As the corporatist monstrosity known as the USA slowly grinds towards collapse, yet another dark milestone is passed. The US federal debt is now over $20 trillion.
This is addition to the approximate $120 trillion in unfunded liabilities.
Loving big government as usual, Tantrum Trump, siding with the Democrats, just raised the debt ceiling, and even made a gentleman’s agreement with them to actually abolish the debt ceiling altogether. $30 trillion, here we come!
$20 trillion in debt. Let me remind you that the GDP of the entire US is $18.5 trillion. Isn’t that nice?
Some are saying that we have to raise the debt ceiling, since we have to pay our bills. No, idiots. The fact we keep borrowing money means we aren’t paying our bills. If we were actually paying our bills, we wouldn’t keep having to increase our debt and borrow more money.
Others are saying all that this debt is just fine since we “owe it to ourselves.” What happens to the US dollar long-term then? If that’s really true, why don’t we just print enough money to hand everyone $100,000 every year on January 1st? Stupid.
By the way, one-third of that $20 trillion is not to “ourselves” at all, but to foreign nations. What happens when they start refusing to keep lending us money? Collapse, or something close to it.
Think about this for a minute: it took us 231 years to get to $10 trillion in debt. It took just 11 years to get to $20 trillion. As of this moment, we’re already 16% of the way beyond that to $30 trillion (we’re $20.16 at trillion already). We should be at $30 trillion in no time (particularly with single-payer health care looming over us in the next decade or so).
Goodbye, America. You were great while you lasted.
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It’s all exponential, which means the unit of measure must be modified. A dollar now is not the same as in 1800. Also, you have to compare dollars to the size of the economy. Together 3% inflation+3% growth means if debt grew 6%/year it wouldn’t really grow. 6% after 11 years is 90% increase, almost as much as the thing you complain about, going from 10$ to 20$ trillion in 11 years vs 231 years.
You obviously know this characteristic of exponential functions. I don’t know what the desperate tone of the article is seeking. 🙂
Completely irrelevant. Total public debt has doubled since 2008. Has the dollar gone down in value by 100% since 2008? Moreover, devaluation of the dollar is a very bad thing; your comment implies it’s good or neutral thing. On top of that, the debt has skyrocketed even if you adjust for inflation. Look at this graph here as just one example.
No matter how you want to spin the numbers or make excuses, this debt growth is out of control and a horrible thing for the future of the US. (Not that I care; the US brought this on itself.)
“Not that I care”
That shit is hard. It’s so easy to get sucked into all the bullshit and wallow in how fucked things are getting hoping there’s some way to turn it around, some kind of bright future on the horizon.
$20 Trillion seems like a lot because it is.
The inflation rates in the last 10 years hover closer to 1-2%. (http://www.inflation.eu/inflation-rates/united-states/historic-inflation/cpi-inflation-united-states.aspx). Â Accounting for inflation, the debt grew by $8-9 trillion in the last 9 years.
I personally think better things could be done with much of the money, especially with good long-term planning. But, also I want to point out that the government does many decent things, too. At the same time, many budgetary items are due to political expediency.
Another way to look at the recently added debt, though not necessarily correct:
The US government has borrowed a lot of money almost interest-free. Once you take into account inflation, the USG borrows the money for “almost free.” (1-3% interest rates, 0-3% inflation)
If the rate of inflation increases, then the USG could “make” money from the borrowed money.
For example, USG borrows $1T for 10 years at 2%. The inflation rate is 4%. Then the USG actually “makes/saves” $100B+. Isn’t this correct?
But that doesn’t factor into the risk of deflation, loss of income, and many other factors. Â And finally, someone still must pay back the principal.
Truthfully, the unfunded liabilities seem potentially more daunting.
Ironically, the Economist just wrote an article about “Ponzi schemes that work”, or also called PAYG – Pay As You Go. (https://www.economist.com/news/economics-brief/21727877-final-brief-our-series-big-economic-ideas-looks-costs-and-benefits)
A couple more interesting article found googling “pay as you go Ponzi” : (https://mises.org/library/social-security-ponzi-scheme including a “defense” of real Ponzi schemes and https://www.usatrace.com/ponzi/ – transfer payments vs. Ponzi schemes)
Hopefully, states elegantly solve their issues with pensions and unfunded debt. Â It will likely inform the national issue.
One potentially important difference between debt and unfunded liabilities. With the national debt, everyone would pay eventually, maybe more so the “rich.” Â With unfunded liabilities or transfer payments like Social Security, the burden could fall mostly on retired folks with little savings.
