It goes beyond that. $175 trillion includes all future entitlement spending not debt, it’s crazy to call all future entitlement spending for every living person debt. By that metric there’s essentially no such thing as a solvent government anywhere in the world and there never has been in modern history.
Repayment isn't a goal that anyone in the system should reasonably want. Federal debt is not like credit card debt. Debt is a product that the US Government sells. Me, being a big corporation or human, go to the USG and say "I need somewhere to park my money that is safeish from inflation". The USG sells me debt at X.Y% interest. The money now generates safe interest, which means its safeish from inflation. A world where the USG "repays the debt" is a world where this essential product is no longer available.
High levels of debt only signals high demand for this product.
This is super-counterintuitive, but the debt has little to do with the deficit. We could run a surplus and still be in the same level of debt (in fact, this would be a tremendous place to be). We could run a deficit and have no debt (just print money, duh). The decisions that go into column A generally do not impact the decisions our leaders have to make in column B, though there are of course convenient relationships between the two.
> Repayment isn't a goal that anyone in the system should reasonably want.
Repayment to $0 isn't a reasonable goal but there are a lot of problems with your argument.
The biggest question is about sustainability. Is the debt-to-GDP ratio stable/manageable and is the interest rate on the debt below the economy's growth rate? If the answer is no, you have a problem.
> High levels of debt only signals high demand for this product.
This is backwards. The amount of debt is set mostly by government supply, which is driven by deficits. The demand signal is the price, which in this case is the yield. If the demand was high, yields would drop as the amount of debt grew. Instead, we have rising debt and rising yields, which means supply outstrips demand.
The US no longer has a AAA sovereign credit rating for a reason. When Moody's (the last agency to downgrade the US) stripped the US of its AAA rating, it cited "rising debt and interest costs 'that are significantly higher than similarly rated sovereigns.'"
The biggest issue at this point isn't the principal, it's the interest. Interest is the fastest-growing line item in the federal budget. It's almost at $1 trillion/year now and expected to nearly double by 2035. You either have to cut from other spending or borrow more to pay the interest.
Your comment implies that this doesn't have a real cost, which is silly.
How can you use a word like “never” when this debt is literally unprecedented in the history of the world
It can never be repaid. Presumably the people in charge of generating it are not oblivious to this fact.
"If you owe the bank $100, that's your problem. If you owe the bank $100 million, that's the bank's problem."
It goes beyond that. $175 trillion includes all future entitlement spending not debt, it’s crazy to call all future entitlement spending for every living person debt. By that metric there’s essentially no such thing as a solvent government anywhere in the world and there never has been in modern history.
Well, will be interesting to see how this play out. The US federal debt repayments is already above $1trillion a year.
Repayment isn't a goal that anyone in the system should reasonably want. Federal debt is not like credit card debt. Debt is a product that the US Government sells. Me, being a big corporation or human, go to the USG and say "I need somewhere to park my money that is safeish from inflation". The USG sells me debt at X.Y% interest. The money now generates safe interest, which means its safeish from inflation. A world where the USG "repays the debt" is a world where this essential product is no longer available.
High levels of debt only signals high demand for this product.
This is super-counterintuitive, but the debt has little to do with the deficit. We could run a surplus and still be in the same level of debt (in fact, this would be a tremendous place to be). We could run a deficit and have no debt (just print money, duh). The decisions that go into column A generally do not impact the decisions our leaders have to make in column B, though there are of course convenient relationships between the two.
> Repayment isn't a goal that anyone in the system should reasonably want.
Repayment to $0 isn't a reasonable goal but there are a lot of problems with your argument.
The biggest question is about sustainability. Is the debt-to-GDP ratio stable/manageable and is the interest rate on the debt below the economy's growth rate? If the answer is no, you have a problem.
> High levels of debt only signals high demand for this product.
This is backwards. The amount of debt is set mostly by government supply, which is driven by deficits. The demand signal is the price, which in this case is the yield. If the demand was high, yields would drop as the amount of debt grew. Instead, we have rising debt and rising yields, which means supply outstrips demand.
The US no longer has a AAA sovereign credit rating for a reason. When Moody's (the last agency to downgrade the US) stripped the US of its AAA rating, it cited "rising debt and interest costs 'that are significantly higher than similarly rated sovereigns.'"
The biggest issue at this point isn't the principal, it's the interest. Interest is the fastest-growing line item in the federal budget. It's almost at $1 trillion/year now and expected to nearly double by 2035. You either have to cut from other spending or borrow more to pay the interest.
Your comment implies that this doesn't have a real cost, which is silly.
So the more people want US$ debt the more tbe US government must spend?