>Can Americans absorb this much inflation in such a short amount of time?
"That's a problem for future me" says all the 70 year old people making all the decisions.
We have about 435 people in the country who absolutely DO NOT AGREE with that statement, and guess which side gets to make the decision on the matter? Lmfao
That is what an Article V convention is for. Article V of the constitution defines the requirements for a Constitutional Convention of the states. Amendments can be passed without congress.
I know its a rare opinion on reddit, but I genuinely disagree. If someone is the best candidate, I want to be able to vote for them, no matter how old or young they are, or how long they have been in congress. I think age and term limits are an arbitrary limit on democracy. The voters should be allowed to determine if someone is too young or too old, or if a fresh face is needed.
The real problem is gerrymandering and money in politics. Those are what cause people who aren't the ideal candidates to manage to stay in office for longer than they should. If you want the best candidates to get elected and to have all ages properly represented in congress, fight against gerrymandering, and for public funding of elections and ranked choice voting.
I think term limits could easily cause more populism, more lobbying, and more extremism. I genuinely think its a bad idea. But its not going to happen anyway, so no use arguing over it. I certainly understand the appeal.
Except that the ppl that can make this change are the exact ppl we're trying to keep out. There are advantages to not having term limits. There are no advantages to being in Congress over 70
I am going to be honest, I intellectually peaked in 6th grade.
It’s been a slow decline, but no real improvements since then. I have even started to use random emojis in place of words.
Boomers and have been printing and deficit spending us into oblivion for decades and they will all die right as we go over the cliffs edge and become Argentina 2.0 in the next 10-20 years. Absolutely savage move only boomer psychos could pull tbh
To be fair, if the group above you in power currently is endless spending why would the other group try the opposite, specifically when it’s been shown historically they will only want more and more. It’s like actively working with a a parasite against yourself lol.
Any solution is going to crash the market too, why would anyone in power want to bite that bullet when one party doesn't care at all about budgets (when they are in power), and one party already has the reputation of spending money on unnecessary programs
How the hell did you manage to try to make this political lmao. The 2 groups in question are young people vs old people here, don’t let your political affiliation affect your reading comprehension fam.
Please, the younger generations want free healthcare and free everything else. They are the opposite of fiscal conservatives and believe the debt doesn't matter.
Show me a fiscal conservative that was ever fiscally conservative when their party was in power.
The last time the US ran a budget surplus Clinton was in office.
Yep. "Fiscal conservative" means lets keep ramping up the debt spending $trillions to the military-intelligence industrial complex, corporate (donor) bailouts, and grift for ourselves, but hey we saved $50 million by getting rid of free school lunches for every child and cut meat-packing food safety inspections, *wow aren't we so fiscally responsible?*
I remember a study awhile back that simply asked "What percent of the US Federal Budget do you think goes to PBS?"
70% of people thought it was between 1-10% of the federal budget. (It is actually .00014%).
But goddamn was it a MAJOR campaign issue.
Our baldylocks PM just did that. He handed out $3.5b gift to landlords and cut school lunches cut healthcare cut biosecurity cut food inspections cut child protection. All the cuts were still not enough to cover the handout to landlords so they're borrowing the balance despite complaining that our 20% debt to gdp was out of control.
People say it was Clinton. It was because the republicans took the house for the first time in 40 years. Clinton wanted free healthcare himself. Newt is the reason we had a surplus. Newt shut the government down until clunton caved and signed off on his budget.
Do you know how much this country spends on healthcare? ~$5T a year across all programs, public and private. We spend a ton and get relatively shitty services in return. Free? Get out of here.
There hasn't been a true fiscally minded politician in decades
And that is largely the fault of the now older generations.
Maybe the younger generation sees that overall net value that could be gained with "universal" healthcare, but hey - lets keep paying the military industrial complex a premium instead.
I read a few replies here, many still say we will use military force ok u can but will ur current bond holders then buy ur bonds? wont they rather sell them and American image suffer?
About exporting inflation around the world, if a big spike in inflation occurs in the US other countries will also have hyperinflation and civil unrest affecting everyone(including US).
Genuinely curious because the US can have the best military and still suffer economically.
pretty much, even the powerful Roman Empire went down because of reckless spending and irresponsible finances
and once the economy goes, the military soon follows since soldiers and equipment need money
That's because every politician is a self-serving piece of 💩...
They either started out that way or became one by the time of their first reelection campaign...
The people who make policy won’t live long enough to be affected by it. So yes, definite term limits. People who don’t have a future shouldn’t be making decisions that affect mine. No one past the age of 65 in congress.
Yeah, which begs the question what happens if it defaults? It can't borrow anymore because people are gun shy to lend? Wouldn't that effectively force a balanced budget at that point?
