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US debt to GDP ratio is greater than 120%. The IMF defines that as an economic death spiral. By 2028 the loan payments we make on all that debt/money we printed

by JakeAl 3y ago

US debt to GDP ratio is greater than 120%. The IMF defines that as an economic death spiral. By 2028 the loan payments we make on all that debt/money we printed will only cover the interest, no longer the principal, and the death spiral becomes irreversible with US insolvency by 2042. Historically, we are at the point where there's a depression, war, and/or a new monetary system. That's how they reset and seize more power. We need not only a balanced budget amendment, but massive spending/entitlement cuts and austerity, as well as boost in GDP/exports because we can't service our own debt and have relied on other nations to buy our bonds. They are selling our bonds and not buying these days. Markets WERE looking at a lost decade, but the past week or so have been looking at 30 year treasuries, so 30 years.

deleted 3y ago
[deleted]
jmcqk6 3y ago
Who are "they?" > have relied on other nations to buy our bonds. This is false. The vast majority of US government debt is held domestically. Foreign holdings have been increasing, but as of 2022, still only represents 30% of debt.
throw1234651234 3y ago
I am always working under the assumption that if we "got spending under control", this trend could be reversed. Is that fair or naive?
- topspin 3y ago
  It's fair. It's not politically feasible, however. Yes, that means we're doomed to catastrophic financial hell. We're already at the cliff's edge, watching interest rates climb while trillions of US short term debt turns over. It would only take a couple more points of interest to make all of the US Treasury spreadsheets go from the bright red they're already at to flashing red with klaxons. And they'll do what they all, always do: monetize. Blow out the currency. That's our fate, and it's inexorable at this point. The only question is when.
  - roflyear 3y ago
    "It would only take a couple more points of interest to make all of the US Treasury spreadsheets go from the bright red they're already at to flashing red with klaxons." This is hyperbole: if you increase rates by even 2x debt will still be serviceable.
    - topspin 3y ago
      [dead]
- tastyfreeze 3y ago
  I think that is fair. But, getting spending under control means cutting welfare programs and military spending. Both are currently political suicide. Another option to get it under control is growth. The easiest way to do that is removing regulations that make growth difficult and get government out of the way. Ultimately growth will just lead to higher spending. A complete solution is a bit of both. Cutting spending or capping it, and growth. Without cuts or a cap Congress will just see growth as a sign they can spend more money we don't have.
- roflyear 3y ago
  It's a fair assessment, but naive to assume it can be reasonably accomplished.
pif 3y ago
> That's how they reset and seize more power. > They are selling our bonds and not buying these days. Who is "they"?
deleted 3y ago
[deleted]
onlyrealcuzzo 3y ago
> We need not only a balanced budget amendment, but massive spending/entitlement cuts and austerity, as well as boost in GDP/exports because we can't service our own debt and have relied on other nations to buy our bonds. Massive spending/entitlement cuts aren't popular. ~40% of the country is on either Medicaid, SNAP, Medicare, or Social Security. That's ~46% of Federal spending. Besides Republicans for SNAP - it's completely untouchable. ~12% of Federal spending is the military. With all the wars going on - good luck cutting that. After interest - you only have ~16% of spending left to cut. And that's the stuff I think most people are in agreement we actually want! You can't squeeze blood from a stone. What's most likely to happen is that instead of ~40% of US adults not working - that number will decrease - and you'll have a larger, more productive tax base and less people on entitlements - strictly due to market forces.
- HDThoreaun 3y ago
  The US really needs to fix its healthcare system. Spending is completely out of control. Our 17% of gdp on healthcare is a solid 5% higher than any other country even though our GDP per capita is among the highest, and it ends up with these massive entitlement programs for people that can't afford healthcare. There's definitely a lot of low hanging fruit to be picked here but the special interests are so entrenched that the political will would need to be much higher than it currently is.
  - onlyrealcuzzo 3y ago
    > Our 17% of gdp on healthcare is a solid 5% higher than any other country even though our GDP per capita is among the highest, and it ends up with these massive entitlement programs for people that can't afford healthcare. The US is ridiculously unhealthy. I'm not sure how much more you expect to spend compared to France - when the median citizen is morbidly obese, sedentary, and an alcoholic or a smoker or a diabetic. Considering the health of our citizens - 5% more doesn't sound bad.
NickC25 3y ago
> Historically, we are at the point where there's a depression, war, and/or a new monetary system. Well, the talking heads on MSNBC, Bloomberg, et. all are saying a recession (if not a depression) in the near term is inevitable. A hot war in a really volatile part of the world kicked off the other day. Crypto isn't the new kid on the block anymore but it's definitely still hanging around. Seems all your conditions are close to being met, if they aren't already. Yikes. >We need not only a balanced budget amendment, but massive spending/entitlement cuts and austerity So much this. Somehow I imagine that for example, the Pentagon, wouldn't really see its operational readiness hindered if we cut its budget by $100 billion a year or so.
BurningFrog 3y ago
> US debt to GDP ratio is greater than 120% This unit of measure is really unfortunate. It makes it seem like 100% is some maximum limit. When I become Unit Emperor, it will be "US debt is over 14 months of GDP".
while_true_ 3y ago
You mention austerity but not tax increases? First order of business is repeal of the Trump tax cuts, those are definitely unsustainable and a major contributor to current budget deficits.
roflyear 3y ago
> By 2028 the loan payments we make on all that debt/money we printed will only cover the interest, no longer the principal Based on what? What is the "loan payments" here? Are you saying the US budget will be 100% dedicated to servicing the debt by 2028? This is certainly false, the cost to service debt will not go up ~10x in the next five years.

