What the actual fuck.
For years, these Republicans have been screaming about adding to the national debt. And now it’s what, crickets?
Although it is true that the carry trade would cause chaos if Japan sold, buying Yen to cover their ass is only a stop gap.
At some point, this bill will become due.
"Wanniski's 1978 book, The Way the World Works, documented his theory that the United States Senate's floor votes on the Smoot–Hawley tariff legislation coincided day to day with the Wall Street stock market Crash of 1929,[5] and that the Great Depression was the result of the Smoot–Hawley tariff, rather than any failure of classical economics."
Well yes, that’s the anti-Santa theory. It’s Republicans being forced to raise taxes by other means because any other way is unelectable.
They can’t cut spending, they can cut taxes.
We need revenue, so a confusing tax raise was the solution. Literally dumbest idea ever.
The "Two Santa Claus Theory" recommends that the Republicans must assume the role of a second Santa Claus by not arguing to cut spending but offering the option of cutting taxes.
Two Santa Claus theory functions as the politically popular front, while the long-term result is the systemic dismantling of public jurisdiction. It's entirely about enclosure.
Shrinking government jurisdiction through deliberate underfunding and privatization systematically transfers control over public goods, like infrastructure, utilities, and regulatory oversight to private corporations and markets. While the formal mechanisms of democracy and voting remain intact, the government's actual power to act is stripped away, leaving elected officials with no authority over anything. It encloses the public square, replacing democratic accountability and constitutional protections with private ownership, where citizens have no voting rights, recourse, or guaranteed universal access.
While public attention is safely anchored in manufactured partisan squabbles, the fundamental nature of governance is stripped away. Tech monopolies and defense contractors are quietly building out integrated surveillance networks, automated border walls, and algorithmic policing systems that are insulated from public jurisdiction by intellectual property laws and trade secret protections. By the time the public realizes the extent of the transfer, elected officials will be reduced to mere middle managers, presiding over a hollow state that retains the symbolic pageantry of democracy, but possesses none of the physical or legal power to override private owners.
Textbook financial authoritarianism; the quiet, permanent foreclosure on communal sovereignty itself. Sovereign debt and escalating interest payments is the mathematical anchor for this process, acting as a permanent enforcement mechanism for privatization and the erosion of public power. When a nation's budget is dominated by servicing debt, fiscal policy ceases to be a tool for public welfare and instead becomes a wealth-transfer pipeline to global capital markets.
The historic irony is that the American Revolution was fought precisely to escape the corporate-state hybrids, financial cartels, and speculative debt traps that now define the West. The founders were explicitly aware of these forces and designed the early republic as a direct counter-experiment.
This is the same pattern has repeated from the Roman Empire, Netherlands, France, British Empire, and now to the US. By controlling the creation of currency and the terms of debt, borderless wealth has built a system where the physical pageantry of freedom remains intact, where you can still move around, vote, and speak, but your actual time, your resources, and the infrastructure of your society are entirely owned by creditors.
Neat, huh? Enslaving the world with a resource created out of thin air.
“Heavy physical work, the care of home and children, petty quarrels with neighbours, films, football, beer, and above all, gambling, filled up the horizon of their minds.
To keep them in control was not difficult. A few agents of the Thought Police moved always among them, spreading false rumours and marking down and eliminating the few individuals who were judged capable of becoming dangerous; but no attempt was made to indoctrinate them with the ideology of the Party.
It was not desirable that the proles should have strong political feelings. All that was required of them was a primitive patriotism which could be appealed to whenever it was necessary to make them accept longer working-hours or shorter rations. And even when they became discontented, as they sometimes did, their discontent led nowhere, because being without general ideas, they could only focus it on petty specific grievances. The larger evils invariably escaped their notice.”
Why is anyone surprised after decades of this behavior? Republicans are not fiscal conservatives. And it's been the case since at least Reagan. Others have mentioned the "2 Santas Strategy". Here are the results:
CBO projected deficits, January of each year:
1993: $310 billion - record deficit Reagan/Bush left Clinton.
2001 (surplus): $236 billion - record surplus Clinton left Bush, fueled by 1991 and 1993 deficit acts (passed under Democratic House and Senate) and a booming economy. Surpluses projected the rest of the decade.
2009: $1.4 trillion - record deficit W Bush left Obama as tax loans weighted towards the wealthy were passed, trillions spent on wars, and the bubble busted.
2017: $560 billion - deficit Obama left Trump, a record decline.
2020: $1 trillion (78% increase) - Trump's deficit pre-covid, fueled tax cuts weighted towards the wealthy and higher spending.
2021: $2.3 trillion (311% increase) - what Trump left Biden with covid spending temporarily boosting spending as a % of GDP.
2025: $1.8 trillion - but over half is now debt interest which is mainly from previous fiscal mismanagement. See W Bush and Trump trajectories. We should have continued the deficit reduction we saw under Obama, which would have put us in a far better position going into the pandemic.
2025: Trump/Republican tax bill passed in 2025 is expected to add $4-$5.5 trillion to baseline deficit projections over 10 years, depending on if any provisions sunset. Iran war additionally adds to debt.
Media plays a major role in misperceptions by labelling some Republicans as "deficit hawks". None are. They all vote for those trillions in deficit-financed tax loans and only feign hawkishness when we have a Democratic president.
When 60% of the U.S. government budget is spent on social support spending, do you really think Republicans being deficit hawks would ever win them an election? The debt problem isn’t a partisan issue; it’s a political issue. A democracy or constitutional republic like the U.S. will always reach unsustainable debt levels because spending buys votes for all politicians and parties across the entire political spectrum.
Already has, in the form of skyrocketing inflation. The Federal government has essentially been printing Trillions of dollars in new money since the last big recession in 2008 in the form of endless quantitative easing, PPP loans, corporate welfare, stimulus checks, and now just in the form of Trillions in unrestrained spending to Trump-connected Oligarchs - all sharply devaluing the value of the dollar.
It is unsustainable and, following the Trump playbook, will end in the effective bankruptcy of our nation, with working Americans holding the bag.
Biden dealt with COVID, and Obama added the cost of the Iraq and Afghanistan wars to the books, which the Bush2 bean counters insisted shouldn't be on the books for "reasons". Hope that helps.
Both parties had added to the debt which is bad. You then have to go into details on how much each party adds to the debt. They are the same yet one is worse.
It would be more accurate to say that Democrat administrations have reduced the deficit and Republican administration's have increased the deficit (since and including Clinton). There's still some nuance as Obama initially saw a sharp rise in deficit spending due to the Great Recession but that was steadily reduced through the rest of his administration. George W Bush is the only modern president to actually eliminate a budget surplus.
No one cares about adding to the debt when they're in charge, and Republicans have been in charge of Congress more since 1996s. Before then, Democrats were in majority leadership of Congress more often and thus (sorta) caused a higher percentage of debt increases.
Debt percentages basically never go down and only one term has seen a budget that technically went down over a year due to budget changes and major relative national growth (during Clinton).
Now they are lying about how they plan to fix it, the brilliant plan now is inflation via tariffs, fiscal policy, and currency devaluation. The war with Iran’s impact on fuel cost is a bonus.
It is true but debt went down during Clinton’s presidency but only by a tiny amount. Every other administration in my lifetime has increased it substantially.
They do this every single time they are in power. It's been happening since Regan was in office. Their base is too stupid to understand the lies being told to them.
Hyperbole is not always disingenuous, or are you saying you really think that there isn't an issue with the average age of a US senator being 64 aka retirement age?
Makes me think that when a Dem is elected again (I guess if an election even happens again), billionaires can force Japan to sell their treasuries and saddle the Dems with a financial crisis. Good times...
Now you are just being silly there is an election on November 3 this year. And these will be another one November 2028. Why do people even believe that trump can end elections is just bad critical thinking skills. Even if he said he not leaving the white house the secret services or white house officers will just escort him out. Your done sir time to move on and bring the next person in .
And even if he were to attempt such a thing he would need the support of most of the generals and admirals of the army and navy to even make it a relm of possibility to pull off and thats never happening
Dude, how many generals have been fired??? Hegseth has made loyalty oaths a part of the game, not to the Constitution but to him and Trump. I know how coups happen, now, could their be drama between national guard, local police forces and the US army, sure. But Americans also just "follow" the loudest voices so... a coup could happen here in the US. I'm not alarmist, I'm just watching the pieces being moved the way they have been all over the world.
You make a great piont. I still don't believe such a thing could be pulled off in the USA. But I guess people of the past, in countries it did happen, believed it couldn't happen and it did happen
Republicans suddenly become fiscal conservatives as soon as they're out of power and the bill for their reckless spending comes due. Then they get back in charge and spend spend spend baby.
There’s a lot of road still before the U.S. is bankrupt. I’d have to pull the numbers back up, but it’s at like 125% of debt to GDP and it has an estimated outer boundary of something like 210% I believe.. though around 160% is when you’d likely start seeing investors pull out and critical economic impact.
And a Democrat will be the one having to fix it. Every single Republican has increased the deficit in my lifetime. All of them. Not one has been fiscally responsible.
Your first mistake is thinking republican voters actually care about policy. I asked my mom if she ever once read any of the policies or visited a candidates website and she said no. It’s all 100% reactionary
Republicans have added to the debt the most. The way it works is relatively simple. Republicans cut taxes for the elites and increase spending. The government needs to borrow more and more. Most of the borrowing is from Americans, who buy Treasuries. These Americans are not just any Americans - they’re the elites who received tax cuts. So these tax cuts increase in value from interest bc now they’ve been converted to investments.
By the end of Trump’s current term, he alone will be responsible for >40% of all US national debt. Most of the remainder is at the feet of Bush and Reagan’s tax cuts.
That 40% stat is bullshit. Debt going up while Trump was president is not the same thing as Trump personally causing all of it, and CRFB says exactly that.
A huge chunk of the borrowing tied to his first term came from bipartisan legislation, including COVID relief. (CRFB)
And no, Reagan and Bush tax cuts do not magically explain “most of the rest” either, CBO shows the debt is the product of decades of taxes, spending, entitlements, recessions, wars, and interest.
I'm gonna ride your top comment to recommend every one read this book: The Deficit Myth by Stephane Kelton.
The book explains Modern Monetary Theory. Ultimately, the US has the power to create as much money is needed bc we have our own fiat currency. The only problem is controlling inflation and unemployment, the deficit is not a problem and never will be.
Have you read the book? My explanation does not give the theory justice. Kelton lays out very concrete solutions to this. The problem is most policy makers are not economists and don't even look at the issue through the proper lens. Deficits are not inherently bad, it's all about how we utilize them. Money printing adds cash to circulate to the public, then we raise taxes to remove it.
What republican president has skyrocketed the debt to gdp ratio? None since Bush Sr. You never recovered from the 2008 burst, that's the truth of it. The Covid burst only worsened it, but the actual normal management was alright for both republicans and democrats, obama did okay given the circunstances and Clinton did amazingly well in that sense
Yep it’s definitely our fault that republicans have no problem expanding the debt when they’re in power. It’s definitely our fault that nothing is affordable now. We just didn’t do our jobs and make more obscene money while others starve.
While we’re at it we also need to use less water and paper to save the environment because it’s definitely us and not huge industry that’s doing the polluting.
Hm.... literally every country had that happen? Search for it yourself. If the economies worldwide had a massive halt, obviously the gdp slowed down and the existing debt increased the ratios together with new accumulated debt? Wtf are you talking about
It happened in every country because every country implemented the same strategy.
It wasn't just a thing that happened on its own. It's a thing that happened because similar actions were taken to deal with Covid by those countries. Trump and co took those actions, and therefore are responsible for the outcome.
Ahahahaha okay, so everyone now is as bad as evil Trump. Are you trying to make me laugh? There was literally no other way, the world was in uncharted territory. I would bet my house Biden, Kamala, Obama, Clinton, whoever, would do the same, because other countries with leaders of diverse political ideologies all had to do the same. Send people home, freeze large chunks of the economy, and raise the debt, both by borrowing and by lowering the gdp due to the economy stopping. In fact, Trump acted too late to try and not make the economy stop, something that imo was a bad choice as maybe less people could've died otherwise, which would make the debt to gdp ratio seem even worse than it did.
Why did the debt to gdp ratio increase 30% under Obama? Was it his fault?
>Why did the debt to gdp ratio increase 30% under Obama? Was it his fault?
Yes. He was president, wasn't he?
>Ahahahaha okay, so everyone now is as bad as evil Trump. Are you trying to make me laugh? There was literally no other way, the world was in uncharted territory. I would bet my house Biden, Kamala, Obama, Clinton, whoever, would do the same, because other countries with leaders of diverse political ideologies all had to do the same. Send people home, freeze large chunks of the economy, and raise the debt, both by borrowing and by lowering the gdp due to the economy stopping. In fact, Trump acted too late to try and not make the economy stop, something that imo was a bad choice as maybe less people could've died otherwise, which would make the debt to gdp ratio seem even worse than it did.
I'm not sure what you are trying to argue here, other then offering pretty big assumptions/projections from what I said to what you think I said. I made no comment regarding the necessity of the actions taken, but simply why the outcomes were relatively similar across the board.
That said, the changes weren't consistent, as each country tailored it's approach.
Google AI spit this out after searching "debt to gdp ratio changes post covid by country". Caveat: There are a multitude of factors for these changes, some not entirely because of the Covid Response.
Japan: Remains the highest among major developed economies, climbing past 236% of GDP.
Canada: Rose steeply from roughly 87% pre-pandemic to over 110% of GDP, keeping federal burdens high even as private sectors deleveraged.
Italy and France: Hover between 113% and 135% of GDP, reflecting rigid post-COVID sovereign liabilities.
Germany: Stabilized at a moderate level near 64% of GDP.
Greece: Eased down from absolute pandemic peaks but remains high at roughly 146% to 150% of GDP.
Estonia: Maintained one of the lowest ratios in Europe, staying well under 25% of GDP.
The fact you believe everything that happens is fault of the president, tells me all I need to know. Blaming Obama for the situation he inherited is as ridiculous as it can get, he was mostly a passenger on what was a major worldwide shockwave as anyone with a bit of knowledge understands.
The overall outlook is the same in most developed countries with differences related to economy structures, pre existent situations, etc etc, that increase or decrease the hit taken, something quite basic to know.
I guess you missed the part in OP where the article talks about U.S. debt-to-GDP ratio becoming unbalanced (currently at 122% per the St Louis Fed). 2020 also broke 125%. Guess who was president leading up to that? It also ticked down every year until 2024.
You can point to COVID for the first term (although it would be just as fair to point out how poorly that administration handled the situation), but that doesn't really explain what is going on now. The president doesn't have some magical lever to control the economy, but Trump has aggressively pursued unsound, self-dealing policies with a compliant Congress.
You cant seriously think the 2020 debt to GDP hike was caused by that administration, since it happened literally everywhere in the World as economies stopped under covid and debt emission was necessary worldwide? Google it, it was not a USA only problem. That take of yours immediately shows that you are either ignorant, or have an agenda. Obama received a 75% ratio and delivered a 103% when he left. Was it his fault?
I will judge what he delivers to the next one after he leaves. So far, the Iran business has been a disaster, as an example. And I think the consequences of the Iran problem are going to last for a looong time, that's on him entirely.
Look into a Debt to gdp chart. The rest is talk. From both sides, not just one. Absolute numbers mean nothing as any person with the slightest education knows, ratios do. His debt to gdp numbers prove otherwise.
I never said that. What matters in managing a country is if your economy matches, or not, the growth of the debt. There's a reason ratios are used, and why they are the number 1 indicator of how its evolving. If you add 1T of debt, but your economy produces more than enough so that your ratio actually goes down, you are better off than before. Its not a Trump or Obama thing, I couldnt give a shit about both. This stupid, uneducated polarization happening everywhere is what's taking the western world to shit
Republicans implemented DOGE (regardless of your speaking points, it led to cuts), gutted USAID, is currently investigating and canceling fraud spending, cuts to Medicaid, cuts to SNAP, and shrinking government employees. To name a few. I can already see the far-lefties foaming at the mouth to run in and say their other lines. But only one party is serious about cuts.
Now on the other hand, the Iran war is not helping. The ICE budget is also massive, but you can also thank Democrats for allowing it to get this bad.
Meh these are also usual speaking points. We can say we’re saving money here and then put it elsewhere.
The debt to GDP is going up, not down. We’re also not in a position where there is appetite for long term bonds which means our borrowing costs for servicing existing debt are not going down anytime soon.
Its a bad situation that no one in government is addressing regardless of DOGE cheerleaders.
Funny how all of that did nothing to stop debt, and only increased it. Almost as if we spend far more fighting to fix problems than we do to prevent them, and we now spend a fortune reacting to things that were prevented.
>regardless of your speaking points, it led to cuts
So the government is efficient and capable now, right? You're not going to just act like those cuts were reasonable and rational now and then start complaining about it in a couple years when a Democrat coincidentally is in the office later, right?
Republicans once again bringing the wrecking ball to government agencies and their funding without realizing what they’re doing.
Private corporations are so intertwined and dependent on government subsidies paid via these programs that hurting their bottom line hurts all of us, even if we don’t use these programs.
Example: you cut billions in Medicaid funding. In order to service the newly uninsured/underinsured patients, hospitals in turn raise prices/bill your insurance more.
It’s just cutting off your nose to spite your face.
