US National debt

[Mr. Shavington]

The national debt increased by more than 89% since the beginning of the pandemic, but we had more important priorities - like saving a few lives. Sometimes we bet on a big tax break for the wealthy, and sometimes we lose the bet. While I'm personally anti-debt it's never our biggest problem. We'll just print more money!!!!

Is it really not a problem, or do people just not pay much attention to it? If I do a quick search, the US Federal Government took $5.0Tn in total tax revenue for the last fiscal year, and net interest paid on the national debt was $659Bn, with an average interest rate of 3.05%. Interest rates may be higher than usual but who knows what they will be in future. If those numbers are correct it seems that currently 13% of US taxes are spent only to service the national debt. I guess that’s more than any government departments cost.

Edit: note post edited to correct numbers.

 

[Columbo]

US government tax receipts have been far less than expenditures for many years now. They are literally just printing the difference, like Monopoly money. And then the central bank asks for interest on it (another sensitive topic).

The global petrodollar has been the only thing holding the entire thing together. The rest of the world still uses, and wants, the dollar for that primary purpose. That’s what’s propping up its value. That, and the continuing wars we wage to maintain that status. It’s been the driving force of US foreign policy for decades, and allows the US, and many of its citizens, to live above their means. Not just the government, but also every American who uses dollars.

But that status is rapidly eroding. The world’s petroleum producers are moving away from the dollar, increasingly into BRICS. A bunch more just jumped over to it this past month.

When it finally breaks, and all those trillions and trillions of dollars come back home, the most important precious metal to have won’t be gold or silver. The government concealed 15% inflation we are seeing now will seem like a paradise.

That’s all I’ll say on this very politically sensitive topic.

 

[Columbo]

I struggle to comprehend who the counterparties are for all this debt. All governments are in debt, virtually all businesses, most people. Doesn’t it have to balance somehow so that for every trillion an entity owes, there is somebody, somewhere who has a trillion in surplus assets? Investment funds, pension schemes, savings? They can’t amount to this much, can they? I suspect it doesn’t balance at all, by a huge margin.

I know that interest is being paid on all the debt, but it always seems like almost everybody has net debts and I don’t understand how that can be. I suppose it has to do with the fact that almost all of the ‘money supply’ today is merely accounting entries - book loans, derivatives, etc. and almost none of it is actual currency.

And what happens in the future? Does everybody continue borrowing this non-existent ‘money’ until they exceed their capacity to pay the interest and taxes cannot be raised any further to pay interest (since people will starve to death and then they can’t pay tax)? I assume with a seemingly infinite ability to expand the ‘money supply’ there will always be lenders willing to grant loans to governments, predicated on the governments’ ability to increase taxation to pay the interest - it is not for the lenders to judge whether lending more to a government is detrimental to the financial welfare of its citizens.

Where does it all end? When the entire global economy is employed only in servicing debt? Does the last person to go bankrupt inherit the Earth? Is that the game?

Do you really want to go down that rabbit hole, here at B&B?

Bankers … and the banker class? They’ve been hiding in the shadows for centuries. I’m not talking about your neighborhood banker. Or even the big commercial banks.

They are not “lending” anything. Deep dive on the history of central banks, and it gets ugly, fast.

 

[Mr. Shavington]

US government tax receipts have been far less than expenditures for many years now. They are literally just printing the difference, like Monopoly money. And then the central bank asks for interest on it (another sensitive topic).

The global petrodollar has been the only thing holding the entire thing together. The rest of the world still uses, and wants, the dollar for that primary purpose. That’s what’s propping up its value. That, and the continuing wars we wage to maintain that status. It’s been the driving force of US foreign policy for decades, and allows the US, and many of its citizens, to live above their means. Not just the government, but also every American who uses dollars.

But that status is rapidly eroding. The world’s petroleum producers are moving away from the dollar, increasingly into BRICS. A bunch more just jumped over to it this past month.

When it finally breaks, and all those trillions and trillions of dollars come back home, the most important precious metal to have won’t be gold or silver. The government concealed 15% inflation we are seeing now will seem like a paradise.

That’s all I’ll say on this very politically sensitive topic.

It was perhaps a healthy thing when the British currency collapsed a year ago after the government announced plans to borrow tens of billions to pay for politically-motivated tax reductions. It indicated that the markets do pay attention to fiscal mismanagement and that there is a limit to how much governments will be allowed to keep borrowing without taking steps to either increase taxes or reduce expenditure.

 

[AshleyC]

Someone once said that "Something that cannot go on forever, will not go on forever."

And I believe they said that in the context of economics.

When this "thing" we've got going on ceases to function, as it must, our identities as to which side of the aisle we sit on won't matter. We'll all be standing in the same line waiting for our bowl of soup.

 

[Ron R]

We seem to follow the USA per capita for debt in Canada, the rest of the western world follows this debt formula also because of the wants of their citizens & huge Military deterrence expenditures of NATO allies.(WII gave the USA dollar the world currency status as a standard to exchange products globally because they where the big part of winning WII and USA had so many high global industrial standards back then!) USA does not want to lose that dollar status or it will get very different difficult to live a higher standard of living IMO.
The only people you need to blame are special interests lobbyists in the USA IMO for higher debt and greed, they are only interested in not paying taxes or banning competitor products in a global economy, meaning you pay more for certain products + increase in taxes to the wrong citizens group, keeping them poorer IMO.
The central banks like to see 2-3 % inflation but that is accumulative over many years costing me to pay more and it increases taxes when you buy something down the road. People just have to pay their fair share of taxes to help reduce debt but that is not going to happen in my life time! (Readers digest version of what I see what mostly has taken place after WII.)

