Economy The Looming Debt Crisis

[Rob Battisti]

Spoiler

In before this devolves into a tranny thread

Before we get started, this is not a left versus right issue. It’s not a matter of Republicans saying they want to reduce spending(the don’t) or Democrats claiming we can tax our way to a balance(we can’t). This isn’t just a United States issue. Though the US accounts for a very large share of Global Debt.

This is a serious problem and can’t be dismissed with a wave of the hand. This is not normal and never before have we been in this position globally.

Figures:

Global Debt has risen by 10 TRILLION in the first half of 2023

Global Debt to GDP ratio expected to hit 337% by the end of the year.

Considered interest rates and debt, we’re over 4x the point of no return in being able to pay off the debt.

Sharp rise mainly contributed by 4 countries: USA, UK, France and Japan

US debt ceiling suspended until 2025(meaning our 33 Trillion of debt will continue to explode faster without any way to stop it).

US Debt Per Tax Payer is over $255k

US Deficit is over 1.9 TRILLION WITHOUT BEING IN A NATIONAL CRISIS

US unfunded debt rose over 14% in a year to nearly 6x our current debt.

US Debt will increase over 5 Billion A DAY over the next decade

US interest on debt is over 1 Trillion and headed to 2 Trillion with higher interest rates coming

US and EU GDP slowing.

Globally we spend 22% of GDP on just servicing the INTEREST on global debt

We will need some kind of reset on the global financial system and the change won’t be pretty.

 

[Chesten_Hesten]

 

[Rob Battisti]

Not looking too good

 

[Scerpi]

Spoiler

In before this devolves into a tranny thread

Before we get started, this is not a left versus right issue. It’s not a matter of Republicans saying they want to reduce spending(the don’t) or Democrats claiming we can tax our way to a balance(we can’t). This isn’t just a United States issue. Though the US accounts for a very large share of Global Debt.

This is a serious problem and can’t be dismissed with a wave of the hand. This is not normal and never before have we been in this position globally.

Figures:

Global Debt has risen by 10 TRILLION in the first half of 2023

Global Debt to GDP ratio expected to hit 337% by the end of the year.

Considered interest rates and debt, we’re over 4x the point of no return in being able to pay off the debt.

Sharp rise mainly contributed by 4 countries: USA, UK, France and Japan

US debt ceiling suspended until 2025(meaning our 33 Trillion of debt will continue to explode faster without any way to stop it).

US Debt Per Tax Payer is over $255k

US Deficit is over 1.9 TRILLION WITHOUT BEING IN A NATIONAL CRISIS

US unfunded debt rose over 14% in a year to nearly 6x our current debt.

US Debt will increase over 5 Billion A DAY over the next decade

US interest on debt is over 1 Trillion and headed to 2 Trillion with higher interest rates coming

US and EU GDP slowing.

Globally we spend 22% of GDP on just servicing the INTEREST on global debt

We will need some kind of reset on the global financial system and the change won’t be pretty.

You know what else isn't being talked about... Payments on the interest.

With the interest rates escalating rapidly to stop Bidenflation...

Interest Payments
2021 - $325 BILLION!!!!
2022 - $476 BILLION!!!
2023? - $663 BILLION... Holy fuck.

Yeah... Good fucking luck sleeping at night.

I honestly have zero idea how this is going to end.

 

[My name is]

What if we globally decide to forgive all debt and start over

 

[Rob Battisti]

You know what else isn't being talked about... Payments on the interest.

With the interest rates escalating rapidly to stop Bidenflation...

Interest Payments
2021 - $325 BILLION!!!!
2022 - $476 BILLION!!!
2023? - $663 BILLION... Holy fuck.

Yeah... Good fucking luck sleeping at night.

It’s not just Biden. There is no way out of this outside of debasing our currency, allowing for MORE inflation and simply reworking CPI to make it seem like everything is okay. Which is what we always do anyway.