Proof that the deficit never matters under a Republican regime. If it did, something would be done, instead crickets. Doesn't matter who is in charge, deficit hawks are always quiet when a Republican is at the helm and only squawk when a Democrat is leader.
A tale as old as time. Republicans fuck everything up, Dems fix it, but not quick enough, and Republicans get elected to fuck it all up again. Stop voting for Republicans.
They will tell you they’re trying to grow the gdp to such an amount that repayment is via increased tax revenue. In reality they have no plans to tackle the debt.
It's not just crickets from the repugs when in charge, they actually add trillions to the debt when in charge. Mostly by the tax cuts for the rich and unfunded wars.
They will gloat on how closing a agency and firing thousands saved $100,000,000 dollars, or brag about the $10,000,000,000 cuts from helping Americans get food,
while at the same time they will ignore the $10,000,000,000,000 in Debt those same people racked up from wars, corruption, and just general incompetence or side pet projects,
It's not even worth losing breath over but their ability to put a pinpoint spotlight on the most useless shit (Minnesota daycares) while waving away unnecessarily spending $100 billion+ (realistically) dicking around again in the middle east is so infuriating and illogical it makes me feel stupider even trying to address it.
But wait - there's more. He has spent our military weapons stock on an unnecessary war that he has effectively lost. We will not only need to replenish the stock at the cost of hundreds of billions, but also pay hundreds of billions to Iran - or face the consequences of removing/reducing their oil from the world supply.
True, the pandemic hit in mid 2020, and Trump had been president for 3 years prior. Most of that first term debt had already been accrued.
The main economic hit was during the next administration, where supply chain issues and inflation really kicked in. Biden did add a lot to the debt as well during that period.
Also disingenuous because it isn't inflation-adjusted. For instance, the national debt nearly doubled under the Nixon/Ford administration. Adjusted for inflation, Nixon's $345B would be $2.7T today
This site doesn't have exactly what you are looking for, but it has some info. Toward the bottom it lists all the presidents, so you can sort by dollars added or percent change.
Woodrow Wilson "wins" for percent change. He added 722% to the deficit. Under him we went from a $3B deficit to $24B. I assume WWI was a major contributor. Nixon takes the cake for post-WW2 presidents at 98%. Obama's first term is the leader for 21st century presidents at 55%.
That’s how exponential growth works. At 7% a year, any number doubles in about 10 years. So those trailing 10 years always account for half of the number.
P.S. Republicans were always bad for the economy, just stating math facts.
But what is your point? Are you doing a "WHATTABOUTBAMA"? lol
Trump added about 2 trillion a year over his 6 years. Obama added 1.2 trillion a year over his 8 years. Obama had to deal with GW Bush's global financial meltdown.
The point is that trump isn’t the root of the problem. There needs to be presssure on congress and whoever the president is to close the budget deficit, it’s been every president since clinton
I don’t like Trump any more than you do, but this isn’t a Trump vs Obama issue. The US govt will always be in dept because the US govt likes being in debt. Debt is a useful political tool
This thread is about the "U.S. Treasury is paying $3 billion a day in interest on national debt", and I am directly pointing out how the debt has changed in the recent past, and what effect that would have on the literal title of this thread.
Eventually yes. The largest surplus the US has ever had was 2000’s $250B, which was twice the size of the next largest surplus. Govt spend that year was $1.8T, so that 14% surplus brought the debt down to $5.5T. The US would have needed two dozen 2000s to break even. Nowadays it would need several decades of 2000s
Would the US even want to break even? People like owning US debt, and the US likes giving it to them. Debt lets the US do fun stuff. It wouldn’t be impossible to balance the budget, but it would require an unpopular sustained bipartisan effort that has no guaranteed benefits in the long run
It America is ever called to pay off the debt, then the world was screwed a long time ago. America’s debt:GDP is high at 1.4, but it’s barely top 10 and
most developed countries sit around 1. There are bigger problems to worry about IMO
But wait - there's more. He has spent our military weapons stock on an unnecessary war that he has effectively lost. We will not only need to replenish the stock at the cost of hundreds of billions, but also pay hundreds of billions to Iran - or face the consequences of removing/reducing their oil from the world supply.
Republican scream about the deficit when the Democrats are in because they don’t like the Democrats spending any money on the people. But the minute they get in they give tons of money to themselves and their rich buddies and explode the deficit. Rinse and repeat. When will the people in this country realize that the Republicans cannot govern. They’re always fiscally irresponsible.
Increasing rates at the Federal Reserve won't affect supply side inflation a single iota. Inflation isn't happening right now because people have tons to spend and demand is up, it's happening because of supply.
Right - but assume you do that, and get a depression.
Now you've got receipts going lower, and outlays (assuming you don't leave people to starve in the street, and don't have to pay cops to keep them there) going up.
So your deficit is still going up, no? And that means more interest paid out, more printing, etc.
Yes, profligate borrowing for too long can have serious consequences on a national economy once you stop being able to finance it. That's why you should be very careful to avoid reaching that point.
This isn’t red vs blue dude. When have democrats fought for a balanced budget? Never and it doesn’t matter. This is the natural evolution of our fiat system.
Nobody would ever be elected on raising taxes and cutting services.
We already pay a gigantic amount of interest, causing a nominal debt spiral.
The choices are:
bankrupt the US government via high rates and stomp inflation. This will cause a depression and does a lot to common folk too.
let spending continue and inflation will run rampant. This will do a lot to the common folk but at least you can’t blame the govt. blame china or supply chain or some dumb shit.
This isn’t red vs blue. It’s calculated financial repression
The Democrats routinely reduce the deficit. Every Democratic President for the last 40 years has left office with a lower deficit than they came in with.
This is an incredibly lop sided thing that is, absolutely, a red vs blue thing. Republicans are responsible for the vast, vast majority of this debt. They are the reason we have continual deficit issues. Every time they get into power, they run up the national deficit, and the national debt.
I don't disagree, I just think the US might very well be past that point already.
If you raise taxes to reduce the deficit, you're going to HAVE to have a depression. It's just an accounting relationship - GDP=C+G+I+NX, and you're reducing G in this case.
The US could have in the past worked on its income inequality, so C would be greater.
We could have a second military(to be clear a second military is a bad idea lol. This is just to show how enormous this money is) or buy homes for over 2 million people or cover the healthcare expenses of ~20% the population with that(under current costs. More if we brute force costs down by annhilating the profiteering and bloat)
Lol part of the reason the debt is so big is because we have that military and the outrageous spending that comes with it. We don't want another one of those. If anything, let's chop it in half.
It looks like the military is our fifth highest spending category behind social security, interest, Medicare, and health.
The US should make a law that each generation should have to pay back their accrued debt over their lifetime, or it will be pulled from their social security and Medicare
Boomers were by far in large the worst generation and continue to be in American history.
They benefited from unusually cheap housing, affordable education, strong pensions, rapid economic growth, and a far smaller national debt, then spent decades voting for policies that protected their own assets and benefits while pushing the costs onto younger generations. They restricted housing supply, expanded entitlement spending without fully funding it, tolerated enormous deficits, and shifted education, healthcare, retirement, and government debt burdens forward. They inherited favorable conditions, extracted much of the benefit, and repeatedly voted to leave future generations with the bill.
The sad thing is the slight majority of boomers are not even in the cohort that got to take advantage of all that cheap housing and great job growth. It's wealthy boomers and boomer politicians that truly fucked everyone over. That class of boomer should definitely be blamed for the state of affairs this country finds itself in. They fucked all of us over 7 ways from Sunday.
The sad thing is the slight majority of boomers are not even in the cohort that got to take advantage of all that cheap housing and great job growth. It's wealthy boomers and boomer politicians that truly fucked everyone over. That class of boomer should definitely be blamed for the state of affairs this country finds itself in. They fucked all of us over 7 ways from Sunday.
This is just another way of saying the figure we already knew which was around 1 trillion over the year. Unfortunately, this issue will only likely get worse as there is less and less trust in the government and t-bills continue to have higher rates. Hand in hand with limited trust in the US government is limited trust by citizens who will not tolerate tax raises for a government perceived as not working. I think the only tolerance people will have is taxing the rich, but this will only raise so much revenue. We cannot both close the deficit and start new programs without broad tax raises.
The Center for American Progress had a good piece about how 90% of the deficit in normal times has been caused by Bush/Trump tax cuts. Taking care of the deficit in theory isn’t difficult, but likely will be political hell.
What I actually wanted to comment on though are two unsung villains in the fight for responsible government:
Libertarians who have been raising alarms since Debt-GDP was like 30%. There’s a lot of dismissing about the debt because people have been raising alarms for decades before it was an issue.
Elon musk and Doge. He convinced a lot of Americans the deficit can be fixed with some tweaking along the edges, rather than the broader issue that we’ve had several rounds of tax cuts without thought based on a failed understanding of the Laffer curve. He’s just continued the smoke and mirrors for republicans were they pretend to be very focused on the debt but aren’t serious.
In a 2011 CNBC interview, Buffett said:
“I could end the deficit in five minutes. You just pass a law that says that any time there’s a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.”
His point was that this would put Congress’s personal incentive getting reelected directly behind controlling the deficit. He followed it by saying, essentially, now you’ve got the incentives in the right place.
Remember when Clinton balanced the budget while getting his cock sucked? Compare that to a fat grifter child molester running up almost half of all u.s. debt hahaha
I wouldn't worry about this too much.. it is all just a bunch of made up numbers on a few computers somewhere.. some dudes will probably adjust those numbers soon and everything will be fine I think but I ain't do maf good.. I am a financial advisor.. this is financial advice.
United States can borrow money indefinitely (this one of the reasons why politicians didn't want to deal with the problem) as long as debt to GDP ratio is maintained and interest rates are relatively low. So they just need to find a way to adjust the interest rates if possible.
Not starting a war with a country that can significantly impact oil shipping and thus inflation probably would’ve been a good strategy to keep interest rates lower. And not implementing widespread tariffs
That’s because they didn’t have the strength and courage to go ask the best and brightest Fox News anchors for the most impactful course of action. A real lapse in leadership as clearly demonstrated in the current situation.
They weren't Republicans. They are not pro life when it comes to Iranians.The rich and the military industrial complex really didn't like Obama or Biden.
If we’re talking economics and not politics, then it would be a better argument to say it’s strategic to gain long-term control over oil shipping lanes…
Doesn’t mean it’s viable or necessary, but the whole argument about the “debt” being unsustainable assumes it does ultimately boil down to resource wars and military threats.
As long as there are strategic allies worldwide that want to align with the whoever controls the world’s most powerful forces, game theory suggests it will be way more challenging to collapse the incumbent economic might.
It’ll have to come down to allies retracting their partnership + applying sanctions, and/or citizens revolting.
Perhaps the ballooning debt causes one or both of those outcomes- but if that’s a likely outcome, then it’s economically prudent to acquire and secure additional resources.
What does “hostile to the US” mean? It’s more media industry headlines against the guy in charge more than it is actual policy and partnership alternatives.
All bark, no bite…at the very least, it’s impossible to know in the short-term if any “trade threats” materialize (i.e. moving closer to Eastern markets vs. Western).
Even so, it would be trading away one superpower for another superpower, when the world still operates assuming zero-sum resources.
By “hostile,” I mean a government whose strategic interests conflict with those of the U.S. and that has both the incentive and ability to impose costs on the U.S. or its allies. It doesn’t require them to declare the U.S. an enemy.
That’s the thing- I don’t believe there are actually NATO-adjacent allies who aren’t willfully or forcefully aligned with the US.
Globalization and digital markets made “security” a prerequisite for most supply chains that keep things cheap for the poorest people.
It’s a game of frenemies, tit-for-tat threats, etc…but until you can prove you secured a viable alternative partnership, you’re beholden to your existing partner(s) to maintain your economy, security, and quality of life for citizens who vote.
Of course, no one wants to be in a position where they don’t hold the cards- and that’s why it’s been popular to attempt diversification in trade. We just can’t know if that’s fruitful or less risky until years go by.
The problem is that it is the working class paying it. Literally giving money away for free to politicians find creative ways to make rich people more rich.
not only that - but thanks to the K shaped economy the consumption of the rich is actually pretty damn significant.
Which means that, unlike in the past, when the US prints money to cover the interest it pays to the rich, the rich are actually driving up overall prices, and thus inflation.
And that means that if the government tries to raise rates to slow inflation, they'll be increasing the amount of money they print to pay the interest. And thus increasing inflation.
Not a good look. Stagflation - but I think a Volcker shock would kill the nation this time, it's not healthy enough for it.
One of the biggest problems in American politics is that too many politicians stay in power for far too long. There should be some kind of expiration date term limits that prevent people from turning political office into a lifelong career.
When politicians remain in power for decades, they can develop extremely close relationships with wealthy donors, corporations, and powerful interest groups. That creates more opportunities for corruption and gives the ultra rich far too much influence over political decisions.
The United States is supposed to be a democracy where ordinary people have a meaningful voice. But when money and long term political connections have too much influence, that democratic balance becomes weaker. In my view, reducing the influence of big money and limiting how long politicians can remain in office would address two of the biggest problems in American politics.
Let's agree to disagree. Doing nothing is the worse option. To have old people that have no energy and struggle to understand things around in politics is wrong in my humble opinion, some of them dying while still in office.
Those are two separate issues. Do you think AOC should retire from politics now? She has been in office for 8 years. If not today, when do you think she should be barred from participating in politics?
The limit can be set at 15–20 years. People who remain in politics longer than that ultimately harm democracy and democratic values. They may become less efficient, care less about making a real difference, and focus more on getting reelected, often making a lot of noise only when the next election approaches.
The flip side to this is that you always end up with green legislators, and then you'd probably just get lifetime aids who are doing the job for them while politicians collect money for kissing babies
For me the solution is money out of politics. End citizens united, have publicly funded campaigns
We have grumpy walking corpses that can barely keep up with what they are doing or understand the complexity of today's problems. Surely, we can find younger, more capable people to take over.
You don't get it. The US is currently running into stagflation. No economic growth, massive debt burden and a FED that cannot lower interest rates nor raise them.
If the FED were to lower interest rates, capital will move out of the USD which will drastically increase inflation. There is no winning here, the US needs to raise taxes and reduce spending. Printing it's way out of the debt won't work.
We really dont know the long term consequences when the gdp is heavily skewed by 8 companies spending a trillion dollars a year on 1 specific thing while the rest of the economy lags behind.
The U.S. is in a unique position globally, with the dollar serving as the world's primary reserve currency. I feel that a lot of people and politicians aren't willing to accept a lower standard of living or make difficult sacrifices. Instead, they want to maintain the lifestyle they have today and leave future generations to deal with the consequences.
>The U.S. is in a unique position globally, with the dollar serving as the world's primary reserve currency.
And if we don't continue paying on our debts, we face sovereign default, which will devalue our currency, and the result will collapse numerous global economies and country's economies as their reserve currency folds.
We don't need a drastic change of lifestyle when it comes to the government and Treasury bills; if we implemented socialized healthcare, which isn't free but it's cheaper than the bullshit Americans have now, while also cutting back on defense spending, we could pretty easily start to "work off" our debt.
The problem is that neither Democrats nor Republicans want to address the can that's been kicked down the road and they've caught up with it. Republicans especially don't want to "work off" anything. If they had their way, America would default on those payments and immediately invade or occupy whichever nation's economy tanks and is the most attractive on a balance sheet.
And Democrats will just approve those measures while wagging their finger.
Close overseas military bases, sell off the military hardware to the host countries, and repatriate our defenses to the US. Use half of the defense budget for leaner, more sophisticated "low cost" technology that serve as defensive measures at home, and if the military industrial complex still hungers for sales, let them sell overseas like China does.
But Citizen's United has seen to it that that America is paralyzed and cannot do anything because our leadership is completely corrupt, top to bottom, "left" and "right".
Unlimited money in elections means unlimited corruption. The US began it's collapse in 2010 with Citizens United, and the fall has just begun.
>As someone who’s already experienced societal breakdown, here’s the truth: America has already collapsed. What you’re feeling is exactly how it feels. It’s Saturday and you’re thinking about food while the world is on fire. This is normal. This is life during collapse.
>Collapse does not mean you’re personally dying right now. It means y’all are dying right now. Death is sometimes close, sometimes far away, but always there. I used to judge those herds of gazelle when the lion eats one of them alive and everyone keeps going — but no, humans are just the same. That’s the real meaning of herd immunity. We’re fundamentally immune to giving a shit.
I say its a theory because of the increasing divergence of wealth in this country.
The middle and lower class do not drive the economy anymore through consumption and only 1 in 5 new dollars is created through working capital.
An increasingly larger share of spending is being done by the top 3rd of the wealth owners and more wealth is being created through financing and monetary tools instead of building.
Bubble. It's a bubble. Trust me, AI spend is definitely going to come to a halt because they can't turn a profit. It's all CAPEX investment. They simply aren't making money off consumer subscriptions and businesses can't sustain the amount of token spend that they are incurring. And the cost per token is only going to keep creeping up as these models become more advanced and require more compute. Trust me, the bubble will pop. A few companies will come out the other side of this with some novel ideas that turn a profit, but most startups and big businesses are gonna be left bag holding for sure.
> Google just cut me off from gmail for running out of storage. Have to pay monthly now. Im sure the price will go up every year. Im always really good about clearing up space. I feel like theyre lying about how much data i use.
