | 10 hours ago
Since Covid's start US Government income went from $3.6 trillion to $5.6 trillion. That is a $2 trillion increase. That is enough to pay for the interest on more than $40 trillion in debt. So, inflation has basically paid for all the interest on all the U.S. government debt. Yes, the debt and interest payments will continue to grow, but inflation makes that a non issue for many years.
Simply put, if inflation is 10%, and interest rate is kept at 5%, then borrowing more and more money is not a problem.
Prestigious_Load1699 | 10 hours ago
Federal debt has increased by $15 trillion in the same period.
https://www.pbs.org/newshour/politics/u-s-hits-38-trillion-in-debt-after-the-fastest-accumulation-of-1-trillion-outside-of-the-pandemic#:~:text=inform%20and%20inspire.-,MORE%20FROM,served%20in%20President%20George%20W.
That increase in revenue has been utterly swamped by increased borrowing.
dontrackonme | 9 hours ago
What is the interest on $15 trillion? $750 billion? So, income has gone up more than twice the "cost".
I want to buy a Tesla. The payment is $1000 a month. It allows me to commute to a job that pays me $2500 a month. Am I utterly swamped?
Prestigious_Load1699 | 9 hours ago
If you take out more car loans each month with no means to fund them outside of further borrowing, then yes you are utterly swamped in an inescapable debt cycle.
If we had a balanced budget or a debt level that was stable, we could eventually grow our way out of it.
dontrackonme | 9 hours ago
What are you talking about? Federal income has been going up like crazy. That is the "means to fund them". Yes, it is all from inflation, but the math still works out fine for now.
Prestigious_Load1699 | 9 hours ago
If we weren’t continually adding more to the debt then the increased revenue would indeed cover our growing interest payments.
However, we have borrowed significantly more than the difference, so this current path is unsustainable.
If we balanced the budget each year, then the increased revenue would absolutely shore up this problem. However, we are adding more debt while simultaneously owing more and more in interest. The growth has been grossly insufficient to cover our ballooning long-term debt burden.
dontrackonme | 8 hours ago
You got some math to back up your assertion?
Last year income went up $800 billion. The deficit increased less than $2 trillion. You have to pay 5% of that 2 trillion in interest . That is $100 billion. The increase in income was enough to pay the interest on the new borrowing 8 times over.
Government debt never needs to be "paid off". You just need to ensure interest payments are made in a timely manner. The population suffers price increases and a lower standard of living, but the government goes on fine.
Prestigious_Load1699 | 8 hours ago
Don’t you think that at some point down the line the growth in interest payments will overcome annual revenue increases?
For example, annual debt obligations are projected to double from $1T in 2025 to $2T in 2035.
If that further doubles to $4T by 2045, we are required to experience a $2T increase in annual revenue to offset that.
Now, think about 2055, and so on…
The cost of accumulating more debt is an explosion of interest owed moving forward. The fact that we can cover it now does not mean it is sustainable long-term.
This is why debt does matter - it comes at an ever-increasing price.
artbystorms | 19 hours ago
Hasn't Japan's interest on its debt been more than GDP for a long time? Is the US as resilient as Japan on that front or are their economic structures more stable / less prone to panic than ours?
zedMinusMinus | 19 hours ago
The principal on Japan's debt has been more than its GDP, not more than the interest. Also, for the last several years, Japan's debt to GDP ratio has been going down.