> The US debt is starting to become an existential problem.
Really...? Until Liberation Day the other week, I would doubt this. The whole world holds the US dollar, if the USA fails (side-glare at Donald and Elon), the whole world goes into chaos. If President Harris had said "OK world, we need to borrow x more dollars to keep this country running", people (private creditors and nations) would say "I'm pretty sure the USA will still be a solid economy in 10 (or 30 years), x% ROI if I lend them money? Sure!".
And as this chart says, it's not all owned by "Chaina": https://www.visualcapitalist.com/charted-heres-who-owns-u-s-...
It's not wrong.
We were doing great in 2000.
[EDIT] Plus of course there's the '01 crash in here, which doesn't help matters, as those never do.
Bush pushed through a huge tax cut while launching two extremely expensive wars, one of which was definitely not necessary (arguably, neither of them were a good idea—I'd have argued that at the time, certainly).
Then, financial crisis. You (under orthodox modern political-economy and national fiscal policy guidance) usually try to reserve your biggest deficit spending for exactly these kinds of cases. We had no "cushion" because we'd wasted it on tax cuts and wars. The deficit goes very unwisely deep.
Then, Obama. Tax cuts not reversed under the democrats. Wars not ended (fast enough). More expensive foreign adventures, in fact, though not really comparable to the budgetary catastrophes of Iraq and Afghanistan. At least the economy recovers, but we don't get back to what should be baseline levels of deficit spending, we stay way too deep in the red.
Then, Trump. More tax cuts. Deeper in the red.
And wouldn't you know it, another disaster! Covid. If only we weren't already in awful territory with our budget... but we are, and deficit spending beats a bad recession and still seeing bad budget results due to a weakened economy, so, more spending it is, because that is what you do in these cases, you're just not supposed to start from such a poor position.
Biden. Little done to fix any of that, aside from doing a pretty good job managing Covid on the econ side (which, I have my complaints, but credit where it's due)
Trump again. We're likely to see tax receipts drop due to IRS cuts and a declining economy, this time for no good reason. And they're talking tax cuts... again.
So yeah, we were on track to need decades of very-careful policy to let our GDP catch up with our debt, without making big cuts. And we'd have to raise taxes back to late-90s levels for that to work, anyway.
That many years of responsible management weren't gonna happen. Tax increases evidently aren't, either. Realistically, we were on track to eventually hit and have to work through a crisis over this, probably early in the back half of this century.
This administration appears to be moving that point many, many years earlier, though.
Not everyone is happy to depend on USD. BRICs were making plans to introduce their own alternative reserve currency. Trump once threatened 100% tariffs if they followed through with that.
https://www.msn.com/en-us/money/markets/aggressive-tariffs-f...
https://www.msn.com/en-us/money/markets/trump-threatens-100-...
https://www.bloomberg.com/news/articles/2024-12-02/south-afr...
I wonder if these plans have anything to do with the world's reserve currency being controlled by an entity that's sometimes erratic and assholey...
In the utopia where the USA is actually a beacon of democracy, the people in the BRICs countries might be fans of it, and would vehemently support politicians who align themselves with it, weakening other political factions.
That plan was DoA. They were never going to agree (Some being petro states, some being commodities exporters, some manufacturers etc) and half those countries lack proper rule of law to enforce contracts that turn out to be negative for said countries.
This has nothing to do with Trump beyond the fact that his plans could hasten how quickly this blows up. Bond rates were already going up before the election, the bond market was already nervous. Your indication that the world isn’t starting to have doubts isn’t born out by the bond market rates.
> And as this chart says, it's not all owned by "Chaina"
I never said that. China has been rolling US debt off of their books for a decade now and moving towards BRICS.
If we make this a partisan issue, which you appear to be, we won’t solve this problem. That would be a catastrophic mistake.
Are you saying that hastening the catastrophe is the right move?
No.
Ok. You never know what you are going to hear on HN :)
Fine I’ll oblige. :P
I believe hastening it (momentarily) has been good. Well the looming debt issue as I understand this subthread to be about.
Like a patient getting indigestion and goes to the ER thinking it's a heat attack, only to find it’s not but his cholesterol and BP is through the roof and he needs blood pressure meds asap.
Trumps tactics has caused much more attention on the matter. Tariffs can be reduced, etc, but hopefully bringing a wake up call will help avoid catastrophe.
No idea if that was part of Trumps plan or just bumbling, but I believe it’ll be good long term.
I’ve been reading lots of dystopian sci-fi fearing hyperinflation in the near future in the US and then Europe. Now it seems people are taking it a bit more seriously. Even this comment chain shows that.
Then again I’m also encouraged by Argentina’s response after 70-80 years of hyperinflation and stagnation. Javier Milei‘s policies appear to be working contrary to the prediction of most everyone beforehand.
People have been predicting catastrophe since the 70s. Same with social security. Somehow we keep muddling along.
That attitude sounds like a college grad with a fresh credit card they keep spending on.
Their parents warn them that if they keep spending on it there will be major issues. But hey, they still have like $10k of credit and they can get another card! They’re just old and predicting catastrophe all the time.
Until one day they they have no more credit left and all their income goes to paying credit card interest not even paying off the debt.
In the 70s the debt was negligible. Now the debt is nearing 100% of the US GDP [1]. Historically once countries reach 120% hyperinflation occurs. The dollar being the global reserve currency buffers it a bit but not indefinitely.
1: https://econofact.org/why-is-the-u-s-debt-expected-to-keep-g...
50 years is not "a fresh credit card". If someone predicts something and 50 years later it hasn't happened, I think it's time to re-examine their assumptions
And what were they predicting? Most reasonable predictions were that once the GDP to debt ratio reaches a certain point that’s when issues arise. It’s just now nearing that 100% of GDP mark. Obviously predictions on a national scale can take decades. The “fresh credit card” was handed out in the 70’s.
Just because climate change hasn’t ended the world yet in 50 years doesn’t mean it’s not a serious threat.
> Bond rates were already going up before the election
Treasuries behaving like a risk asset is 100% Trump. And it has nothing to do with him blowing out our deficit, it's 100% about stagflation and money markets.
> Bond rates were already going up before the election,
Do you think the fact that there was a 40-70% (and I'm being optimistic, here) chance that the election would elect Trump [1] had anything at all to do with that?
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[1] Who made his plans for destroying both the American hegemony and global trade, and its domestic economy quite clear.