Uhm, are you responding to the right comment? How does that relate to what I said in the slightest?
Ahhh, gotcha. Yeah, the continued enshittification of shit we used to get for free (youtube videos without ads, Netflix without ads, Reddit without ads and free api usage, etc.).
Bubble. It's a bubble. Trust me, AI spend is definitely going to come to a halt because they can't turn a profit. It's all CAPEX investment. They simply aren't making money off consumer subscriptions and businesses can't sustain the amount of token spend that they are incurring. And the cost per token is only going to keep creeping up as these models become more advanced and require more compute. Trust me, the bubble will pop. A few companies will come out the other side of this with some novel ideas that turn a profit, but most startups and big businesses are gonna be left bag holding for sure.
$3B a day in interest is the symptom. Bigger issue is the feedback loop : higher debt leads to higher interest costs then larger deficits then more borrowing. Japan / Treasury link makes this even more important
I hate T bills and savings bonds. However I did invest in them via income etfs...I refuse to have a savings account due to withdrawl fees. I hold cash at home and some precious metals. I am waiting for the default. Especially in the case of a budget impasse and shutdown
Yeah I would think most people are using the SGOV ETF or other government money market funds rather than dealing directly with the Treasury these days.
All of these banks that offer High yield savings accounts are probably actually also holding peoples cash in short term Treasury bills with some cash reserves.
If the government actually ever defaulted on it, the banking system in general would be fucked.
FDIC also relies on the government bailing everything out when things go south. I highly doubt the dues for banks to join FDIC actually fully covers the liabilities they have in customer deposits.
I dislike wasted spending. If the government can borrow at 3% to build a large capital project that adds a 5% to the GDP, then I have no problem with that. If they are borrowing to give rich fucks yet another tax cut, then everyone involved can fuck right off.
Sorry for assuming you are a Libertarian. The money printer doesn't exist. The government sells bonds to raise money for deficit spending, and not the Libertarian money printer bullshit.
the Federal Reserve creates US dollars digitally to buy Government bonds (Quantitative Easing), how is a money printer not an accurate metaphor of that situation?
Not only that, but they increased the debt ceiling in the BBB, and they do a lot of short term borrowing at high interest rates thus kicking the can down the road.
That’s how bonds work, yes. Interestingly, 76% of the debt is owned by Americans, so most of the interest is going back to American bondholders (mix of gov and public).
Walter Mondale was correct. His historic landslide loss was one of the greatest travesties of the last 60 years. And the media still pushes the BS that Republicans are fiscally responsible.
If we say there are about 150M tax payers, that comes out to around $20 per day per taxpayer, or around $7000 per year per taxpayer. That's actually crazy.
Obviously, it's not uniformly burdened on those 150M, but if it were, that would mean minimum wage workers would have to work about 4h every weekday just to pay for the interest of the federal debt. That's nearly half the workday.
Even for full-time, median wage workers, using a 40h workweek, it's nearly one hour every weekday, just for the interest. Wow.
Just imagine how much that money would help if spent on other things. All the R's and D's could spend it how they wish if we did not have shitting financial leaders over the last 20 years. Plus, we are broke and in debt now with expensive health care, failing roads and airports, and lack of great public transportation. The Gov. is failing us.
Republican voters punished the last republican to properly finance his military intervention, so now we running wild on credit. Very frustrating that they spent 20 years calling those of us who didn't support the kind of improperly financed forign adventurism the founders warned us about "unamerican"
You all do realize that Trump isn’t solely responsible for the entire nation’s deficit for all time. We were making interest payments back with Biden and even before.
And the say debt with be 50 trillion by the time he leaves office which will setup the next republican talking point of "we can afford the programs anymore"
Republicans ignore the deficit when they are in charge, but as soon as it’s a Democrat, they wi cry and complain. All part of the brainwashing machine that ignores the fact that Republicans, especially Trump, are responsible for the majority of the debt.
To who? That's what I want to know. Who are we funneling $2 billion a day to, as a result of T💩's gifting. Who owns all that debt? China? Russia? Deutsche Bank?
Which is pretty crazy seeing as the US does not have to issue treasuries when it spends, but chooses to do so. So that is literally voluntary $3 billion to people who already have billions. Who instead of spending, are sitting on capital, demanding it to be protected.
If they don’t want to pay so much, lower rates? Seems like a simple fix. And anyone that claims inflation will skyrocket has to demonstrate how? 2008-2020 rates were the lowest they’ve been in generations and inflation was nowhere to be found.
Edit: “if I can’t explain my position I’ll downvote” should be the motto for this sub.
Edit 2: so what do you want? Keep rates high? Less spending? What’s the macro consequences. Try explaining than downvoting. Ask Google, they’ll help you!
Investors bought enormous quantities of Treasuries at much lower yields from 2008–2020, so “no one would buy them” is clearly too strong.
The real question is how far yields could be pushed below the market-clearing rate before private demand fell, requiring greater Fed purchases or causing inflation, currency, or financial-stability problems.
What evidence shows we are near that limit?
Primary dealers are expected to bid competitively at every auction, so “nobody would buy” is literally wrong.
Weak demand can raise the market-clearing yield, but foreign governments aren’t indispensable: domestic investors can hold the debt, and the Fed can create reserves to buy Treasuries in the secondary market. That doesn’t mean rates can be fixed anywhere without consequences.
The genuine limit is inflation, currency and financial stability, not the government somehow running out of its own dollars. Under current law Treasury still must obtain balances through taxes or borrowing, but that is an institutional constraint Congress created, not a technological need for foreign financing.
Pointing to 2008-2020 isn’t really relevant rn. The environment around bonds is very different. The fed funds rate is higher, other countries also have bonds much higher than their 2008-2020 periods as well, etc.
Treasury yields are determined by the secondary market. They look at what people are paying for already issued treasuries and adjust their rates accordingly. You under the impression they don’t already try to keep the rate as low as they can?
You’re describing the current policy arrangement, not a constraint. Tsy yields follow the secondary market because the government currently allows them to, but the Fed sets the overnight rate and can cap longer-term yields by offering to buy unlimited Treasuries at a chosen price, as it did from 1942–1951.
If the Fed offered to buy every 10-year Treasury yielding above 2%, what transaction could force that yield above 2%?
The real argument is whether such a policy would cause inflation or other harmful effects, not whether markets can prevent the issuer of the dollar from setting the interest rate on its own liabilities.
The Fed is part of the federal government, although operationally independent from Treasury, so you’re right that Treasury cannot impose that cap by itself under current law.
My point is that the rate is a policy choice of the consolidated government, not a market funding constraint. And “of course” it would cause inflation and currency depreciation is an assertion, not a mechanism.
Fed purchases exchange one government liability, a Treasury security, for another, a reserve balance; they do not automatically increase private-sector net financial wealth.
Lower rates can stimulate some borrowing, but they also reduce government interest payments to the private sector, so the inflationary effect is theoretically ambiguous and depends on spending, taxation, credit demand and real productive capacity.
The dollar’s exchange rate likewise depends on relative policy, growth, trade and expectations, not mechanically on Treasury yields.
We’ve now established that yields can be capped; if you claim a 2% cap must cause inflation or depreciation, demonstrate the causal mechanism and evidence rather than assuming the conclusion.
That describes the auction procedure, not who ultimately controls the interest-rate environment. Auction yields reflect the Fed’s policy rate, expected future policy, and its willingness to purchase Treasuries.
If the Fed credibly offered to buy every 10-year Treasury at a price corresponding to a 2% yield, nobody would voluntarily accept less and the auction would clear near 2%.
The United States did exactly this by capping Treasury yields from 1942–1951. Markets determine yields only within the policy framework the government chooses.
Yeah, no mate. The fed could establish a floor by always offering more but they can not establish a cap.
If US bonds are not a good yield to risk rating people will just put their money elsewhere. This illusion that the American government is all powerful needs to end.
A floor under a bond’s price is mathematically a cap on its yield because price and yield move inversely.
Step by step: the Fed announces it will buy any 10-year Treasury at a price corresponding to a 2% yield; if an auction cleared above 2%, dealers could buy there and immediately sell to the Fed at the higher guaranteed price; that arbitrage pushes the auction yield back toward 2%; if private investors prefer other assets, they can sell and go elsewhere, but the Fed purchases the residual by crediting reserve accounts and cannot run out of dollars; those reserves then earn whatever rate the Fed chooses to pay.
This is not a claim that America is “all powerful.” It is the narrow fact that a currency issuer can set the nominal yield on liabilities denominated in its own currency.
The possible constraints are inflation, exchange-rate depreciation and the political choice to abandon the cap, not an inability to find dollars or compel private investors to hold the bonds.
The Fed and Treasury demonstrated this from 1942–1951 by pegging short-term Treasury rates and capping long-term yields at 2.5%. So yes, investors can put their money elsewhere; no, that does not prevent the Fed from capping Treasury yields.
It only determines how many securities the Fed must purchase to maintain the cap.
I read that framing as something else. But the mechanism you're taking about can't really be used without serious consequences. Run inflation too high and devalue the currency too much and the US runs a very high risk of accelerating global dedolarization. Losing the cheap global investment into the American economy would be rough to say the least.
That’s a different argument, though.
You’ve moved from “the government can’t control the interest rate because investors can refuse to buy the bonds” to “the government can control the interest rate, but doing so might have undesirable inflation or exchange-rate consequences.”
The first claim is about operational capacity.
The second is about policy consequences. They shouldn’t be conflated.
There is no operational requirement that foreign investors fund U.S. dollar spending. The U.S. government spends by crediting dollar accounts. Treasury securities are then interest-bearing dollar assets. If foreigners decide they want fewer Treasuries, they have to exchange them for something else denominated in dollars, buy U.S. goods or assets, or sell the dollars to somebody else. The dollars themselves don’t disappear.
Could a policy mix generate excessive inflation or currency depreciation? Of course. That is the actual constraint. But the relevant question is whether aggregate nominal spending is outrunning the economy’s productive capacity, not whether bond investors are willing to “finance” the government.
And dedollarization doesn’t change that operational point either. Reduced foreign demand for dollar assets could affect exchange rates, import prices, and therefore inflation.
Those are potentially important economic consequences. But they still don’t create a shortage of dollars for the U.S. government or prevent the Fed from setting the dollar interest rate.
So I’m not arguing that yield caps are costless or that they should always be used. I’m saying the constraint is the economic consequences of the policy, not the government’s ability to execute it.
Mate, my point is that even if a bunch of things could be done, in theory, to tackle the problem, the consequences would be too severe to even consider it as an option. Printing their way out of debt is simply no viable.
If we're talking theoretically, they can just default on their debt and be done with the issue, clean slate, no money spent.
What a government theoretically can do and what it can actually do are two different things.
The evidence from 2008-2020 is pretty poor imo. The US treasury was considered a safe asset during the GFC, which while mostly over in the US in 2013-2014 was still ongoing up to the COVID crisis for a lot of the world.
Yields were pretty low for all safe assets anyways, so the treasury yields were only relatively low compared to current yields. At the time, for the security that they offered, the US treasury bonds were considered fine yields.
That explains why private demand for Treasuries was strong, but it does not answer either point.
F2008–2020 remains evidence that low rates alone do not necessarily cause high inflation, regardless of why rates were low.
Treasury yields were not merely discovered by an unconstrained market: the Fed set short-term rates near zero and purchased trillions in securities, deliberately lowering yields.
Calling the entire period through 2019 an ongoing global financial crisis also stretches the explanation beyond credibility.
Are you conceding that the government can lower Treasury rates, but arguing that today it might produce different economic consequences?
That is a defensible argument, but it abandons your original claim that rates cannot be set because debt is sold at auction.
Cheap imports contributed to low inflation, but they cannot explain it entirely. If low interest rates inherently caused inflation to skyrocket, inflation should still have risen substantially from 2008–2020 despite cheaper imports.
Tariffs and rising import costs can raise particular prices and temporarily increase the price level, but that does not demonstrate that lowering Treasury rates would create sustained economy-wide inflation.
You still need to identify the mechanism connecting lower interest payments on government debt to continuously accelerating prices.
That isn’t an argument. The Fed sets the overnight rate and can cap Treasury yields through asset purchases, as it did from 1942–1951.
You can argue that lowering rates would have undesirable consequences, but then specify the mechanism and weigh those consequences against maintaining high rates, which directly increases federal interest payments and private interest income.
Mockery does not answer the policy question: what prevents rates from being lowered, and what is your preferred alternative and its macroeconomic consequences?
Medicare for all - the reason we pay so much in Medicaid and Medicare is because we don't run it like insurance runs it where you have pools of people who do not use insurance. Almost everyone on Medicaid or Medicare uses it. Unlike say car insurance.
Now, you can throw a bunch of shit here and bla bla bla, but if you think lowering rates is easy then why don't they do it? Why do you think it's so easy but nobody else does?
The Fed has a dual mandate, inflation and jobs. Sure they can get rid of one of those mandates, but they haven't and we don't know what that would mean to the economy.
But to suggest that it's a simple fix seems to be at odds with everyone else on the planet.
Reducing military spending is a legitimate choice, but it also removes income and employment from the economy unless that spending is replaced elsewhere.
Medicare is expensive largely because it covers older and disabled people with high medical needs, while Medicaid covers many low-income people whose care is costly for different reasons.
Expanding the insurance pool can spread risk, but the major potential savings from universal coverage come from lower provider and drug prices and reduced administrative costs.
Lowering rates is operationally easy, not necessarily consequence-free: the Fed votes to lower its policy rate and can cap longer-term Treasury yields by purchasing securities at a fixed price.
Its dual mandate guides that decision; it does not prevent it. Policymakers keep rates high because they believe doing so restrains borrowing, demand and inflation, not because markets make lower rates impossible. But higher rates also cause the government to pay more interest into the private sector, so their inflation effect is not automatically one-directional.
“Why haven’t they done it?” establishes only their current policy preference, not that they lack the capacity. The relevant question is which policy produces better economic outcomes, including the consequences of high interest payments, spending cuts, unemployment and inflation.
> Reducing military spending is a legitimate choice, but it also removes income and employment from the economy unless that spending is replaced elsewhere.
Or you know, how about just keeping it the same for a decade or so instead of increasing it 50% YoY like this administration is doing?
> Medicare is expensive largely because it covers older and disabled people with high medical needs, while Medicaid covers many low-income people whose care is costly for different reasons.
That's exactly what I said, there's a limited pool of people who don't use it. Why do you think we spend more money on Medicaid/Medicare than any other item in our budget? Because the risk pool is just people who need to use the service.
> Lowering rates is operationally easy
And? How is that an argument for making monetary policy?
> “Why haven’t they done it?” establishes only their current policy preference, not that they lack the capacity.
This is an incredibly simplistic way to look at things. Of course they have the capacity to do it, no shit. How does that even matter?
What they're trying to do is not crash the US economy and thus the world economy like we did in '08. You want to make it sound like it's so simple. "They have the capacity, it's operationally easy" - those are not arguments for lowering interest rates.
> Or you know, how about just keeping it the same for a decade or so instead of increasing it 50% YoY like this administration is doing?
Keeping military spending nominally unchanged for a decade would still be a real cut after inflation. That may be a legitimate policy choice, but it doesn't answer the point: cutting federal spending removes income and employment from the private sector unless it is offset by lower taxes or other spending.
And military spending isn't increasing 50% year over year. If you mean a specific proposal or category, cite the figures and baseline. A sustained 50% annual increase would make military spending more than seven times larger within five years.
> That's exactly what I said, there's a limited pool of people who don't use it. Why do you think we spend more money on Medicaid/Medicare than any other item in our budget? Because the risk pool is just people who need to use the service.
No, that isn't how either program works.
Medicare covers nearly everyone above the eligibility age, including people who use little care in a given year. Medicaid covers tens of millions of people, including many children and working-age adults who aren't continuously receiving expensive treatment. These are enormous populations, not tiny pools consisting only of sick people.
More importantly, you're applying the financing logic of private insurance to federal programs. Private insurers need premiums from healthy members to cover claims from sick members. The federal government doesn't need premiums from a sufficient number of healthy people before it can pay Medicare and Medicaid claims.
The actual constraint is the availability of doctors, nurses, hospitals, medicine, equipment, and other medical resources. Adding healthy people can reduce average spending per enrollee, but it doesn't reduce the cost of treating existing patients or create additional medical resources.
Medicare and Medicaid cost so much because they cover large populations, including many elderly, disabled, and medically vulnerable people, and because American healthcare prices and administrative costs are exceptionally high. "The risk pool only contains users" is neither an accurate description nor an adequate explanation.
> Lowering rates is operationally easy
> And? How is that an argument for making monetary policy?
It answers your argument that lowering rates couldn't be a simple option because policymakers haven't done it. You're conflating operational capacity with policy desirability.
Whether the government can set a lower rate and whether it should set a lower rate are separate questions. The answer to the first is yes. The second requires comparing the actual effects of higher and lower rates.
> "Why haven't they done it?" establishes only their current policy preference, not that they lack the capacity.
> This is an incredibly simplistic way to look at things. Of course they have the capacity to do it, no shit. How does that even matter?
It matters because "if it's so easy, why don't they do it?" was your argument.
You're now conceding that it is operationally easy while saying operational ease doesn't prove it is desirable. Fine, but that abandons your original argument. Policymakers declining to use an available policy tells us what they currently believe or prefer. It doesn't prove their decision is economically necessary or correct.
