Comment by akamaka
2 months ago
A good economics education would let someone be specific about what they think the problem is. What year will the US default on its debt? How much money needs to be cut from the budget to avoid that? To what extent will those cuts slow down the economy and be self-defeating?
If he arms himself with the right mathematical tools, he might just discover that the default he’s expecting is actually not imminent.
To me the elephant in the room is the cost of servicing the debt.
Even if the US has a bunch of runway before shit actually hits the fan, 2024 saw over a trillion dollars servicing the debt. That could be funding a lot of government programs instead.
Let’s look at the numbers:
https://fred.stlouisfed.org/series/FYOIGDA188S
Seems not ideal, but also not terrible. We have much less of a hole to dig our way out of than we did in the 1990s. Certainly doesn’t look like a crisis. The recent jump seems entirely caused by the response to the Covid crisis and not really a structural problem.
Unlike now, in the 90s the US had no competitors with equally strong industrial capacity.