Just saying, isn’t 20.16 trillion only 1.6% of the way to 30 trillion, not 16% ? Unless I misunderstood the sentence.
Aren’t all countries in massive debt?
Instead of looking towards a bright future for your nation state, which isn’t going to happen, look towards a bright future for yourself, which is very doable, as I explained here.
Exactly. No matter how you adjust the numbers for inflation, interest rates, per capita, or whatever, the situation is staggeringly insane.
A few things, yes, like roads, courts, an army, and a few other things. But these things don’t cost even $5 trillion, much less $20 trillion.
You misunderstood the sentence. Re-read it. “It took just 11 years to get to $20 trillion. As of this moment, we’re already 16% of the way beyond that to $30 trillion.”
All countries? Of course not.
Most in the collapsing Western world? Yes.
The US was at over 104% debt to GDP in 2016 (now it’s even worse). Most major Western nations are at that or worse. But Hong Kong is only at 32%. New Zealand, where I’m probably moving, is only at 24% (and it’s been going down, not up).
All countries suck, but not all countries suck equally.
Progressives are NOT gonna be happy when single payer healthcare bites them in the ass, when it becomes virtually impossible to get.
Its gonna be about as bad as the USSR in the 1970s, where the government will only be able to do certain things for certain citizens. The following demonstrations and riots will not be pretty.
Of course I agree with you entirely, except to say (as you reference in your article) calling our debt $20 trillion is a sleight of hand trick too, since it doesn’t include the massive obligations made under social security etc. which are just as much debts as our bond obligations. Of course that is a little more fixable since we can simply screw over the people we made those promises to (like social security recipients) while it is harder to screw over our bond holders.
And for all the naysayers who think inflation will wipe away this debt just consider this simple fact, including all debt this amounts to $1.5 million dollars unsecured debt for every family in the USA. For everyone from the bum on the street to the CEO in the board room. If you are not terrified by that you are truly clueless.
But slightly off topic, you have had Tony Robbins’ book on money on your “Currently Reading” Â thing for a while. I have heard a few people say that it is extremely insightful and was wondering what your thoughts were on it.
Surely Big Daddy Government is looking out for us at all times.
The next recession, we will see negative rates.
probably with another round of QE.
All these Fiat currencies are going the way of the Dodo.
There’s going to be a massive wave of money from old money to the crypto’s (and of course the old monetary metals will do well)
i just don’t know if it’s going to be orderly transition, Â over a period of 15 years say,
Or mass panic into them in a short span of a couple years.
To be honest I never understood the concept of national “debt” or why would anyone ever lend money to a government? What happens when the government doesn’t pay? In fact most governments never pay. And yet the debt is increasing, it means someone (I assume someone extremely stupid) keeps giving money to governments (why?).
In the case of US it means even less, since they can just print more dollars, or just decide not to pay, and its not like anyone is going to do anything about it or even stop lending money to US!
I actually know someone that thinks this is a valid solution to all these problems. It’s this kind of childish and shortsighted thinking that it the cause of most if not all of these problems.
Absolutely. Things are much worse than they appear on the surface.
I’m very busy and it’s a big book, so I’m still working through it. I’ll make a post about it when I’m done.
Possibly yes. Almost definitely on the QE.
Buying treasury bonds are a normal investing strategy pushed by Social Programming, because historically these were considered very safe. Even I’ve recommended it under certain conditions (the Permanent Portfolio), but times are a changin’.
Well, the US government probably will tax and print enough to pay, but they will eventually pay in vastly deflated dollars which won’t be worth shit.
There are lots of reasons, particularly for foreign governments, but the summary is that the US dollar is considered a stable currency and safe haven (even though it isn’t).
Oh, someday China, India, Brazil, etc will stop loaning money to the US. It will be a very dark day when that happens. (I won’t be here so I don’t care.)
Me too.
As a matter of fact, these kind of insane “solutions” are becoming more prevalent, not less.
I do to. Pretty much EVERYONE in the west who is left leaning economically thinks this way now. Either that or they are right leaning and think that war is gonna solve EVERYTHING. lol
It’s not owed to foreign countries. It’s owed to the federal reserve. How can it be paid back? With dollar bills. That are borrowed from the federal reserve.
Krugman’s joking suggestion was that since congress still has the power to mint coins, they should just mint a few trillion dollar coins and pay off the debt. The idea … does have its merits.
Did you even read the article? Or the comments?
Hi Caleb, what are your thoughts on the book?
I enjoy your book reviews, especially on non-fiction.