> What they're trying to do is not crash the US economy and thus the world economy like we did in '08.
The 2008 crash wasn't caused by the Fed lowering interest rates. It resulted from an overleveraged private financial system, deteriorating mortgage credit, collapsing asset values, and cascading defaults. The Fed cut rates toward zero in response to that collapse and kept them extremely low throughout the recovery.
You therefore can't invoke 2008 as evidence that lowering rates would crash the economy. The historical sequence points in the opposite direction.
> You want to make it sound like it's so simple. "They have the capacity, it's operationally easy" - those are not arguments for lowering interest rates.
Correct. They're rebuttals to the claim that lowering rates is prevented by markets or rendered impossible by the fact that policymakers haven't chosen it.
The affirmative argument is that higher rates aren't a cost-free anti-inflation device. They increase federal interest payments to holders of government securities, transfer more income to asset owners, raise borrowing costs, depress interest-sensitive spending, and increase financing costs for housing and businesses. Their disinflationary effect depends largely on weakening demand, investment, and employment enough to reduce price pressure.
If you support that tradeoff, identify the causal mechanism and explain why its benefits exceed its costs. "The Fed has a mandate," "they're trying not to crash the economy," and "everyone else agrees" describe institutional beliefs. They don't demonstrate that those beliefs are correct.
> And military spending isn't increasing 50% year over year.
Sure is!
> No, that isn't how either program works.
That's exactly how that works, because kids or people who are on it have to meet income guidelines.
> Adding healthy people can reduce average spending per enrollee, but it doesn't reduce the cost of treating existing patients or create additional medical resources.
100% agreed, but you missed the point!
> You're now conceding that it is operationally easy while saying operational ease doesn't prove it is desirable.
No, i'm saying that it doesn't matter. Being easy to do operationally means what?
> The 2008 crash wasn't caused by the Fed lowering interest rates.
Correct, I never said that. I said crash the economy like '08. If the US economy falters, the world falters.
> They're rebuttals to the claim that lowering rates is prevented by markets or rendered impossible by the fact that policymakers haven't chosen it.
No, they're not rebuttals, i'm trying to explain to you how doing something that is easy operationally doesn't mean anything for the reason to do it.
> And military spending isn't increasing 50% year over year.
Fair correction. A 50% year-over-year claim is too high unless referring to a specific proposal or budget component. My substantive point only requires that military spending can be frozen or cut, but doing so reduces somebody’s income and employment unless the resources are redirected.
> That's exactly how that works, because kids or people who are on it have to meet income guidelines.
Income eligibility is not the same as medical utilization. Medicaid includes millions of relatively healthy children and adults, while most spending is concentrated among older and disabled beneficiaries. Medicare is expensive because it deliberately covers elderly and disabled populations. Adding healthy people lowers average spending per enrollee, but it does not reduce the cost or resources required to treat existing patients. Universal coverage may still save money through lower prices and administrative costs, but a healthier risk pool is not the main source of those savings.
> 100% agreed, but you missed the point!
Then state the point, because agreeing that adding healthy people does not reduce existing treatment costs contradicts your explanation that the pool itself is why total program spending is so high.
> Being easy to do operationally means what?
It means your original objection that auctions or unwilling buyers prevent lower Treasury rates was incorrect. Operational feasibility does not establish desirability, but it separates “cannot be done” from “can be done but may have costs.” We are now debating those costs, which is where the discussion should have started.
> I said crash the economy like '08.
Then explain the causal chain. Lower rates were the response to the 2008 collapse, not its cause, and conventional monetary theory treats lower rates as supportive of demand. You have alternatively claimed lower rates would cause inflation, devalue the dollar and crash the economy. Those are not automatically compatible outcomes. Specify how lower rates cause a 2008-style financial collapse rather than merely listing adverse possibilities.
> Doing something that is easy operationally doesn't mean anything for the reason to do it.
The stated reason was reducing federal interest expense. Operational ease establishes that this option exists. Whether its effects are preferable to high rates or spending cuts is the next question. High rates increase federal interest payments and transfer more income to asset holders, while spending cuts remove income and demand directly. Every alternative has consequences, so identify and compare them.
Lower rates cause inflation. You raise rates to fight inflation. That's why Inflation is a big fucking deal.
Lowering rates is only part of the cost of borrowing. Bond rates start at the rate set by the Feds, but if there are no buyers for those bonds at that rate, they need to increase the rate, aka payouts, to attract buyers. The final price is set by the markets.
“Lower rates cause inflation” is not a complete causal explanation. Lower rates may increase borrowing and demand, but their effect depends on credit demand, fiscal policy, productive capacity and supply conditions.
They also reduce the government’s interest payments to bondholders. Likewise, raising rates may weaken borrowing, but it simultaneously increases federal interest income paid into the private sector. The net inflation effect is therefore not automatic.
Your bond-market claim describes the current policy arrangement, not a constraint. Auctions currently clear near market yields, but the Fed can enforce a yield ceiling by standing ready to buy bonds at a specified price. Bond prices and yields move inversely, so placing a floor under the price places a ceiling on the yield. If the Fed offered to buy every 10-year Treasury at the price corresponding to a 2% yield, investors could put their money elsewhere, but they could not force the yield above 2%. The Fed would purchase whatever quantity private investors declined to hold by crediting reserve accounts.
The United States actually capped long-term Treasury yields at 2.5% from 1942–1951. Therefore, the market sets the final yield only when the government chooses not to enforce a different one. The legitimate argument is whether imposing a lower rate would produce undesirable economic effects, not whether a lack of private buyers makes it operationally impossible.
ClassyBurn | a day ago
What the actual fuck.
For years, these Republicans have been screaming about adding to the national debt. And now it’s what, crickets?
Although it is true that the carry trade would cause chaos if Japan sold, buying Yen to cover their ass is only a stop gap.
At some point, this bill will become due.
GurProfessional9534 | a day ago
It’s Two Santa Claus theory, and it has been going on since the 70’s. They will spend wildly when in power, and it is by design.
https://en.wikipedia.org/wiki/Jude_Wanniski
shanem | a day ago
Deep linking for folks
https://en.wikipedia.org/wiki/Jude_Wanniski#The_Two_Santa_Claus_Theory
--TheCity-- | a day ago
From that link I just leave this here.
"Wanniski's 1978 book, The Way the World Works, documented his theory that the United States Senate's floor votes on the Smoot–Hawley tariff legislation coincided day to day with the Wall Street stock market Crash of 1929,[5] and that the Great Depression was the result of the Smoot–Hawley tariff, rather than any failure of classical economics."
RonaldWoodstock | a day ago
Well yes, that’s the anti-Santa theory. It’s Republicans being forced to raise taxes by other means because any other way is unelectable.
They can’t cut spending, they can cut taxes. We need revenue, so a confusing tax raise was the solution. Literally dumbest idea ever.
The "Two Santa Claus Theory" recommends that the Republicans must assume the role of a second Santa Claus by not arguing to cut spending but offering the option of cutting taxes.
Were_all_dead_anyhow | a day ago
Two Santa Claus theory functions as the politically popular front, while the long-term result is the systemic dismantling of public jurisdiction. It's entirely about enclosure.
Shrinking government jurisdiction through deliberate underfunding and privatization systematically transfers control over public goods, like infrastructure, utilities, and regulatory oversight to private corporations and markets. While the formal mechanisms of democracy and voting remain intact, the government's actual power to act is stripped away, leaving elected officials with no authority over anything. It encloses the public square, replacing democratic accountability and constitutional protections with private ownership, where citizens have no voting rights, recourse, or guaranteed universal access.
While public attention is safely anchored in manufactured partisan squabbles, the fundamental nature of governance is stripped away. Tech monopolies and defense contractors are quietly building out integrated surveillance networks, automated border walls, and algorithmic policing systems that are insulated from public jurisdiction by intellectual property laws and trade secret protections. By the time the public realizes the extent of the transfer, elected officials will be reduced to mere middle managers, presiding over a hollow state that retains the symbolic pageantry of democracy, but possesses none of the physical or legal power to override private owners.
Textbook financial authoritarianism; the quiet, permanent foreclosure on communal sovereignty itself. Sovereign debt and escalating interest payments is the mathematical anchor for this process, acting as a permanent enforcement mechanism for privatization and the erosion of public power. When a nation's budget is dominated by servicing debt, fiscal policy ceases to be a tool for public welfare and instead becomes a wealth-transfer pipeline to global capital markets.
The historic irony is that the American Revolution was fought precisely to escape the corporate-state hybrids, financial cartels, and speculative debt traps that now define the West. The founders were explicitly aware of these forces and designed the early republic as a direct counter-experiment.
This is the same pattern has repeated from the Roman Empire, Netherlands, France, British Empire, and now to the US. By controlling the creation of currency and the terms of debt, borderless wealth has built a system where the physical pageantry of freedom remains intact, where you can still move around, vote, and speak, but your actual time, your resources, and the infrastructure of your society are entirely owned by creditors.
Neat, huh? Enslaving the world with a resource created out of thin air.
SuspiciousMap9630 | 20 hours ago
“Heavy physical work, the care of home and children, petty quarrels with neighbours, films, football, beer, and above all, gambling, filled up the horizon of their minds.
To keep them in control was not difficult. A few agents of the Thought Police moved always among them, spreading false rumours and marking down and eliminating the few individuals who were judged capable of becoming dangerous; but no attempt was made to indoctrinate them with the ideology of the Party.
It was not desirable that the proles should have strong political feelings. All that was required of them was a primitive patriotism which could be appealed to whenever it was necessary to make them accept longer working-hours or shorter rations. And even when they became discontented, as they sometimes did, their discontent led nowhere, because being without general ideas, they could only focus it on petty specific grievances. The larger evils invariably escaped their notice.”
IndustrialPuppetTwo | 21 hours ago
Sums it up rather nicely.
finsup_2021 | 18 hours ago
This is why Bitcoin was created after the 07 crash.
gmb92 | a day ago
Why is anyone surprised after decades of this behavior? Republicans are not fiscal conservatives. And it's been the case since at least Reagan. Others have mentioned the "2 Santas Strategy". Here are the results:
CBO projected deficits, January of each year:
1993: $310 billion - record deficit Reagan/Bush left Clinton.
2001 (surplus): $236 billion - record surplus Clinton left Bush, fueled by 1991 and 1993 deficit acts (passed under Democratic House and Senate) and a booming economy. Surpluses projected the rest of the decade.
2009: $1.4 trillion - record deficit W Bush left Obama as tax loans weighted towards the wealthy were passed, trillions spent on wars, and the bubble busted.
2017: $560 billion - deficit Obama left Trump, a record decline.
2020: $1 trillion (78% increase) - Trump's deficit pre-covid, fueled tax cuts weighted towards the wealthy and higher spending.
2021: $2.3 trillion (311% increase) - what Trump left Biden with covid spending temporarily boosting spending as a % of GDP.
2025: $1.8 trillion - but over half is now debt interest which is mainly from previous fiscal mismanagement. See W Bush and Trump trajectories. We should have continued the deficit reduction we saw under Obama, which would have put us in a far better position going into the pandemic.
2025: Trump/Republican tax bill passed in 2025 is expected to add $4-$5.5 trillion to baseline deficit projections over 10 years, depending on if any provisions sunset. Iran war additionally adds to debt.
Rinse and repeat.
https://www.cbo.gov/data/budget-economic-data
Media plays a major role in misperceptions by labelling some Republicans as "deficit hawks". None are. They all vote for those trillions in deficit-financed tax loans and only feign hawkishness when we have a Democratic president.
Mammoth-Garden-9079 | 18 hours ago
When 60% of the U.S. government budget is spent on social support spending, do you really think Republicans being deficit hawks would ever win them an election? The debt problem isn’t a partisan issue; it’s a political issue. A democracy or constitutional republic like the U.S. will always reach unsustainable debt levels because spending buys votes for all politicians and parties across the entire political spectrum.
Ancient_Weakness699 | 5 hours ago
Redo these numbers as % of GDP to put them in a true perspective.
Right now it's about 6.2% of GDP. It was about 9.5% after COVID in 2021. Enough doomering.
Thom0 | a day ago
>Although it is true that the carry trade would cause chaos if Japan sold, buying Yen to cover their ass is only a stop gap
Its worse than that. They purchased YEN using EUR.
_Gobulcoque | a day ago
For the benefit of context: why is it worse than that?
Virtual_Magazine_860 | a day ago
Because it's leveraged dollars.
_Gobulcoque | 22 hours ago
> They purchased YEN using EUR.
The OP said this. Does that mean they borrowed USD bought EUR, then bought YEN?
I'm not following where the leverage came from. Sorry, noob trying to understand. Spare me a few minutes of your time.
ap1618 | a day ago
1.15 dollars
Constant-Plant-9378 | a day ago
> At some point, this bill will become due.
Already has, in the form of skyrocketing inflation. The Federal government has essentially been printing Trillions of dollars in new money since the last big recession in 2008 in the form of endless quantitative easing, PPP loans, corporate welfare, stimulus checks, and now just in the form of Trillions in unrestrained spending to Trump-connected Oligarchs - all sharply devaluing the value of the dollar.
It is unsustainable and, following the Trump playbook, will end in the effective bankruptcy of our nation, with working Americans holding the bag.
kent_eh | a day ago
For some reason Reddit duplicated (or quadruplicated) your post.
LegitimateSituation4 | a day ago
How can they focus on that when there's a trans person in Idaho that wants to play badminton???
dust4ngel | a day ago
economic security of the nation <<< my security about my masculinity
EarthBear | 12 hours ago
All that winning.
Ada_Pearce | a day ago
All they've ever done is blow up surpluses left to them by democracts
Alatarlhun | a day ago
Republicans hold anti-American values and are intent on cratering the republic.
There is no other reasonable way to look at the pattern of behavior.
wackOverflow | a day ago
Where was the surplus after Obama or Biden?
Stompnutz | a day ago
Biden dealt with COVID, and Obama added the cost of the Iraq and Afghanistan wars to the books, which the Bush2 bean counters insisted shouldn't be on the books for "reasons". Hope that helps.
TotallyObviousBot | a day ago
You forgot a president in your list there bud
wackOverflow | a day ago
I forgot more than a few, because there hasn’t been a surplus since 2001.
VVaterTrooper | a day ago
Both parties had added to the debt which is bad. You then have to go into details on how much each party adds to the debt. They are the same yet one is worse.
Wind_Yer_Neck_In | a day ago
Hard to pivot to a surplus when your predecessor nukes the national purse so hard it would take more than a decade to meaningfully tackle it.
TKAS05 | a day ago
It would be more accurate to say that Democrat administrations have reduced the deficit and Republican administration's have increased the deficit (since and including Clinton). There's still some nuance as Obama initially saw a sharp rise in deficit spending due to the Great Recession but that was steadily reduced through the rest of his administration. George W Bush is the only modern president to actually eliminate a budget surplus.
FacadesMemory | 23 hours ago
Newt Gingrich and congress did good things during the Clinton spot you mentioned. We need more Newts in congress.
kbailles | a day ago
It was one of Trumps primary campaign shticks. Im not sure if he’s fulfilled really any of his campaign promises.
Badgeringlion | a day ago
Most of Project 25 has been fulfilled or is on track.
As for the ones that would actually help people? He loves the uneducated and stupid since they never ask questions.
Tibreaven | a day ago
I mean, they lied?
No one cares about adding to the debt when they're in charge, and Republicans have been in charge of Congress more since 1996s. Before then, Democrats were in majority leadership of Congress more often and thus (sorta) caused a higher percentage of debt increases.
Debt percentages basically never go down and only one term has seen a budget that technically went down over a year due to budget changes and major relative national growth (during Clinton).
Microplasticsharts | a day ago
Now they are lying about how they plan to fix it, the brilliant plan now is inflation via tariffs, fiscal policy, and currency devaluation. The war with Iran’s impact on fuel cost is a bonus.
SolomonG | 23 hours ago
> No one cares about adding to the debt when they're in charge,
Spoken like someone too young to remember the Clinton admin.
Tibreaven | 23 hours ago
I literally referenced the Clinton admin as the only recent example of the opposite lol
m77je | a day ago
It is true but debt went down during Clinton’s presidency but only by a tiny amount. Every other administration in my lifetime has increased it substantially.
Fluffy-Pop-3407 | 7 hours ago
Obama cut the deficit more than half. From 1.4tn to 560bn.
ShogunFirebeard | a day ago
They do this every single time they are in power. It's been happening since Regan was in office. Their base is too stupid to understand the lies being told to them.
Longjumping-Ad514 | a day ago
Debt and interest are only an issue when a Democrat is in power.
Serpentongue | a day ago
The beauty of Congress having an average age of 85 is that it’ll eventually be someone else’s problem
Ultra-Pulse | a day ago
Average, is that for real?
Stumblin_McBumblin | a day ago
It is not
Alatarlhun | a day ago
Of course not. Getting you angry at falsehoods is just as good.
TotallyObviousBot | a day ago
Hyperbole is not always disingenuous, or are you saying you really think that there isn't an issue with the average age of a US senator being 64 aka retirement age?
optimisticReal | a day ago
I remember the tea party where they were screaming that the democrats were enslaving their grandchildren in debt.
They completely silent today and just happy that. Trump is lighting the fire to Armageddon
Awkward-Painter-2024 | a day ago
Makes me think that when a Dem is elected again (I guess if an election even happens again), billionaires can force Japan to sell their treasuries and saddle the Dems with a financial crisis. Good times...