by JakeAl 3y ago

deleted 3y ago

[deleted]

jmcqk6 3y ago

Who are "they?" > have relied on other nations to buy our bonds. This is false. The vast majority of US government debt is held domestically. Foreign holdings have been increasing, but as of 2022, still only represents 30% of debt.

throw1234651234 3y ago

I am always working under the assumption that if we "got spending under control", this trend could be reversed. Is that fair or naive?

topspin 3y ago
It's fair. It's not politically feasible, however. Yes, that means we're doomed to catastrophic financial hell. We're already at the cliff's edge, watching interest rates climb while trillions of US short term debt turns over. It would only take a couple more points of interest to make all of the US Treasury spreadsheets go from the bright red they're already at to flashing red with klaxons. And they'll do what they all, always do: monetize. Blow out the currency. That's our fate, and it's inexorable at this point. The only question is when.
- roflyear 3y ago
  "It would only take a couple more points of interest to make all of the US Treasury spreadsheets go from the bright red they're already at to flashing red with klaxons." This is hyperbole: if you increase rates by even 2x debt will still be serviceable.
  - topspin 3y ago
    [dead]
tastyfreeze 3y ago
I think that is fair. But, getting spending under control means cutting welfare programs and military spending. Both are currently political suicide. Another option to get it under control is growth. The easiest way to do that is removing regulations that make growth difficult and get government out of the way. Ultimately growth will just lead to higher spending. A complete solution is a bit of both. Cutting spending or capping it, and growth. Without cuts or a cap Congress will just see growth as a sign they can spend more money we don't have.
roflyear 3y ago
It's a fair assessment, but naive to assume it can be reasonably accomplished.

pif 3y ago

> That's how they reset and seize more power. > They are selling our bonds and not buying these days. Who is "they"?

deleted 3y ago

[deleted]

onlyrealcuzzo 3y ago

> We need not only a balanced budget amendment, but massive spending/entitlement cuts and austerity, as well as boost in GDP/exports because we can't service our own debt and have relied on other nations to buy our bonds. Massive spending/entitlement cuts aren't popular. ~40% of the country is on either Medicaid, SNAP, Medicare, or Social Security. That's ~46% of Federal spending. Besides Republicans for SNAP - it's completely untouchable. ~12% of Federal spending is the military. With all the wars going on - good luck cutting that. After interest - you only have ~16% of spending left to cut. And that's the stuff I think most people are in agreement we actually want! You can't squeeze blood from a stone. What's most likely to happen is that instead of ~40% of US adults not working - that number will decrease - and you'll have a larger, more productive tax base and less people on entitlements - strictly due to market forces.

HDThoreaun 3y ago
The US really needs to fix its healthcare system. Spending is completely out of control. Our 17% of gdp on healthcare is a solid 5% higher than any other country even though our GDP per capita is among the highest, and it ends up with these massive entitlement programs for people that can't afford healthcare. There's definitely a lot of low hanging fruit to be picked here but the special interests are so entrenched that the political will would need to be much higher than it currently is.
- onlyrealcuzzo 3y ago
  > Our 17% of gdp on healthcare is a solid 5% higher than any other country even though our GDP per capita is among the highest, and it ends up with these massive entitlement programs for people that can't afford healthcare. The US is ridiculously unhealthy. I'm not sure how much more you expect to spend compared to France - when the median citizen is morbidly obese, sedentary, and an alcoholic or a smoker or a diabetic. Considering the health of our citizens - 5% more doesn't sound bad.

NickC25 3y ago

> Historically, we are at the point where there's a depression, war, and/or a new monetary system. Well, the talking heads on MSNBC, Bloomberg, et. all are saying a recession (if not a depression) in the near term is inevitable. A hot war in a really volatile part of the world kicked off the other day. Crypto isn't the new kid on the block anymore but it's definitely still hanging around. Seems all your conditions are close to being met, if they aren't already. Yikes. >We need not only a balanced budget amendment, but massive spending/entitlement cuts and austerity So much this. Somehow I imagine that for example, the Pentagon, wouldn't really see its operational readiness hindered if we cut its budget by $100 billion a year or so.

BurningFrog 3y ago

> US debt to GDP ratio is greater than 120% This unit of measure is really unfortunate. It makes it seem like 100% is some maximum limit. When I become Unit Emperor, it will be "US debt is over 14 months of GDP".

while_true_ 3y ago

You mention austerity but not tax increases? First order of business is repeal of the Trump tax cuts, those are definitely unsustainable and a major contributor to current budget deficits.

roflyear 3y ago

> By 2028 the loan payments we make on all that debt/money we printed will only cover the interest, no longer the principal Based on what? What is the "loan payments" here? Are you saying the US budget will be 100% dedicated to servicing the debt by 2028? This is certainly false, the cost to service debt will not go up ~10x in the next five years.