 

[SharpieB]

“Congratulations! You did it! Very impressive!”

- Smart azz Canadian.

 

[Chef455]

If you believe that someone has "crossed the Rubicon", report the post and we'll be happy to review.

Nope, nothing to report. Appreciate the opinions on a subject that's very concerning. Gentlemen prevail, which is awesome. The mods do an amazing job and I thank them for it. That does feel a bit baited though Phil. YMMV.

 

[luvmysuper]

Nope, nothing to report. Appreciate the opinions on a subject that's very concerning. Gentlemen prevail, which is awesome. The mods do an amazing job and I thank them for it. That does feel a bit baited though Phil. YMMV.

Baited? Sorry, I don't get it.
Crossing the Rubicon is reference to a step that is over the line and beyond the realm of being ignored.
From Julias Caesars move to seize power in 49BC.

 

[The Knize]

The young never think about the future.
Whether it's debt, joints that go bad from dumb stunts, giving away privacy rights, or what is posted on the internet.
We were all young once, and suffered similar lapses of judgment.

[I should be giving credit to someone for this, but I cannot remember who said it. Of course, I do not think I have ever had a truly original thought anyway!]

I often think back over the years and conclude that when I was younger I made a lot of mistakes all the while thinking I was completely right. And then I think I must be making a lot of mistakes right now!

 

[AshleyC]

Part of me wishes that B&B had a forum where we could let politics just all hang out.

But then...

There are places I can go when I want to joust, politically.

This is more like a Victorian club in London, where we all just mind the niceties.

 

[luvmysuper]

Part of me wishes that B&B had a forum where we could let politics just all hang out.

But then...

There are places I can go when I want to joust, politically.

This is more like a Victorian club in London, where we all just mind the niceties.

That's a fair assessment of what we aim for. A place where folks can go and be assured that there will be no nastiness.
After a few drinks and some conversation, some folks do indeed depart to go watch the fights.

 

[The Knize]

Baited? Sorry, I don't get it.
Crossing the Rubicon is reference to a step that is over the line and beyond the realm of being ignored.
From Julias Caesars move to seize power in 49BC.

I did not get the "baited" reference either. Crossing the Rubicon is a great reference/metaphor!

I do not think there is anything to report either. Obviously this is a topic that could slip over into the political, but I do not think this thread has actually gone there. I think posters are trying to be careful not to.

It does strike me that I really do not understand the implications of the national debt much at all, and I have been around for a long time now, with pretty much of an interest in such things. I am not being vain, I hope, but this result as to a particular topic is usually an indication that someone "in power" has a interest in me not really understanding the particular topic. I also notice that the "party out of power" frequently makes a very big deal of how out of control the national debt is, and then when that party is again in power, you hear nary a peep about the national debt, while the national debt has continued to get bigger and bigger, often at an accelerating rate.

 

[The Knize]

That's a fair assessment of what we aim for. A place where folks can go and be assured that there will be no nastiness.
After a few drinks and some conversation, some folks do indeed depart to go watch the fights.

Well-articulated, Phil!

Maybe this is just my opinion, but besides avoiding overt nastiness in particular posts on B&B, I think B&B is a useful demonstration of the fact that folks can have useful discussions with each other, and who knows, even form fast friendships , or loose friendships, without knowing where others might be coming from politically. Just my two cents, though.

 

[DrStrange]

Our leaders have failed us. Promised too much to buy votes and haven't done the hard work of actually leading.

I blame the voters.

 

[luvmysuper]

I blame the voters.

Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

- H.L. Mencken

 

[Lockback]

I blame the voters.

Ultimately, I completely agree. We're committing suicide and the politicians are more than happy to help us.

 

[Lightcs1776]

This thread has reminded me why it is so important to keep my debt low, which I have done. I would love to spend without a care in the world, but that is not reality. I have seven years before I retire. I have no car payments, no personal loans, and a small home equity loan (could have remodeled two bathrooms myself but was swayed by the warranty). I figure about two more years with the extra payments that are being made. I don’t have any hope for accountability from those in office but I can keep myself accountable.

 

[The Knize]

Democracy is the theory that the common people know what they want, and deserve to get it good and hard.

- H.L. Mencken

Mencken (1880-1956, probably most active from 1920 to 1945, or so), along with Voltaire, I suppose, had a lot to say!

 

[Captain Pre-Capsize]

During the pandemic, citizens were paid by the government to stay home and not work. That caused a rise in inflation since they were just printing money and it caused the debt to balloon a good deal. Not saying it was right or wrong, simply an observation. The debt is at record levels but who do we (the citizens) owe? In other words who has invested in treasuries and other instruments so that the government could distribute funds to us?

I see that China (sometimes pronounced "Chine-yah" ) holds a great deal of it which I would think has influence on geopolitical events.

The following was on the internet so it must be true (cough, cough...)