JRoc1X | 21 hours ago
Now you are just being silly there is an election on November 3 this year. And these will be another one November 2028. Why do people even believe that trump can end elections is just bad critical thinking skills. Even if he said he not leaving the white house the secret services or white house officers will just escort him out. Your done sir time to move on and bring the next person in .
And even if he were to attempt such a thing he would need the support of most of the generals and admirals of the army and navy to even make it a relm of possibility to pull off and thats never happening
Awkward-Painter-2024 | 21 hours ago
Dude, how many generals have been fired??? Hegseth has made loyalty oaths a part of the game, not to the Constitution but to him and Trump. I know how coups happen, now, could their be drama between national guard, local police forces and the US army, sure. But Americans also just "follow" the loudest voices so... a coup could happen here in the US. I'm not alarmist, I'm just watching the pieces being moved the way they have been all over the world.
JRoc1X | 20 hours ago
You make a great piont. I still don't believe such a thing could be pulled off in the USA. But I guess people of the past, in countries it did happen, believed it couldn't happen and it did happen
neph36 | a day ago
As soon as there is a dem potus it will not only be a crisis but their fault
lost_horizons | 22 hours ago
Soon. Interventions don’t work, it just pushed the day off slightly.
lost_horizons | 22 hours ago
Soon. Interventions don’t work, it just pushed the day off slightly.
Caveat_Venditor_ | 21 hours ago
Wait how is buying the yen capitalism?
wandering-monster | 18 hours ago
It hasn't been for years.
It's been for four years at a time.
Republicans suddenly become fiscal conservatives as soon as they're out of power and the bill for their reckless spending comes due. Then they get back in charge and spend spend spend baby.
AngrySumBitch | 17 hours ago
🛞 🛒 🚀
RaisinWonderful9482 | 16 hours ago
There’s a lot of road still before the U.S. is bankrupt. I’d have to pull the numbers back up, but it’s at like 125% of debt to GDP and it has an estimated outer boundary of something like 210% I believe.. though around 160% is when you’d likely start seeing investors pull out and critical economic impact.
californicating | 12 hours ago
And a Democrat will be the one having to fix it. Every single Republican has increased the deficit in my lifetime. All of them. Not one has been fiscally responsible.
DinosaurHoax | 7 hours ago
They will get very upset again once a democrat gets elected.
Dreadsin | 5 hours ago
Your first mistake is thinking republican voters actually care about policy. I asked my mom if she ever once read any of the policies or visited a candidates website and she said no. It’s all 100% reactionary
roararoarus | a day ago
Republicans have added to the debt the most. The way it works is relatively simple. Republicans cut taxes for the elites and increase spending. The government needs to borrow more and more. Most of the borrowing is from Americans, who buy Treasuries. These Americans are not just any Americans - they’re the elites who received tax cuts. So these tax cuts increase in value from interest bc now they’ve been converted to investments.
Due_Satisfaction2167 | a day ago
By the end of Trump’s current term, he alone will be responsible for >40% of all US national debt. Most of the remainder is at the feet of Bush and Reagan’s tax cuts.
wackOverflow | a day ago
That 40% stat is bullshit. Debt going up while Trump was president is not the same thing as Trump personally causing all of it, and CRFB says exactly that.
A huge chunk of the borrowing tied to his first term came from bipartisan legislation, including COVID relief. (CRFB)
And no, Reagan and Bush tax cuts do not magically explain “most of the rest” either, CBO shows the debt is the product of decades of taxes, spending, entitlements, recessions, wars, and interest.
kent_eh | a day ago
Like so many things, the national debt is only a problem for republicans when democrats are in power.
No-Cook-534 | a day ago
I'm gonna ride your top comment to recommend every one read this book: The Deficit Myth by Stephane Kelton.
The book explains Modern Monetary Theory. Ultimately, the US has the power to create as much money is needed bc we have our own fiat currency. The only problem is controlling inflation and unemployment, the deficit is not a problem and never will be.
CosmicQuantum42 | 18 hours ago
I mean yeah but that’s the whole crux of the problem right?
I can eat all I want! Not a problem at all. The only issue is keeping the weight down.
By definition money printing involves inflation, which tends to hit people with first access to money and credit the least.
No-Cook-534 | 18 hours ago
Have you read the book? My explanation does not give the theory justice. Kelton lays out very concrete solutions to this. The problem is most policy makers are not economists and don't even look at the issue through the proper lens. Deficits are not inherently bad, it's all about how we utilize them. Money printing adds cash to circulate to the public, then we raise taxes to remove it.
Tulaodinho | a day ago
What republican president has skyrocketed the debt to gdp ratio? None since Bush Sr. You never recovered from the 2008 burst, that's the truth of it. The Covid burst only worsened it, but the actual normal management was alright for both republicans and democrats, obama did okay given the circunstances and Clinton did amazingly well in that sense
jetsonian | a day ago
Yep it’s definitely our fault that republicans have no problem expanding the debt when they’re in power. It’s definitely our fault that nothing is affordable now. We just didn’t do our jobs and make more obscene money while others starve.
While we’re at it we also need to use less water and paper to save the environment because it’s definitely us and not huge industry that’s doing the polluting.
Tulaodinho | a day ago
Debt to gdp ratios do not necessarily compare to cost of living, that is a different question. I never mentioned that at all
MEDICARE_FOR_ALL | a day ago
Trump did?
Tulaodinho | a day ago
No he did not lol. It only shot up when covid hit, and it happened to every country, it was a global thing as the gdps shrank
PappyPoobah | a day ago
Some basic research would do you well: https://www.crfb.org/blogs/how-much-did-president-trump-add-debt
Tulaodinho | a day ago
That is irrelevant if the gdp grows to match, hence why ratios are used
MEDICARE_FOR_ALL | a day ago
So you just admitted that he did.
Delusional TDS post. Trump was president when the debt to GDP amount shot up.
And he's doing it again.
Tulaodinho | a day ago
Hm.... literally every country had that happen? Search for it yourself. If the economies worldwide had a massive halt, obviously the gdp slowed down and the existing debt increased the ratios together with new accumulated debt? Wtf are you talking about
alanthar | a day ago
It happened in every country because every country implemented the same strategy.
It wasn't just a thing that happened on its own. It's a thing that happened because similar actions were taken to deal with Covid by those countries. Trump and co took those actions, and therefore are responsible for the outcome.
Tulaodinho | a day ago
Ahahahaha okay, so everyone now is as bad as evil Trump. Are you trying to make me laugh? There was literally no other way, the world was in uncharted territory. I would bet my house Biden, Kamala, Obama, Clinton, whoever, would do the same, because other countries with leaders of diverse political ideologies all had to do the same. Send people home, freeze large chunks of the economy, and raise the debt, both by borrowing and by lowering the gdp due to the economy stopping. In fact, Trump acted too late to try and not make the economy stop, something that imo was a bad choice as maybe less people could've died otherwise, which would make the debt to gdp ratio seem even worse than it did.
Why did the debt to gdp ratio increase 30% under Obama? Was it his fault?
alanthar | a day ago
>Why did the debt to gdp ratio increase 30% under Obama? Was it his fault? Yes. He was president, wasn't he?
>Ahahahaha okay, so everyone now is as bad as evil Trump. Are you trying to make me laugh? There was literally no other way, the world was in uncharted territory. I would bet my house Biden, Kamala, Obama, Clinton, whoever, would do the same, because other countries with leaders of diverse political ideologies all had to do the same. Send people home, freeze large chunks of the economy, and raise the debt, both by borrowing and by lowering the gdp due to the economy stopping. In fact, Trump acted too late to try and not make the economy stop, something that imo was a bad choice as maybe less people could've died otherwise, which would make the debt to gdp ratio seem even worse than it did.
I'm not sure what you are trying to argue here, other then offering pretty big assumptions/projections from what I said to what you think I said. I made no comment regarding the necessity of the actions taken, but simply why the outcomes were relatively similar across the board.
That said, the changes weren't consistent, as each country tailored it's approach.
Google AI spit this out after searching "debt to gdp ratio changes post covid by country". Caveat: There are a multitude of factors for these changes, some not entirely because of the Covid Response.
Japan: Remains the highest among major developed economies, climbing past 236% of GDP.
Canada: Rose steeply from roughly 87% pre-pandemic to over 110% of GDP, keeping federal burdens high even as private sectors deleveraged.
Italy and France: Hover between 113% and 135% of GDP, reflecting rigid post-COVID sovereign liabilities.
Germany: Stabilized at a moderate level near 64% of GDP.
Greece: Eased down from absolute pandemic peaks but remains high at roughly 146% to 150% of GDP.
Estonia: Maintained one of the lowest ratios in Europe, staying well under 25% of GDP.
Tulaodinho | a day ago
The fact you believe everything that happens is fault of the president, tells me all I need to know. Blaming Obama for the situation he inherited is as ridiculous as it can get, he was mostly a passenger on what was a major worldwide shockwave as anyone with a bit of knowledge understands.
The overall outlook is the same in most developed countries with differences related to economy structures, pre existent situations, etc etc, that increase or decrease the hit taken, something quite basic to know.
TheoreticalZombie | a day ago
I guess you missed the part in OP where the article talks about U.S. debt-to-GDP ratio becoming unbalanced (currently at 122% per the St Louis Fed). 2020 also broke 125%. Guess who was president leading up to that? It also ticked down every year until 2024.
You can point to COVID for the first term (although it would be just as fair to point out how poorly that administration handled the situation), but that doesn't really explain what is going on now. The president doesn't have some magical lever to control the economy, but Trump has aggressively pursued unsound, self-dealing policies with a compliant Congress.
Tulaodinho | a day ago
You cant seriously think the 2020 debt to GDP hike was caused by that administration, since it happened literally everywhere in the World as economies stopped under covid and debt emission was necessary worldwide? Google it, it was not a USA only problem. That take of yours immediately shows that you are either ignorant, or have an agenda. Obama received a 75% ratio and delivered a 103% when he left. Was it his fault?
I will judge what he delivers to the next one after he leaves. So far, the Iran business has been a disaster, as an example. And I think the consequences of the Iran problem are going to last for a looong time, that's on him entirely.
LaCremaFresca | a day ago
It did not only shoot up because of Covid. His tax giveaways to the rich shot it up well before that.
43% of all the US debt has been accrued under Donald Trump.
He doesn't give a FUCK about you, your family, or anybody but himself.
He's pushing us into fiscal ruin right in front of our eyes.
Open your eyes. He lied to you. He's taking advantage of you.
Tulaodinho | a day ago
Look into a Debt to gdp chart. The rest is talk. From both sides, not just one. Absolute numbers mean nothing as any person with the slightest education knows, ratios do. His debt to gdp numbers prove otherwise.
TotallyObviousBot | a day ago
Could you explain it to me?
Lemp_Triscuit11 | a day ago
Is it your assertion I can't link any of Trump's policy that had added large amounts to the debt?
Tulaodinho | a day ago
I never said that. What matters in managing a country is if your economy matches, or not, the growth of the debt. There's a reason ratios are used, and why they are the number 1 indicator of how its evolving. If you add 1T of debt, but your economy produces more than enough so that your ratio actually goes down, you are better off than before. Its not a Trump or Obama thing, I couldnt give a shit about both. This stupid, uneducated polarization happening everywhere is what's taking the western world to shit
Lemp_Triscuit11 | a day ago
https://fred.stlouisfed.org/series/GFDEGDQ188S
Then how would we interpret the post-covid section of this graph which charts the exact metric that you requested?
Tulaodinho | a day ago
What about it?
Petrichordates | a day ago
Hasn't*
oakinmypants | 23 hours ago
If you don’t support this government sell your US bonds
Super_Mario_Luigi | a day ago
Flashy flair to the usual speaking points.
Republicans implemented DOGE (regardless of your speaking points, it led to cuts), gutted USAID, is currently investigating and canceling fraud spending, cuts to Medicaid, cuts to SNAP, and shrinking government employees. To name a few. I can already see the far-lefties foaming at the mouth to run in and say their other lines. But only one party is serious about cuts.
Now on the other hand, the Iran war is not helping. The ICE budget is also massive, but you can also thank Democrats for allowing it to get this bad.
Facebook_Lawyer_Gym | a day ago
Meh these are also usual speaking points. We can say we’re saving money here and then put it elsewhere.
The debt to GDP is going up, not down. We’re also not in a position where there is appetite for long term bonds which means our borrowing costs for servicing existing debt are not going down anytime soon.
Its a bad situation that no one in government is addressing regardless of DOGE cheerleaders.
Its_Pine | a day ago
Funny how all of that did nothing to stop debt, and only increased it. Almost as if we spend far more fighting to fix problems than we do to prevent them, and we now spend a fortune reacting to things that were prevented.
UltraMittens | a day ago
Democracy Derangement Syndrome
TotallyObviousBot | a day ago
>regardless of your speaking points, it led to cuts
So the government is efficient and capable now, right? You're not going to just act like those cuts were reasonable and rational now and then start complaining about it in a couple years when a Democrat coincidentally is in the office later, right?
heytheremicah | 22 hours ago
Republicans once again bringing the wrecking ball to government agencies and their funding without realizing what they’re doing.
Private corporations are so intertwined and dependent on government subsidies paid via these programs that hurting their bottom line hurts all of us, even if we don’t use these programs.
Example: you cut billions in Medicaid funding. In order to service the newly uninsured/underinsured patients, hospitals in turn raise prices/bill your insurance more.
It’s just cutting off your nose to spite your face.
braumbles | a day ago
Proof that the deficit never matters under a Republican regime. If it did, something would be done, instead crickets. Doesn't matter who is in charge, deficit hawks are always quiet when a Republican is at the helm and only squawk when a Democrat is leader.
A tale as old as time. Republicans fuck everything up, Dems fix it, but not quick enough, and Republicans get elected to fuck it all up again. Stop voting for Republicans.
tnolan182 | a day ago
They will tell you they’re trying to grow the gdp to such an amount that repayment is via increased tax revenue. In reality they have no plans to tackle the debt.
infinity404 | a day ago
“The budget will balance itself”
Clintocracy | 10 hours ago
Sometimes they cut spending, the problem is that their tax cuts absolutely dwarf any spending cuts they can get through
Content-Fudge489 | a day ago
It's not just crickets from the repugs when in charge, they actually add trillions to the debt when in charge. Mostly by the tax cuts for the rich and unfunded wars.
naijaboiler | 16 hours ago
But how do they have so many people convinced that they are the party of fiscal discipline
Content-Fudge489 | 16 hours ago
Fox News and Max. That's it.
9783883890272 | 22 hours ago
You're so brave
deltav9 | 21 hours ago
I mean he’s just factually correct: https://en.wikipedia.org/wiki/U.S._economic_performance_by_presidential_party
9783883890272 | 14 hours ago
I mean, I mean, I mean.
I mean.
deltav9 | 4 hours ago
Are you glitching?
Kaiser_Wolfgang | a day ago
fix it? don’t think dems are doing anything to help with the national debt
braumbles | a day ago
They're not in power.
Kaiser_Wolfgang | a day ago
obviously, the clear point is when they are they don’t care about the debt either
TotallyObviousBot | a day ago
The last president to substantially address the deficit was a Democrat.
braumbles | a day ago
That's horse shit.
whomad1215 | a day ago
Clinton had a balanced budget
Obama inherited trillion dollar deficits (and the 2008 crash), and it was down to around $600b when he left
Trump 1.0 was hitting a trillion dollar deficit before covid. The deficit actually increased every year he was in office
Biden varied wildly between 1.4trillion and 2.8trillion, mostly due to covid spending/recovery
Trump 2.0 isn't lowering it
CSMegadeth | 3 hours ago
Historical data says you are incorrect.
m77je | a day ago
Never say never.
It is going to matter at some point when the interest costs become unbearable.
braumbles | a day ago
When a Democrat is in charge, sure.
Sea-Ambition-451 | a day ago
of the mindboggling total debt of the USA, it is hilarious (in a crying way), exactly how much of it is due solely to Trump.
It's 25%.
One Quarter of the entire debt, over the last 250 years, has been wasted solely by one person, in 6 out of those 250 years.
Jeffgoldbum | a day ago
His supporters don't understand the numbers.
They will gloat on how closing a agency and firing thousands saved $100,000,000 dollars, or brag about the $10,000,000,000 cuts from helping Americans get food,
while at the same time they will ignore the $10,000,000,000,000 in Debt those same people racked up from wars, corruption, and just general incompetence or side pet projects,
These people are gullible and easy to distract,
Economy_Zombie_3026 | 23 hours ago
It's not even worth losing breath over but their ability to put a pinpoint spotlight on the most useless shit (Minnesota daycares) while waving away unnecessarily spending $100 billion+ (realistically) dicking around again in the middle east is so infuriating and illogical it makes me feel stupider even trying to address it.
Numeno230n | 22 hours ago
Projected to be 40% by the end of his term.
MoonBatsRule | a day ago
But wait - there's more. He has spent our military weapons stock on an unnecessary war that he has effectively lost. We will not only need to replenish the stock at the cost of hundreds of billions, but also pay hundreds of billions to Iran - or face the consequences of removing/reducing their oil from the world supply.
FallenChickenWing | a day ago
i can’t stand trump but also feel like that number is a bit disingenuous since we had the pandemic and all that
Sea-Ambition-451 | a day ago
True, the pandemic hit in mid 2020, and Trump had been president for 3 years prior. Most of that first term debt had already been accrued.