Imagine being okay with your debt interest exceeding your national defense budget.

 

[DoctorNick]

If everyone was a true patriot and donated an organ or two, we could sell those to make a small dent.

But on a serious note I have no clue how this can be dealt with, I just hope our future generations aren't as screwed as I think they will be.

 

[Rob Battisti]

If everyone was a true patriot and donated an organ or two, we could sell those to make a small dent.

But on a serious note I have no clue how this can be dealt with, I just hope our future generations aren't as screwed as I think they will be.

There is no way to solve it outside of currency debasement and more inflation to the point where 33 trillion doesn’t seem like that big of a number anymore.

 

[andnowweknow]

Infinite growth, corporate greed, and Laissez-faire capitalism...largely American conservative cornerstone ideals, are the problem.

Just look who is in charge, and where debt goes ...

"Well, yeah, but let's move on from who is to blame...time to start over!...now get our there and vote Republican!"

 

[BobsyaUncle]

I have no idea what the solution is.

 

[Jack V Savage]

US debt ceiling suspended until 2025(meaning our 33 Trillion of debt will continue to explode faster without any way to stop it).

This is pure hackery. The debt ceiling is not a way to lower debt (that would just be deciding not to pay debt that has been incurred).

Also, interestingly, net debt for the planet as a whole is 0 (in whatever currency you want to measure it). We have exactly as much owed to people as by people, as we haven't yet found an interplanetary financing source.

 

[panamaican]

Not the point of the thread, and someone will pull up the numbers, but a significant portion of our debt is to ourselves.

Also, alot of the debt is circular. We owe Country X debt, they owe Country Y, Country Y owes us. I haven't researched this issue recently but, years ago, I stopped worrying about it from a functional perspective. It's a real problem on paper but I'm not sure there are any real consequences.

Also, I have more questions than answers. For example: how does any nation truly enforce a debt issue against another country? Let's take the Chinese debt traps for example -- if a nation defaulted on a Chinese loan and refused to turn over some national resource to China as satisfaction for the debt...how does China get paid? Sanctions? Enforced by whom?

This swings back to the larger issue about real world consequences. Who enforces sanctions against us? It seems to all boil down to who has the bigger coalition and once you're part of a big enough coalition, no one is going to heavily penalize the other debtors in the group because they don't want themselves to be penalized later.

Additionally, it's predicated on the idea that we'll grow our way out of the debt, which is farcical but doable on paper.

Anyway, I don't have real answers, just lots of things I don't understand.

 

[Jack V Savage]

If everyone was a true patriot and donated an organ or two, we could sell those to make a small dent.

But on a serious note I have no clue how this can be dealt with, I just hope our future generations aren't as screwed as I think they will be.

What's the bottom-line impact that people fear?

 

[Scerpi]

It’s not just Biden. There is no way out of this outside of debasing our currency, allowing for MORE inflation and simply reworking CPI to make it seem like everything is okay. Which is what we always do anyway.

Imagine being okay with your debt interest exceeding your national defense budget.

The National Debt crisi started decades ago... When the geniuses in DC decided that balancing the Budget was for the Plebeians like you and me

I'm referring the recent multiple policy decisions that lead to the recent massive increase in inflation, then the Feds having to rapidly increase Interest Rates to slow it down.

Which was likely the correct decision and was done in the past. However, this is the first time there was a Deficit of $32 Trillion dollars to manage as well.

The Nation's credit rating has already been hit twice... Will Moody's follow suit? Will the US credit rating be degraded to A by one of the agencies.

It's a fucking game of Hot Potato right and lord help the fucktards in DC when that happens. It'll be the biggest game of pointing fingers you've ever seen.

 

[I Am Legion]

Infinite growth, corporate greed, and Laissez-faire capitalism...largely American conservative cornerstone ideals, are the problem.

Just look who is in charge, and where debt goes ...

