America's never had such high national debt heading into an economic shock

Posted by ndsipa_pomu 3 hours ago

Comments

Comment by Horatius77 34 minutes ago

Sad part is that, you can basically pick any random date over the past 50 years and this headline would ring true at that time. Our debt always seems to be at an all time high.

Comment by 15 minutes ago

Comment by xrd 1 hour ago

What is the hedge for this? Digging a really deep hole somewhere?

Comment by lumost 44 minutes ago

Hedging against currency collapse is notoriously difficult. But a reasonable set of hedges are assets that will have value regardless of currency changeovers. Eg housing, land, gold etc.

Comment by fakedang 17 minutes ago

Anything that has steady value - land, gold, real estate with global appeal, manufacturing for the global market, etc.

Comment by zamalek 1 hour ago

An yet people will die on the hill of "republican economics." I truly can't understand it.

Comment by gavinray 3 hours ago

As an American, I hear "8 trillion dollars in debt" and it seems like monopoly money.

Nobody lets you borrow 8 trillion dollars without paying some of it back.

As far as I'm concerned, it's a made-up number, it's only gotten bigger every moment I've been alive, and nothing ever comes of it.

When the universe dies, the US national debt will be at one gajillion...

Comment by blitzar 3 hours ago

Actually bill clinton paid some of it back (and created 22 million new jobs and an internship).

also the us debt is 38 trillion

Comment by gavinray 2 hours ago

  > also the us debt is 38 trillion

It's sort of like being given one fine that's $100, and one fine that's $250 billion.

You may as well keep increasing the number of second fine, because in no earthly circumstance will I ever be able to pay it back.

Comment by lithocarpus 14 minutes ago

mmm..

A better analogy would be this:

You have $100k income, and $800k debt, on which you have to pay ~$40,000 interest every year. That takes up a good chunk of your income. But if the debt doubled, at the same interest rate, you could really be in trouble.

Comment by fakedang 9 minutes ago

> because in no earthly circumstance will I ever be able to pay it back.

Well at that point, all hell breaks loose - that's the Weimar story all over again.

The minute the US isn't able to project power globally, and the minute the Gulf states shift even a single transaction away from the petrodollar, the USD is finished. At that point, it might not make sense for them to accept the USD or dollar-denominated debt, either because of constant devaluation or the pointlessness of holding onto US Treasuries (because the US won't pay its debt). No one would buy US debt as a safe haven any more, which means the US won't be able to fund its budget.

Comment by coldtea 1 hour ago

>You may as well keep increasing the number of second fine, because in no earthly circumstance will I ever be able to pay it back.

When that's the case, you'd be surprised what happens when the breaking point comes.

Or do you think countries haven't gone bankrupt before?

Comment by rationalist 3 hours ago

also the U.S. unfunded liabilities is over 100 trillion*

* That was the number that I first heard, but a quick search shows it's estimated anywhere from 80 trillion to 210 trillion dollars.

Comment by quickthrowman 1 hour ago

Clinton didn’t do much of anything to pay down the total amount of outstanding debt, but he (and Congress!) did have positive effects by balancing the government’s budget. Outstanding US government debt chart from FRED: https://fred.stlouisfed.org/series/GFDEBTN

The budget was balanced and/or a surplus for the years from 1997-2001, which meant a lot less money was borrowed (or fewer bonds were sold, depending on how you want to look at it.)

The percentage of public debt to GDP also fell substantially from 1993-2000, which is a better metric than gross debt levels anyways. Here’s a chart of that from FRED: https://fred.stlouisfed.org/series/GFDEGDQ188S

Comment by liveoneggs 59 minutes ago

it means we gave $8T to someone and slowly pay it.

https://www.youtube.com/watch?v=KLQlOK3AWSs

Comment by rcxdude 2 hours ago

The US government does spent a pretty large amount of its budget paying some of the debt back. More now that there's been multiple brinkmanship games of threatening a default for political points.

Comment by blitzar 1 hour ago

paying off one credit card with another credit card doesnt really pass the threshold of "paying some of the debt back"

Comment by rationalist 2 hours ago

The interest on the debt alone, is 1 trillion dollars a year.

Comment by rcxdude 2 hours ago

And that's at basically the lowest interest you can possibly get a loan.

Comment by rationalist 2 hours ago

The U.S. GDP is about 31 trillion, so 3 percent of that isn't bad, as long as we can continue to grow more than that, forever.

Federal Outlays: Interest as Percent of Gross Domestic Product (FYOIGDA188S) https://fred.stlouisfed.org/series/FYOIGDA188S

Although according the the article, the interest payments account for one fifth of revenue, projected to be one quarter in ten years.

Comment by coldtea 1 hour ago

>as long as we can continue to grow more than that, forever.

"Being chased while on foot by a pack of hungry cheetahs is not that bad, as long as we can keep our distance"

Comment by kelseyfrog 53 minutes ago

You also have to understand that the foundation of money is debt in the sense that if we paid back all the debt, money wouldn't continue to exist. The sum total of debt exceeds the total quantity of money.

Comment by izacus 2 hours ago

The core of the issue is that the new debt isn't taken at low 3% interest right? So the servicing costs are rising faster than the economy is growing.