The main economic hit was during the next administration, where supply chain issues and inflation really kicked in. Biden did add a lot to the debt as well during that period.
Kershiser22 | 22 hours ago
Also disingenuous because it isn't inflation-adjusted. For instance, the national debt nearly doubled under the Nixon/Ford administration. Adjusted for inflation, Nixon's $345B would be $2.7T today
lost_horizons | 22 hours ago
This is the key point. I’d love to see it adjusted to a constant dollar so we can compare apples to apples
Kershiser22 | 21 hours ago
This site doesn't have exactly what you are looking for, but it has some info. Toward the bottom it lists all the presidents, so you can sort by dollars added or percent change.
Woodrow Wilson "wins" for percent change. He added 722% to the deficit. Under him we went from a $3B deficit to $24B. I assume WWI was a major contributor. Nixon takes the cake for post-WW2 presidents at 98%. Obama's first term is the leader for 21st century presidents at 55%.
wehrmann_tx | 4 hours ago
That’s how exponential growth works. At 7% a year, any number doubles in about 10 years. So those trailing 10 years always account for half of the number.
P.S. Republicans were always bad for the economy, just stating math facts.
unblockedlanternhead | a day ago
And another 25% (about $10T) came from the Obama era. Should we be crying about that too?
Sea-Ambition-451 | a day ago
of course.
But what is your point? Are you doing a "WHATTABOUTBAMA"? lol
Trump added about 2 trillion a year over his 6 years. Obama added 1.2 trillion a year over his 8 years. Obama had to deal with GW Bush's global financial meltdown.
Clintocracy | 10 hours ago
The point is that trump isn’t the root of the problem. There needs to be presssure on congress and whoever the president is to close the budget deficit, it’s been every president since clinton
unblockedlanternhead | a day ago
I don’t like Trump any more than you do, but this isn’t a Trump vs Obama issue. The US govt will always be in dept because the US govt likes being in debt. Debt is a useful political tool
Sea-Ambition-451 | a day ago
just fyi, "The U.S. federal government last ran a budget surplus in fiscal years 1998, 1999, 2000, and 2001."
unblockedlanternhead | a day ago
A temporary budget surplus doesn’t mean there was no debt
Sea-Ambition-451 | a day ago
obviously
unblockedlanternhead | a day ago
So how is your statement relevant to a discussion on debt?
Sea-Ambition-451 | 23 hours ago
a surplus reduces the level of debt.
This thread is about the "U.S. Treasury is paying $3 billion a day in interest on national debt", and I am directly pointing out how the debt has changed in the recent past, and what effect that would have on the literal title of this thread.
unblockedlanternhead | 23 hours ago
Eventually yes. The largest surplus the US has ever had was 2000’s $250B, which was twice the size of the next largest surplus. Govt spend that year was $1.8T, so that 14% surplus brought the debt down to $5.5T. The US would have needed two dozen 2000s to break even. Nowadays it would need several decades of 2000s
Would the US even want to break even? People like owning US debt, and the US likes giving it to them. Debt lets the US do fun stuff. It wouldn’t be impossible to balance the budget, but it would require an unpopular sustained bipartisan effort that has no guaranteed benefits in the long run
Federal debt is a red herring
lost_horizons | 22 hours ago
Debt is handy when needed but shouldn’t be the basis of the budget to these levels. It’s extreme and dangerous now. Way bigger than GDP which is crazy
unblockedlanternhead | 21 hours ago
It America is ever called to pay off the debt, then the world was screwed a long time ago. America’s debt:GDP is high at 1.4, but it’s barely top 10 and most developed countries sit around 1. There are bigger problems to worry about IMO
artisanrox | 20 hours ago
bonkers how !suddenly! the debt is OK for lots of people
unblockedlanternhead | 20 hours ago
It’s a sharp stick to shake during elections but nobody in the govt has really ever cared about it
MoonBatsRule | a day ago
But wait - there's more. He has spent our military weapons stock on an unnecessary war that he has effectively lost. We will not only need to replenish the stock at the cost of hundreds of billions, but also pay hundreds of billions to Iran - or face the consequences of removing/reducing their oil from the world supply.
zback636 | a day ago
Republican scream about the deficit when the Democrats are in because they don’t like the Democrats spending any money on the people. But the minute they get in they give tons of money to themselves and their rich buddies and explode the deficit. Rinse and repeat. When will the people in this country realize that the Republicans cannot govern. They’re always fiscally irresponsible.
Rude_Mirror7441 | a day ago
Maybe they shouldn’t have spent more money than they took in. Fucking morons.
Hopefully the rates shoot up higher so we can absolutely crush inflation and help save our currency.
dc_1984 | a day ago
Increasing rates at the Federal Reserve won't affect supply side inflation a single iota. Inflation isn't happening right now because people have tons to spend and demand is up, it's happening because of supply.
BF740 | a day ago
Sometimes the simplest answers like this are best!
a_library_socialist | a day ago
In which case you're either paying lots more interest - or purposefully causing a depression.
Due_Satisfaction2167 | a day ago
Sure, but it would also collapse housing prices and get a grip on inflation, and reduce government borrowing.
It would more or less force the US government into raising taxes.
a_library_socialist | a day ago
Right - but assume you do that, and get a depression.
Now you've got receipts going lower, and outlays (assuming you don't leave people to starve in the street, and don't have to pay cops to keep them there) going up.
So your deficit is still going up, no? And that means more interest paid out, more printing, etc.
Due_Satisfaction2167 | a day ago
Not if you raise taxes while you do it.
Yes, profligate borrowing for too long can have serious consequences on a national economy once you stop being able to finance it. That's why you should be very careful to avoid reaching that point.
No_Employ__ | 19 hours ago
Raise taxes during a depression? Bro.. can you think of a reason that would never happen?
Due_Satisfaction2167 | 19 hours ago
Oh yeah, but there also isn’t much of a choice eventually. That’s the downside of the path the Republicans have forced us into.
No_Employ__ | 18 hours ago
This isn’t red vs blue dude. When have democrats fought for a balanced budget? Never and it doesn’t matter. This is the natural evolution of our fiat system.
Nobody would ever be elected on raising taxes and cutting services.
We already pay a gigantic amount of interest, causing a nominal debt spiral.
The choices are:
This isn’t red vs blue. It’s calculated financial repression
Due_Satisfaction2167 | 17 hours ago
The Democrats routinely reduce the deficit. Every Democratic President for the last 40 years has left office with a lower deficit than they came in with.
This is an incredibly lop sided thing that is, absolutely, a red vs blue thing. Republicans are responsible for the vast, vast majority of this debt. They are the reason we have continual deficit issues. Every time they get into power, they run up the national deficit, and the national debt.
a_library_socialist | a day ago
I don't disagree, I just think the US might very well be past that point already.
If you raise taxes to reduce the deficit, you're going to HAVE to have a depression. It's just an accounting relationship - GDP=C+G+I+NX, and you're reducing G in this case.
The US could have in the past worked on its income inequality, so C would be greater.
Pichupwnage | a day ago
Thats a about 1.1 trillionnyear.
We could have a second military(to be clear a second military is a bad idea lol. This is just to show how enormous this money is) or buy homes for over 2 million people or cover the healthcare expenses of ~20% the population with that(under current costs. More if we brute force costs down by annhilating the profiteering and bloat)
Defiant_Wolf5934 | a day ago
Lol part of the reason the debt is so big is because we have that military and the outrageous spending that comes with it. We don't want another one of those. If anything, let's chop it in half.
BroadResult8049 | a day ago
Need the hard power EOD as de dollarization continues globally. Money talks and when it doesn’t , the ammo does.
MojaMonkey | 22 hours ago
The purpose of the US military is threats of war escalation so markets can be manipulated.
cjgozdor | 23 hours ago
https://fiscaldata.treasury.gov/americas-finance-guide/federal-spending/
It looks like the military is our fifth highest spending category behind social security, interest, Medicare, and health.
The US should make a law that each generation should have to pay back their accrued debt over their lifetime, or it will be pulled from their social security and Medicare
log1234 | a day ago
So where does the money go?
Fair-Search-2324 | a day ago
We have a second and third and fourth largest military. Oh and the largest police forces ever. Ever.
Pichupwnage | a day ago
Oh yeah I edited it to be clear that isn't a good idea I support lol.
WaffleTacoFrappucino | a day ago
Boomers were by far in large the worst generation and continue to be in American history.
They benefited from unusually cheap housing, affordable education, strong pensions, rapid economic growth, and a far smaller national debt, then spent decades voting for policies that protected their own assets and benefits while pushing the costs onto younger generations. They restricted housing supply, expanded entitlement spending without fully funding it, tolerated enormous deficits, and shifted education, healthcare, retirement, and government debt burdens forward. They inherited favorable conditions, extracted much of the benefit, and repeatedly voted to leave future generations with the bill.
Defiant_Wolf5934 | a day ago
The sad thing is the slight majority of boomers are not even in the cohort that got to take advantage of all that cheap housing and great job growth. It's wealthy boomers and boomer politicians that truly fucked everyone over. That class of boomer should definitely be blamed for the state of affairs this country finds itself in. They fucked all of us over 7 ways from Sunday.
Defiant_Wolf5934 | a day ago
The sad thing is the slight majority of boomers are not even in the cohort that got to take advantage of all that cheap housing and great job growth. It's wealthy boomers and boomer politicians that truly fucked everyone over. That class of boomer should definitely be blamed for the state of affairs this country finds itself in. They fucked all of us over 7 ways from Sunday.
atierney14 | a day ago
This is just another way of saying the figure we already knew which was around 1 trillion over the year. Unfortunately, this issue will only likely get worse as there is less and less trust in the government and t-bills continue to have higher rates. Hand in hand with limited trust in the US government is limited trust by citizens who will not tolerate tax raises for a government perceived as not working. I think the only tolerance people will have is taxing the rich, but this will only raise so much revenue. We cannot both close the deficit and start new programs without broad tax raises.
The Center for American Progress had a good piece about how 90% of the deficit in normal times has been caused by Bush/Trump tax cuts. Taking care of the deficit in theory isn’t difficult, but likely will be political hell.
What I actually wanted to comment on though are two unsung villains in the fight for responsible government:
Libertarians who have been raising alarms since Debt-GDP was like 30%. There’s a lot of dismissing about the debt because people have been raising alarms for decades before it was an issue.
Elon musk and Doge. He convinced a lot of Americans the deficit can be fixed with some tweaking along the edges, rather than the broader issue that we’ve had several rounds of tax cuts without thought based on a failed understanding of the Laffer curve. He’s just continued the smoke and mirrors for republicans were they pretend to be very focused on the debt but aren’t serious.
naijaboiler | 16 hours ago
DOGE saved nada
atierney14 | 12 hours ago
Nada is incorrect technically, their IRS cuts likely decreased revenue by quite a bit, let alone law suits. They cost the government quite a bit.
Blueslide60 | a day ago
You can't keep cutting taxes, especially when the economy is running well. We did raise taxes in 2012 on the highest earners, before that was 1993.
RiseAboveTheForest | 16 hours ago
In a 2011 CNBC interview, Buffett said:
“I could end the deficit in five minutes. You just pass a law that says that any time there’s a deficit of more than 3% of GDP, all sitting members of Congress are ineligible for re-election.”
His point was that this would put Congress’s personal incentive getting reelected directly behind controlling the deficit. He followed it by saying, essentially, now you’ve got the incentives in the right place.
falsejaguar | a day ago
Remember when Clinton balanced the budget while getting his cock sucked? Compare that to a fat grifter child molester running up almost half of all u.s. debt hahaha
CyroSwitchBlade | 11 hours ago
I wouldn't worry about this too much.. it is all just a bunch of made up numbers on a few computers somewhere.. some dudes will probably adjust those numbers soon and everything will be fine I think but I ain't do maf good.. I am a financial advisor.. this is financial advice.
KoseteBamse | a day ago
United States can borrow money indefinitely (this one of the reasons why politicians didn't want to deal with the problem) as long as debt to GDP ratio is maintained and interest rates are relatively low. So they just need to find a way to adjust the interest rates if possible.
DeArgonaut | a day ago
Not starting a war with a country that can significantly impact oil shipping and thus inflation probably would’ve been a good strategy to keep interest rates lower. And not implementing widespread tariffs
KoseteBamse | a day ago
It was an order from one Middle Eastern country. The U.S. didn’t have a choice. An order is an order.
Captain_Kibbles | a day ago
Didn’t Obama and Biden both say they received a similar “order” from said country and denied due to advice from their own military leaders?
breezy013276s | a day ago
That’s because they didn’t have the strength and courage to go ask the best and brightest Fox News anchors for the most impactful course of action. A real lapse in leadership as clearly demonstrated in the current situation.
hooligan045 | a day ago
Yeah but have you considered the fact that Donny the Pedo is a useful idiot serving foreign interests?
KoseteBamse | a day ago
They weren't Republicans. They are not pro life when it comes to Iranians.The rich and the military industrial complex really didn't like Obama or Biden.
Gamer_Grease | a day ago
Hey now, please don’t talk about the most important country in the world here.
DeArgonaut | a day ago
I order you to get off reddit
Just_Curious_Dude | a day ago
> It was an order from one Middle Eastern country. The U.S. didn’t have a choice. An order is an order.
Da fuk?
JC_Hysteria | a day ago
If we’re talking economics and not politics, then it would be a better argument to say it’s strategic to gain long-term control over oil shipping lanes…
Doesn’t mean it’s viable or necessary, but the whole argument about the “debt” being unsustainable assumes it does ultimately boil down to resource wars and military threats.
As long as there are strategic allies worldwide that want to align with the whoever controls the world’s most powerful forces, game theory suggests it will be way more challenging to collapse the incumbent economic might.
It’ll have to come down to allies retracting their partnership + applying sanctions, and/or citizens revolting.
Perhaps the ballooning debt causes one or both of those outcomes- but if that’s a likely outcome, then it’s economically prudent to acquire and secure additional resources.
DeArgonaut | a day ago
Well it made oil shipping lanes less secure and under control of a foreign government hostile to the U.S.
Not to mention, long term, eh. Short term and medium term sure, but the world is shifting away from fossil fuels
JC_Hysteria | a day ago
What does “hostile to the US” mean? It’s more media industry headlines against the guy in charge more than it is actual policy and partnership alternatives.
All bark, no bite…at the very least, it’s impossible to know in the short-term if any “trade threats” materialize (i.e. moving closer to Eastern markets vs. Western).
Even so, it would be trading away one superpower for another superpower, when the world still operates assuming zero-sum resources.
DeArgonaut | a day ago
By “hostile,” I mean a government whose strategic interests conflict with those of the U.S. and that has both the incentive and ability to impose costs on the U.S. or its allies. It doesn’t require them to declare the U.S. an enemy.
JC_Hysteria | a day ago
That’s the thing- I don’t believe there are actually NATO-adjacent allies who aren’t willfully or forcefully aligned with the US.
Globalization and digital markets made “security” a prerequisite for most supply chains that keep things cheap for the poorest people.
It’s a game of frenemies, tit-for-tat threats, etc…but until you can prove you secured a viable alternative partnership, you’re beholden to your existing partner(s) to maintain your economy, security, and quality of life for citizens who vote.
Of course, no one wants to be in a position where they don’t hold the cards- and that’s why it’s been popular to attempt diversification in trade. We just can’t know if that’s fruitful or less risky until years go by.
DeArgonaut | a day ago
Not sure what the actual alignment of nato countries has to do with the us and Iran atm tbh
JC_Hysteria | 23 hours ago
Because the EU, JP, and KR heavily rely on Hormuz straight’s security, for one? 20% of the world’s oil is slowed, which impacts everything?
Even more macro than that, they’re trade and security allies- by definition, allies are supposed to aid each other on common goals.
DeArgonaut | 23 hours ago
okay... but this thread is about US interest on its debt
FindingRelevantInfo | a day ago
Lenders decide the interest rates, not the lendees.
Special_Condition671 | a day ago
That causes inflation though.
YourFuture2000 | a day ago
The problem is that it is the working class paying it. Literally giving money away for free to politicians find creative ways to make rich people more rich.
a_library_socialist | a day ago
not only that - but thanks to the K shaped economy the consumption of the rich is actually pretty damn significant.
Which means that, unlike in the past, when the US prints money to cover the interest it pays to the rich, the rich are actually driving up overall prices, and thus inflation.
And that means that if the government tries to raise rates to slow inflation, they'll be increasing the amount of money they print to pay the interest. And thus increasing inflation.
Not a good look. Stagflation - but I think a Volcker shock would kill the nation this time, it's not healthy enough for it.
KoseteBamse | a day ago
One of the biggest problems in American politics is that too many politicians stay in power for far too long. There should be some kind of expiration date term limits that prevent people from turning political office into a lifelong career.
When politicians remain in power for decades, they can develop extremely close relationships with wealthy donors, corporations, and powerful interest groups. That creates more opportunities for corruption and gives the ultra rich far too much influence over political decisions.
The United States is supposed to be a democracy where ordinary people have a meaningful voice. But when money and long term political connections have too much influence, that democratic balance becomes weaker. In my view, reducing the influence of big money and limiting how long politicians can remain in office would address two of the biggest problems in American politics.
Petrichordates | a day ago
That's literally not one of the problems. In fact, the solutions to it are objectively worse.