"Well, yeah, but let's move on from who is to blame...time to start over!...now get our there and vote Republican!"

You are being facetious and snarky as usual....But that WILL get a republican elected.

 

[Jack V Savage]

Not the point of the thread, and someone will pull up the numbers, but a significant portion of our debt is to ourselves.

Also, alot of the debt is circular. We owe Country X debt, they owe Country Y, Country Y owes us. I haven't researched this issue recently but, years ago, I stopped worrying about it from a functional perspective. It's a real problem on paper but I'm not sure there are any real consequences.

I don't think it's really a problem on paper, in the sense that the TS is saying (a debt crisis is not a legitimate concern). But I would agree that the economy is strong enough now that we should be focusing more on reducing deficits than trying to boost growth (we already are to some extent, of course, as monetary policy has been focused on slowing growth and there has been some fiscal austerity passed). For a long time, we've been in a situation where we needed growth and deficits were too low, which basically means free stuff for everyone--big tax cuts for rich people *and* expansion of the safety net with no short-term negative consequences. But we are back in a world of tradeoffs. Regressive tax cuts will cause short-term pain to everyone else, increasing spending without increasing revenue will have distributional consequences that people might not like, etc. It's a good problem to have, but it means some unpopular policy will have to be passed (ideally, a reversal of some recent giveaways to the rich).

 

[andnowweknow]

You are being facetious and snarky as usual....But that WILL get a republican elected.

What will?

 

[Rob Battisti]

I’m glad Jack came in to say this is not a legitimate concern. Sorry folks, nothing to see here!

 

[Jack V Savage]

You are being facetious and snarky as usual....But that WILL get a republican elected.

Republicans talk about debt, but all their proposals increase it. Here's what the front-runner is talking about:

https://www.washingtonpost.com/business/2023/09/11/trump-tax-cuts-2024/

Trump and his advisers have discussed deeper cuts to both individual and corporate tax rates that would build on his controversial 2017 tax law, which they see as a major accomplishment worth expanding, according to interviews with a half-dozen people close to the former president, some of whom spoke on the condition of anonymity to describe private conversations. The cuts could be paid for, at least in theory, with a new 10 percent tariff on all imports to the United States that Trump has called for, which could raise hundreds of billions in revenue. The sharp new tax cuts would help offset higher consumer costs caused by the tariffs.

So raising taxes on the poor, but then offsetting the gains with another cut for corporations and rich individuals. No one who actually cares about debt is going to support that. And remember when Democrats pushed for a revenue increase without tax hikes by just doing a better job of catching rich tax cheats? The GOP and amoral hacks like the TS were screaming bloody murder.

 

[Scerpi]

Not the point of the thread, and someone will pull up the numbers, but a significant portion of our debt is to ourselves.

Also, alot of the debt is circular. We owe Country X debt, they owe Country Y, Country Y owes us. I haven't researched this issue recently but, years ago, I stopped worrying about it from a functional perspective. It's a real problem on paper but I'm not sure there are any real consequences.

Also, I have more questions than answers. For example: how does any nation truly enforce a debt issue against another country? Let's take the Chinese debt traps for example -- if a nation defaulted on a Chinese loan and refused to turn over some national resource to China as satisfaction for the debt...how does China get paid? Sanctions? Enforced by whom?

This swings back to the larger issue about real world consequences. Who enforces sanctions against us? It seems to all boil down to who has the bigger coalition and once you're part of a big enough coalition, no one is going to heavily penalize the other debtors in the group because they don't want themselves to be penalized later.

Additionally, it's predicated on the idea that we'll grow our way out of the debt, which is farcical but doable on paper.

Anyway, I don't have real answers, just lots of things I don't understand.

So what happen when no one... Foreign Countries or Banks, won't lend anymore money to the US Federal Government due to its inability to even the pay the interest due?

Just print more money? More Inflation.... Even higher interest rates?

Seems like a death spiral to me