This is the problem with seeking simplistic solutions to complex problems.
KoseteBamse | a day ago
Let's agree to disagree. Doing nothing is the worse option. To have old people that have no energy and struggle to understand things around in politics is wrong in my humble opinion, some of them dying while still in office.
MoonBatsRule | a day ago
Those are two separate issues. Do you think AOC should retire from politics now? She has been in office for 8 years. If not today, when do you think she should be barred from participating in politics?
KoseteBamse | a day ago
The limit can be set at 15–20 years. People who remain in politics longer than that ultimately harm democracy and democratic values. They may become less efficient, care less about making a real difference, and focus more on getting reelected, often making a lot of noise only when the next election approaches.
MoonBatsRule | 23 hours ago
So by that logic, AOC will be harmful to be in government by about 2038, when she is 49 years old?
Arilluss | a day ago
The flip side to this is that you always end up with green legislators, and then you'd probably just get lifetime aids who are doing the job for them while politicians collect money for kissing babies
For me the solution is money out of politics. End citizens united, have publicly funded campaigns
KoseteBamse | a day ago
We have grumpy walking corpses that can barely keep up with what they are doing or understand the complexity of today's problems. Surely, we can find younger, more capable people to take over.
Arilluss | 22 hours ago
"Grumpy" is up there with "lacking courage" as inaccurate descriptions go. Legislators vote how they are paid to, age has little to do with it
Gods_ShadowMTG | a day ago
.... aha and what's gonna happen to inflation then? lol
KoseteBamse | a day ago
Politicians are willing to accept moderate inflation, americans will have to deal with it.
Gods_ShadowMTG | a day ago
You don't get it. The US is currently running into stagflation. No economic growth, massive debt burden and a FED that cannot lower interest rates nor raise them.
If the FED were to lower interest rates, capital will move out of the USD which will drastically increase inflation. There is no winning here, the US needs to raise taxes and reduce spending. Printing it's way out of the debt won't work.
jonnno_ | a day ago
They already blew past 2% and now want to change the measurement methodology so that inflation is understated.
IMMoond | a day ago
as long as debt to gdp ratio is maintained
It isn’t though is it?
Long-Blood | a day ago
This is a theory that is still being tested.
We really dont know the long term consequences when the gdp is heavily skewed by 8 companies spending a trillion dollars a year on 1 specific thing while the rest of the economy lags behind.
a_library_socialist | a day ago
look man, what you don't understand is that tulips have intrinsic value
KoseteBamse | a day ago
The U.S. is in a unique position globally, with the dollar serving as the world's primary reserve currency. I feel that a lot of people and politicians aren't willing to accept a lower standard of living or make difficult sacrifices. Instead, they want to maintain the lifestyle they have today and leave future generations to deal with the consequences.
vertigo3pc | 23 hours ago
>The U.S. is in a unique position globally, with the dollar serving as the world's primary reserve currency.
And if we don't continue paying on our debts, we face sovereign default, which will devalue our currency, and the result will collapse numerous global economies and country's economies as their reserve currency folds.
We don't need a drastic change of lifestyle when it comes to the government and Treasury bills; if we implemented socialized healthcare, which isn't free but it's cheaper than the bullshit Americans have now, while also cutting back on defense spending, we could pretty easily start to "work off" our debt.
The problem is that neither Democrats nor Republicans want to address the can that's been kicked down the road and they've caught up with it. Republicans especially don't want to "work off" anything. If they had their way, America would default on those payments and immediately invade or occupy whichever nation's economy tanks and is the most attractive on a balance sheet.
And Democrats will just approve those measures while wagging their finger.
Close overseas military bases, sell off the military hardware to the host countries, and repatriate our defenses to the US. Use half of the defense budget for leaner, more sophisticated "low cost" technology that serve as defensive measures at home, and if the military industrial complex still hungers for sales, let them sell overseas like China does.
But Citizen's United has seen to it that that America is paralyzed and cannot do anything because our leadership is completely corrupt, top to bottom, "left" and "right".
Unlimited money in elections means unlimited corruption. The US began it's collapse in 2010 with Citizens United, and the fall has just begun.
https://indi.ca/i-lived-through-collapse-america-is-already-there/
>As someone who’s already experienced societal breakdown, here’s the truth: America has already collapsed. What you’re feeling is exactly how it feels. It’s Saturday and you’re thinking about food while the world is on fire. This is normal. This is life during collapse.
>Collapse does not mean you’re personally dying right now. It means y’all are dying right now. Death is sometimes close, sometimes far away, but always there. I used to judge those herds of gazelle when the lion eats one of them alive and everyone keeps going — but no, humans are just the same. That’s the real meaning of herd immunity. We’re fundamentally immune to giving a shit.
HulksInvinciblePants | a day ago
I mean, you’re essentially just labeling current activity as a theory while simultaneously implying the stock market reflects the makeup of GDP.
Even if you take away AI…it’s not like companies wouldn’t have found other ways to spend money and seek growth opportunities.
Long-Blood | a day ago
I say its a theory because of the increasing divergence of wealth in this country.
The middle and lower class do not drive the economy anymore through consumption and only 1 in 5 new dollars is created through working capital.
An increasingly larger share of spending is being done by the top 3rd of the wealth owners and more wealth is being created through financing and monetary tools instead of building.
There has to be a tipping point eventually.
Defiant_Wolf5934 | a day ago
Bubble. It's a bubble. Trust me, AI spend is definitely going to come to a halt because they can't turn a profit. It's all CAPEX investment. They simply aren't making money off consumer subscriptions and businesses can't sustain the amount of token spend that they are incurring. And the cost per token is only going to keep creeping up as these models become more advanced and require more compute. Trust me, the bubble will pop. A few companies will come out the other side of this with some novel ideas that turn a profit, but most startups and big businesses are gonna be left bag holding for sure.
Long-Blood | a day ago
Google just cut me off from gmail for running out of storage. Have to pay monthly now. Im sure the price will go up every year.
Im always really good about clearing up space. I feel like theyre lying about how much data i use.
Defiant_Wolf5934 | a day ago
> Google just cut me off from gmail for running out of storage. Have to pay monthly now. Im sure the price will go up every year. Im always really good about clearing up space. I feel like theyre lying about how much data i use.
Uhm, are you responding to the right comment? How does that relate to what I said in the slightest?
Long-Blood | 23 hours ago
Lol.
Im just saying thats one of the ways they can monetize the data center capex spending spree.
Putting limits on things as basic as email and forcing you to pay a subscription fee for something we used to get for free
Defiant_Wolf5934 | 22 hours ago
Ahhh, gotcha. Yeah, the continued enshittification of shit we used to get for free (youtube videos without ads, Netflix without ads, Reddit without ads and free api usage, etc.).
Defiant_Wolf5934 | a day ago
Bubble. It's a bubble. Trust me, AI spend is definitely going to come to a halt because they can't turn a profit. It's all CAPEX investment. They simply aren't making money off consumer subscriptions and businesses can't sustain the amount of token spend that they are incurring. And the cost per token is only going to keep creeping up as these models become more advanced and require more compute. Trust me, the bubble will pop. A few companies will come out the other side of this with some novel ideas that turn a profit, but most startups and big businesses are gonna be left bag holding for sure.
dc_1984 | a day ago
Ah so that's why Trump was trying to get rid of the Fed chair over "misappropriated funds"
Low_Ability4450 | 5 hours ago
$3B a day in interest is the symptom. Bigger issue is the feedback loop : higher debt leads to higher interest costs then larger deficits then more borrowing. Japan / Treasury link makes this even more important
listentomenow | 23 hours ago
It's 'not possible' for the U.S. to pay for Medicaid, Medicare and day care: 'We’re fighting wars' - Donald 'FIFA peace prize winner' Trump
Fun Fact: Israel has universal healthcare, but the US doesn't. ¯\(ツ)/¯
[OP] chota-kaka | 22 hours ago
In addition to the $39.83 trillion of national debt, the government has Unfunded Liabilities of $86.60 tr
Zef-Daytrade | 20 hours ago
Fun fact US gives Israel a lot of money for its wars.
Fickle_Ad_8653 | 19 hours ago
US also gives Israel the bombs it drops on kids. US law says that's illegal, but Trump doesn't care.
Jonny-mtown77 | a day ago
I thought I could hear the humming of the Federal Reserve printers...
Question is which coffers are those dollars rolling into? Citibank? Bank if America? Bank of Japan?
phunky_1 | a day ago
Lots of regular people are now using short term Treasury bills as a savings account alternative also.
A HYSA pays around 3% if you don't want to go rate hopping.
SGOV pays around 3.6 - 3.8% and the interest income is state tax free.
Chances that the government defaults on short term bonds is practically zero.
They would just print more money since that would mean the entire banking system would collapse and FDIC would be useless.
Jonny-mtown77 | a day ago
I hate T bills and savings bonds. However I did invest in them via income etfs...I refuse to have a savings account due to withdrawl fees. I hold cash at home and some precious metals. I am waiting for the default. Especially in the case of a budget impasse and shutdown
phunky_1 | a day ago
Yeah I would think most people are using the SGOV ETF or other government money market funds rather than dealing directly with the Treasury these days.
All of these banks that offer High yield savings accounts are probably actually also holding peoples cash in short term Treasury bills with some cash reserves.
If the government actually ever defaulted on it, the banking system in general would be fucked.
FDIC also relies on the government bailing everything out when things go south. I highly doubt the dues for banks to join FDIC actually fully covers the liabilities they have in customer deposits.
Tribe303 | 22 hours ago
Found the Libertarian who doesn't know what treasury bond is. 🤦
Jonny-mtown77 | 20 hours ago
If you mean me....I'm a moderate to liberal democrat and work in a public library. I just dislike loans to the government.
Tribe303 | 20 hours ago
I dislike wasted spending. If the government can borrow at 3% to build a large capital project that adds a 5% to the GDP, then I have no problem with that. If they are borrowing to give rich fucks yet another tax cut, then everyone involved can fuck right off.
Sorry for assuming you are a Libertarian. The money printer doesn't exist. The government sells bonds to raise money for deficit spending, and not the Libertarian money printer bullshit.
VaughanThrilliams | 17 hours ago
the Federal Reserve creates US dollars digitally to buy Government bonds (Quantitative Easing), how is a money printer not an accurate metaphor of that situation?
getmeoutoftax | a day ago
You know what would help? Let’s make boat loan interest tax deductible!
Can’t believe that anyone even conceived of such a proposal when national debt is this dire.
AdventurousLet548 | 23 hours ago
Not only that, but they increased the debt ceiling in the BBB, and they do a lot of short term borrowing at high interest rates thus kicking the can down the road.
oep4 | 23 hours ago
That’s how bonds work, yes. Interestingly, 76% of the debt is owned by Americans, so most of the interest is going back to American bondholders (mix of gov and public).
sierrackh | 23 hours ago
Better cover the white house in gold leaf. Ooo maybe start another war. Also cut taxes. Also up the defense budget to a few trillion.
That’ll fix er’
listentomenow | 23 hours ago
Trump says it's 'not possible' for the U.S. to pay for Medicaid, Medicare and day care: 'We’re fighting wars'
listentomenow | 23 hours ago
Trump says it's 'not possible' for the U.S. to pay for Medicaid, Medicare and day care: 'We’re fighting wars'
[OP] chota-kaka | 22 hours ago
In addition to the $39.83 trillion of national debt, the government has Unfunded Liabilities of $86.60 tr
punarob | 23 hours ago
Walter Mondale was correct. His historic landslide loss was one of the greatest travesties of the last 60 years. And the media still pushes the BS that Republicans are fiscally responsible.
M3mo_Rizes | 21 hours ago
If we say there are about 150M tax payers, that comes out to around $20 per day per taxpayer, or around $7000 per year per taxpayer. That's actually crazy.
Obviously, it's not uniformly burdened on those 150M, but if it were, that would mean minimum wage workers would have to work about 4h every weekday just to pay for the interest of the federal debt. That's nearly half the workday.
Even for full-time, median wage workers, using a 40h workweek, it's nearly one hour every weekday, just for the interest. Wow.
Level_Impression_554 | 21 hours ago
Just imagine how much that money would help if spent on other things. All the R's and D's could spend it how they wish if we did not have shitting financial leaders over the last 20 years. Plus, we are broke and in debt now with expensive health care, failing roads and airports, and lack of great public transportation. The Gov. is failing us.
SatchSaysPlay | 8 hours ago
So much winning from the USA, I find it mind boggling how they're not the No1 country in the world instead of not even breaking the top 10 /s
Dic3dCarrots | 3 hours ago
Republican voters punished the last republican to properly finance his military intervention, so now we running wild on credit. Very frustrating that they spent 20 years calling those of us who didn't support the kind of improperly financed forign adventurism the founders warned us about "unamerican"
untangledtech | a day ago
We should pass a law making them hand write the debt payment checks. Write zero's till your hand hurts then maybe you'll do something about it.
ChatGRT | a day ago
You all do realize that Trump isn’t solely responsible for the entire nation’s deficit for all time. We were making interest payments back with Biden and even before.
Pale-Effective5926 | a day ago
🤡
Massive_Noise4836 | a day ago
And the say debt with be 50 trillion by the time he leaves office which will setup the next republican talking point of "we can afford the programs anymore"
Tall_Hat_4246 | a day ago
Republicans ignore the deficit when they are in charge, but as soon as it’s a Democrat, they wi cry and complain. All part of the brainwashing machine that ignores the fact that Republicans, especially Trump, are responsible for the majority of the debt.
JohnBrownSurvivor | 23 hours ago
To who? That's what I want to know. Who are we funneling $2 billion a day to, as a result of T💩's gifting. Who owns all that debt? China? Russia? Deutsche Bank?
[OP] chota-kaka | 22 hours ago
Whichever bond matures
Richandler | 19 hours ago
Which is pretty crazy seeing as the US does not have to issue treasuries when it spends, but chooses to do so. So that is literally voluntary $3 billion to people who already have billions. Who instead of spending, are sitting on capital, demanding it to be protected.
gizram84 | 19 hours ago
Remember stats like this when people complain about Elon Musk's wealth.
They piss away his entire net worth many, many times over every single year.
They could confiscate 100% of his entire fortune, and it wouldn't even make a small dent in their budget.
UncleRicohSuave | a day ago
If they don’t want to pay so much, lower rates? Seems like a simple fix. And anyone that claims inflation will skyrocket has to demonstrate how? 2008-2020 rates were the lowest they’ve been in generations and inflation was nowhere to be found.
Edit: “if I can’t explain my position I’ll downvote” should be the motto for this sub.
Edit 2: so what do you want? Keep rates high? Less spending? What’s the macro consequences. Try explaining than downvoting. Ask Google, they’ll help you!
DeArgonaut | a day ago
If you mean lower the rates of the treasuries then people simply won’t buy them
UncleRicohSuave | a day ago
Investors bought enormous quantities of Treasuries at much lower yields from 2008–2020, so “no one would buy them” is clearly too strong.
The real question is how far yields could be pushed below the market-clearing rate before private demand fell, requiring greater Fed purchases or causing inflation, currency, or financial-stability problems.
What evidence shows we are near that limit?
Primary dealers are expected to bid competitively at every auction, so “nobody would buy” is literally wrong.
Weak demand can raise the market-clearing yield, but foreign governments aren’t indispensable: domestic investors can hold the debt, and the Fed can create reserves to buy Treasuries in the secondary market. That doesn’t mean rates can be fixed anywhere without consequences.
The genuine limit is inflation, currency and financial stability, not the government somehow running out of its own dollars. Under current law Treasury still must obtain balances through taxes or borrowing, but that is an institutional constraint Congress created, not a technological need for foreign financing.
DeArgonaut | a day ago
Pointing to 2008-2020 isn’t really relevant rn. The environment around bonds is very different. The fed funds rate is higher, other countries also have bonds much higher than their 2008-2020 periods as well, etc.
Treasury yields are determined by the secondary market. They look at what people are paying for already issued treasuries and adjust their rates accordingly. You under the impression they don’t already try to keep the rate as low as they can?
UncleRicohSuave | a day ago
You’re describing the current policy arrangement, not a constraint. Tsy yields follow the secondary market because the government currently allows them to, but the Fed sets the overnight rate and can cap longer-term yields by offering to buy unlimited Treasuries at a chosen price, as it did from 1942–1951.
If the Fed offered to buy every 10-year Treasury yielding above 2%, what transaction could force that yield above 2%?
The real argument is whether such a policy would cause inflation or other harmful effects, not whether markets can prevent the issuer of the dollar from setting the interest rate on its own liabilities.
DeArgonaut | a day ago
I mean sure, but I thought this was about the treasury, that’s the government not the fed
Yeah ofc it’d cause inflation, and definitely devalue the currency relative to others
UncleRicohSuave | a day ago
The Fed is part of the federal government, although operationally independent from Treasury, so you’re right that Treasury cannot impose that cap by itself under current law.
My point is that the rate is a policy choice of the consolidated government, not a market funding constraint. And “of course” it would cause inflation and currency depreciation is an assertion, not a mechanism.
Fed purchases exchange one government liability, a Treasury security, for another, a reserve balance; they do not automatically increase private-sector net financial wealth.
Lower rates can stimulate some borrowing, but they also reduce government interest payments to the private sector, so the inflationary effect is theoretically ambiguous and depends on spending, taxation, credit demand and real productive capacity.
The dollar’s exchange rate likewise depends on relative policy, growth, trade and expectations, not mechanically on Treasury yields.
We’ve now established that yields can be capped; if you claim a 2% cap must cause inflation or depreciation, demonstrate the causal mechanism and evidence rather than assuming the conclusion.
FindingRelevantInfo | a day ago
Rates aren't set, debt is issued at an auction.
The current rates are effectively the best price anyone was willing to pay for US debt.
UncleRicohSuave | a day ago
That describes the auction procedure, not who ultimately controls the interest-rate environment. Auction yields reflect the Fed’s policy rate, expected future policy, and its willingness to purchase Treasuries.
If the Fed credibly offered to buy every 10-year Treasury at a price corresponding to a 2% yield, nobody would voluntarily accept less and the auction would clear near 2%.
The United States did exactly this by capping Treasury yields from 1942–1951. Markets determine yields only within the policy framework the government chooses.
FindingRelevantInfo | a day ago
Yeah, no mate. The fed could establish a floor by always offering more but they can not establish a cap.
If US bonds are not a good yield to risk rating people will just put their money elsewhere. This illusion that the American government is all powerful needs to end.
UncleRicohSuave | a day ago
You have the direction backward.
A floor under a bond’s price is mathematically a cap on its yield because price and yield move inversely.
Step by step: the Fed announces it will buy any 10-year Treasury at a price corresponding to a 2% yield; if an auction cleared above 2%, dealers could buy there and immediately sell to the Fed at the higher guaranteed price; that arbitrage pushes the auction yield back toward 2%; if private investors prefer other assets, they can sell and go elsewhere, but the Fed purchases the residual by crediting reserve accounts and cannot run out of dollars; those reserves then earn whatever rate the Fed chooses to pay.
This is not a claim that America is “all powerful.” It is the narrow fact that a currency issuer can set the nominal yield on liabilities denominated in its own currency.
The possible constraints are inflation, exchange-rate depreciation and the political choice to abandon the cap, not an inability to find dollars or compel private investors to hold the bonds.
The Fed and Treasury demonstrated this from 1942–1951 by pegging short-term Treasury rates and capping long-term yields at 2.5%. So yes, investors can put their money elsewhere; no, that does not prevent the Fed from capping Treasury yields.
It only determines how many securities the Fed must purchase to maintain the cap.
FindingRelevantInfo | 16 hours ago
I read that framing as something else. But the mechanism you're taking about can't really be used without serious consequences. Run inflation too high and devalue the currency too much and the US runs a very high risk of accelerating global dedolarization. Losing the cheap global investment into the American economy would be rough to say the least.
UncleRicohSuave | 16 hours ago
That’s a different argument, though.
You’ve moved from “the government can’t control the interest rate because investors can refuse to buy the bonds” to “the government can control the interest rate, but doing so might have undesirable inflation or exchange-rate consequences.”
The first claim is about operational capacity.
The second is about policy consequences. They shouldn’t be conflated.
There is no operational requirement that foreign investors fund U.S. dollar spending. The U.S. government spends by crediting dollar accounts. Treasury securities are then interest-bearing dollar assets. If foreigners decide they want fewer Treasuries, they have to exchange them for something else denominated in dollars, buy U.S. goods or assets, or sell the dollars to somebody else. The dollars themselves don’t disappear.
Could a policy mix generate excessive inflation or currency depreciation? Of course. That is the actual constraint. But the relevant question is whether aggregate nominal spending is outrunning the economy’s productive capacity, not whether bond investors are willing to “finance” the government.
And dedollarization doesn’t change that operational point either. Reduced foreign demand for dollar assets could affect exchange rates, import prices, and therefore inflation.
Those are potentially important economic consequences. But they still don’t create a shortage of dollars for the U.S. government or prevent the Fed from setting the dollar interest rate.
So I’m not arguing that yield caps are costless or that they should always be used. I’m saying the constraint is the economic consequences of the policy, not the government’s ability to execute it.
That distinction matters.
FindingRelevantInfo | 9 hours ago
Mate, my point is that even if a bunch of things could be done, in theory, to tackle the problem, the consequences would be too severe to even consider it as an option. Printing their way out of debt is simply no viable. If we're talking theoretically, they can just default on their debt and be done with the issue, clean slate, no money spent. What a government theoretically can do and what it can actually do are two different things.
atierney14 | a day ago
The evidence from 2008-2020 is pretty poor imo. The US treasury was considered a safe asset during the GFC, which while mostly over in the US in 2013-2014 was still ongoing up to the COVID crisis for a lot of the world.
Yields were pretty low for all safe assets anyways, so the treasury yields were only relatively low compared to current yields. At the time, for the security that they offered, the US treasury bonds were considered fine yields.
UncleRicohSuave | a day ago
That explains why private demand for Treasuries was strong, but it does not answer either point.
F2008–2020 remains evidence that low rates alone do not necessarily cause high inflation, regardless of why rates were low.
Treasury yields were not merely discovered by an unconstrained market: the Fed set short-term rates near zero and purchased trillions in securities, deliberately lowering yields.
Calling the entire period through 2019 an ongoing global financial crisis also stretches the explanation beyond credibility.
Are you conceding that the government can lower Treasury rates, but arguing that today it might produce different economic consequences?
That is a defensible argument, but it abandons your original claim that rates cannot be set because debt is sold at auction.
RedikhetDev | a day ago
Inflation was low due to imports from cheap labor countries. Now this cheap labor has become less cheap. Not to mention the self applied tarifs.
UncleRicohSuave | a day ago
Cheap imports contributed to low inflation, but they cannot explain it entirely. If low interest rates inherently caused inflation to skyrocket, inflation should still have risen substantially from 2008–2020 despite cheaper imports.
Tariffs and rising import costs can raise particular prices and temporarily increase the price level, but that does not demonstrate that lowering Treasury rates would create sustained economy-wide inflation.
You still need to identify the mechanism connecting lower interest payments on government debt to continuously accelerating prices.
Tribe303 | 22 hours ago
No, your idiot president started a trade war with the entire planet by making Americans pay more taxes on Imported goods. 🤦
Just_Curious_Dude | a day ago
> If they don’t want to pay so much, lower rates? Seems like a simple fix.
The comedy is over here: reddit.com/r/comedy
UncleRicohSuave | a day ago
That isn’t an argument. The Fed sets the overnight rate and can cap Treasury yields through asset purchases, as it did from 1942–1951.
You can argue that lowering rates would have undesirable consequences, but then specify the mechanism and weigh those consequences against maintaining high rates, which directly increases federal interest payments and private interest income.
Mockery does not answer the policy question: what prevents rates from being lowered, and what is your preferred alternative and its macroeconomic consequences?
Just_Curious_Dude | a day ago
Reduce military spending.
Medicare for all - the reason we pay so much in Medicaid and Medicare is because we don't run it like insurance runs it where you have pools of people who do not use insurance. Almost everyone on Medicaid or Medicare uses it. Unlike say car insurance.
Now, you can throw a bunch of shit here and bla bla bla, but if you think lowering rates is easy then why don't they do it? Why do you think it's so easy but nobody else does?
The Fed has a dual mandate, inflation and jobs. Sure they can get rid of one of those mandates, but they haven't and we don't know what that would mean to the economy.
But to suggest that it's a simple fix seems to be at odds with everyone else on the planet.
UncleRicohSuave | a day ago
Reducing military spending is a legitimate choice, but it also removes income and employment from the economy unless that spending is replaced elsewhere.
Medicare is expensive largely because it covers older and disabled people with high medical needs, while Medicaid covers many low-income people whose care is costly for different reasons.
Expanding the insurance pool can spread risk, but the major potential savings from universal coverage come from lower provider and drug prices and reduced administrative costs.
Lowering rates is operationally easy, not necessarily consequence-free: the Fed votes to lower its policy rate and can cap longer-term Treasury yields by purchasing securities at a fixed price.
Its dual mandate guides that decision; it does not prevent it. Policymakers keep rates high because they believe doing so restrains borrowing, demand and inflation, not because markets make lower rates impossible. But higher rates also cause the government to pay more interest into the private sector, so their inflation effect is not automatically one-directional.
“Why haven’t they done it?” establishes only their current policy preference, not that they lack the capacity. The relevant question is which policy produces better economic outcomes, including the consequences of high interest payments, spending cuts, unemployment and inflation.
Just_Curious_Dude | a day ago
> Reducing military spending is a legitimate choice, but it also removes income and employment from the economy unless that spending is replaced elsewhere.
Or you know, how about just keeping it the same for a decade or so instead of increasing it 50% YoY like this administration is doing?
> Medicare is expensive largely because it covers older and disabled people with high medical needs, while Medicaid covers many low-income people whose care is costly for different reasons.
That's exactly what I said, there's a limited pool of people who don't use it. Why do you think we spend more money on Medicaid/Medicare than any other item in our budget? Because the risk pool is just people who need to use the service.
> Lowering rates is operationally easy
And? How is that an argument for making monetary policy?
> “Why haven’t they done it?” establishes only their current policy preference, not that they lack the capacity.
This is an incredibly simplistic way to look at things. Of course they have the capacity to do it, no shit. How does that even matter?
What they're trying to do is not crash the US economy and thus the world economy like we did in '08. You want to make it sound like it's so simple. "They have the capacity, it's operationally easy" - those are not arguments for lowering interest rates.
UncleRicohSuave | a day ago
> Or you know, how about just keeping it the same for a decade or so instead of increasing it 50% YoY like this administration is doing?
Keeping military spending nominally unchanged for a decade would still be a real cut after inflation. That may be a legitimate policy choice, but it doesn't answer the point: cutting federal spending removes income and employment from the private sector unless it is offset by lower taxes or other spending.
And military spending isn't increasing 50% year over year. If you mean a specific proposal or category, cite the figures and baseline. A sustained 50% annual increase would make military spending more than seven times larger within five years.
> That's exactly what I said, there's a limited pool of people who don't use it. Why do you think we spend more money on Medicaid/Medicare than any other item in our budget? Because the risk pool is just people who need to use the service.
No, that isn't how either program works.
Medicare covers nearly everyone above the eligibility age, including people who use little care in a given year. Medicaid covers tens of millions of people, including many children and working-age adults who aren't continuously receiving expensive treatment. These are enormous populations, not tiny pools consisting only of sick people.
More importantly, you're applying the financing logic of private insurance to federal programs. Private insurers need premiums from healthy members to cover claims from sick members. The federal government doesn't need premiums from a sufficient number of healthy people before it can pay Medicare and Medicaid claims.
The actual constraint is the availability of doctors, nurses, hospitals, medicine, equipment, and other medical resources. Adding healthy people can reduce average spending per enrollee, but it doesn't reduce the cost of treating existing patients or create additional medical resources.
Medicare and Medicaid cost so much because they cover large populations, including many elderly, disabled, and medically vulnerable people, and because American healthcare prices and administrative costs are exceptionally high. "The risk pool only contains users" is neither an accurate description nor an adequate explanation.
> Lowering rates is operationally easy
> And? How is that an argument for making monetary policy?
It answers your argument that lowering rates couldn't be a simple option because policymakers haven't done it. You're conflating operational capacity with policy desirability.
Whether the government can set a lower rate and whether it should set a lower rate are separate questions. The answer to the first is yes. The second requires comparing the actual effects of higher and lower rates.
> "Why haven't they done it?" establishes only their current policy preference, not that they lack the capacity.
> This is an incredibly simplistic way to look at things. Of course they have the capacity to do it, no shit. How does that even matter?
It matters because "if it's so easy, why don't they do it?" was your argument.
You're now conceding that it is operationally easy while saying operational ease doesn't prove it is desirable. Fine, but that abandons your original argument. Policymakers declining to use an available policy tells us what they currently believe or prefer. It doesn't prove their decision is economically necessary or correct.
> What they're trying to do is not crash the US economy and thus the world economy like we did in '08.
The 2008 crash wasn't caused by the Fed lowering interest rates. It resulted from an overleveraged private financial system, deteriorating mortgage credit, collapsing asset values, and cascading defaults. The Fed cut rates toward zero in response to that collapse and kept them extremely low throughout the recovery.
You therefore can't invoke 2008 as evidence that lowering rates would crash the economy. The historical sequence points in the opposite direction.
> You want to make it sound like it's so simple. "They have the capacity, it's operationally easy" - those are not arguments for lowering interest rates.
Correct. They're rebuttals to the claim that lowering rates is prevented by markets or rendered impossible by the fact that policymakers haven't chosen it.
The affirmative argument is that higher rates aren't a cost-free anti-inflation device. They increase federal interest payments to holders of government securities, transfer more income to asset owners, raise borrowing costs, depress interest-sensitive spending, and increase financing costs for housing and businesses. Their disinflationary effect depends largely on weakening demand, investment, and employment enough to reduce price pressure.
If you support that tradeoff, identify the causal mechanism and explain why its benefits exceed its costs. "The Fed has a mandate," "they're trying not to crash the economy," and "everyone else agrees" describe institutional beliefs. They don't demonstrate that those beliefs are correct.
Just_Curious_Dude | a day ago
> And military spending isn't increasing 50% year over year.
Sure is!
> No, that isn't how either program works.
That's exactly how that works, because kids or people who are on it have to meet income guidelines.
> Adding healthy people can reduce average spending per enrollee, but it doesn't reduce the cost of treating existing patients or create additional medical resources.
100% agreed, but you missed the point!
> You're now conceding that it is operationally easy while saying operational ease doesn't prove it is desirable.
No, i'm saying that it doesn't matter. Being easy to do operationally means what?
> The 2008 crash wasn't caused by the Fed lowering interest rates.
Correct, I never said that. I said crash the economy like '08. If the US economy falters, the world falters.
> They're rebuttals to the claim that lowering rates is prevented by markets or rendered impossible by the fact that policymakers haven't chosen it.
No, they're not rebuttals, i'm trying to explain to you how doing something that is easy operationally doesn't mean anything for the reason to do it.
UncleRicohSuave | a day ago
> And military spending isn't increasing 50% year over year.
Fair correction. A 50% year-over-year claim is too high unless referring to a specific proposal or budget component. My substantive point only requires that military spending can be frozen or cut, but doing so reduces somebody’s income and employment unless the resources are redirected.
> That's exactly how that works, because kids or people who are on it have to meet income guidelines.
Income eligibility is not the same as medical utilization. Medicaid includes millions of relatively healthy children and adults, while most spending is concentrated among older and disabled beneficiaries. Medicare is expensive because it deliberately covers elderly and disabled populations. Adding healthy people lowers average spending per enrollee, but it does not reduce the cost or resources required to treat existing patients. Universal coverage may still save money through lower prices and administrative costs, but a healthier risk pool is not the main source of those savings.
> 100% agreed, but you missed the point!
Then state the point, because agreeing that adding healthy people does not reduce existing treatment costs contradicts your explanation that the pool itself is why total program spending is so high.
> Being easy to do operationally means what?
It means your original objection that auctions or unwilling buyers prevent lower Treasury rates was incorrect. Operational feasibility does not establish desirability, but it separates “cannot be done” from “can be done but may have costs.” We are now debating those costs, which is where the discussion should have started.
> I said crash the economy like '08.
Then explain the causal chain. Lower rates were the response to the 2008 collapse, not its cause, and conventional monetary theory treats lower rates as supportive of demand. You have alternatively claimed lower rates would cause inflation, devalue the dollar and crash the economy. Those are not automatically compatible outcomes. Specify how lower rates cause a 2008-style financial collapse rather than merely listing adverse possibilities.
> Doing something that is easy operationally doesn't mean anything for the reason to do it.
The stated reason was reducing federal interest expense. Operational ease establishes that this option exists. Whether its effects are preferable to high rates or spending cuts is the next question. High rates increase federal interest payments and transfer more income to asset holders, while spending cuts remove income and demand directly. Every alternative has consequences, so identify and compare them.
Tribe303 | 21 hours ago
Lower rates cause inflation. You raise rates to fight inflation. That's why Inflation is a big fucking deal.
Lowering rates is only part of the cost of borrowing. Bond rates start at the rate set by the Feds, but if there are no buyers for those bonds at that rate, they need to increase the rate, aka payouts, to attract buyers. The final price is set by the markets.
UncleRicohSuave | 21 hours ago
“Lower rates cause inflation” is not a complete causal explanation. Lower rates may increase borrowing and demand, but their effect depends on credit demand, fiscal policy, productive capacity and supply conditions.
They also reduce the government’s interest payments to bondholders. Likewise, raising rates may weaken borrowing, but it simultaneously increases federal interest income paid into the private sector. The net inflation effect is therefore not automatic.
Your bond-market claim describes the current policy arrangement, not a constraint. Auctions currently clear near market yields, but the Fed can enforce a yield ceiling by standing ready to buy bonds at a specified price. Bond prices and yields move inversely, so placing a floor under the price places a ceiling on the yield. If the Fed offered to buy every 10-year Treasury at the price corresponding to a 2% yield, investors could put their money elsewhere, but they could not force the yield above 2%. The Fed would purchase whatever quantity private investors declined to hold by crediting reserve accounts.
The United States actually capped long-term Treasury yields at 2.5% from 1942–1951. Therefore, the market sets the final yield only when the government chooses not to enforce a different one. The legitimate argument is whether imposing a lower rate would produce undesirable economic effects, not whether a lack of private buyers makes it operationally impossible.