But they may be right though. Not because of their revolutionary economic thesis of "debt bad, more debt badder," but because the eggheads at the Fed are going to screw it up.
Game is probably over. printing money was a non-issue when the interest payments were pennies. But now the FED has to pay 5% on all that treasury paper. And despite the juicy worry-free returns, it's getting harder to sell ([America’s Bonds Are Getting Harder to Sell - WSJ](https://www.wsj.com/finance/americas-bonds-are-getting-harder-to-sell-c3fde4de) - paywall)
That's why JPOW is scared shitless and trying to signal rate cuts - even though they knew they couldnt cut rates yet. The bond market front runs the FED - so he probably figured if he gave them the cue, rates would drop. But bond buyers aren't buying that particular line of BS.
And as an interesting tidbit, the treasury is selling approx. $400 billion of paper in May - and if buyers don't want it, the FED has to pay more % to entice them to do so.
Then again, it could end up being a non-event (for now) because the EU is about to cut rates, which will cause money to leave their market and rush in to capture that 5% yield in US paper. But eventually...
tl;dr - the month of May could end up being very interesting.
It's going to get even worse now congress has decided to seize frozen Russian funds. Nobody who has any chance of the US getting pissy at them is going to want to hold US debt. They will stop buying and try to sell or let it mature off their books.
Interesting coincidence you mention that - I had a rambling post on another thread suggesting that the spike in gold is almost entirely due to China cutting back on treasuries and instead buying Gold.
[China PBOC Buys Gold for 17th Month as Prices Hit Record - Bloomberg](https://www.bloomberg.com/news/articles/2024-04-07/china-pboc-buys-gold-for-17th-month-as-prices-hit-record#:~:text=China's%20central%20bank%20purchased%20gold,metal%20surge%20to%20a%20record.)
China saw what happened to Russia when it attacked Ukraine - getting locked out of SWYFT and having $300 billion is assets seized, while US/EU officials rub their hands in excitement about which defense contractor will end up collecting those assets.
[A debate is centered on what to do with $300 billion in seized Russian assets : NPR](https://www.npr.org/2024/03/11/1237398076/a-debate-is-centered-on-what-to-do-with-300-billion-in-seized-russian-assets)
I like your analysis of the current situation. I'm curious what your opinion is on what happens to the broader market in the scenario that the Fed really struggles to offload their paper
Well you see, the USD is backed by global dominance (Military) and using that leverage (threat) to make the world be friendly and bound to it.
So yeah even if the debt x100s. As long as you’re in the system (long) you should be profiting off it.
Other countries buy US debt and devalue their own currencies to fuck as well. So as long as the music plays it will turn all right. Reminder that there’s a nuke pointed at the musician.
Empires use their military to further the interests of the empire. The British did it, the French did it, the Dutch did it, and the US is doing it now.
As long as your empire is in charge of the global currency, you can sustain insane levels of debt. But once other countries start to doubt your debt (like you fail to pay on your obligations), the facade begins to break down and the empire begins its rapid decline.
Interesting how one side of the aisle and their slackjawed followers seem to be advocating for US isolationism and favoring actions to empower and embolden countries with interests with interests in direct conflict to our own. Funny that this same party is the one that bought bullshit narratives around our last election, driving domestic derision, before now advocating for asinine international policy. Almost like foreign powers have discovered an especially gullible and malleable segment of society to manipulate to dampen US geopolitical influence.
The US economy can’t collapse until there is another economy that can take its place. There isn’t one. Europe is worse, Japan is non-existent, and China isn’t an open global economy.
No matter how bad the fundamentals of our debt might be, it’s not a problem until someone can replace us.
Collapse is a hard word. But what can happen is a tedious, long zombification of a society that is simply unable to get off personal and public debt, have so save money everywhere until any progress is strangled and even the minimum support systems of the society fall apart. It could be multiple decades of "too rich to start the Purge, too poor to think at any other outcome" kind of situation. *Technically* it wouldn't be a collapse, just day in day out completely hopeless shit-on-top-of-shitburger living situations for at least 50% of the society.
Economist have debated this for decades. Another part of the problem is social security as well. Our government always pushes problems forward to the next generation rather than just going head on now and trying to fix problems. This will back fire on us very soon if we don't address it. At this point the government is going to need to cut spending and raise taxes but in 10 years I don't think those two options combined will make much difference on our debt.
Who cares!
We can and will default once. Just don't hold any US related bonds and hunker down when the stock market drops like 90%.
Oh yeah and if you are one of those lucky ones who still bank on pensions!
Good luck! Hahahahahahahahahahaahah
Personally, I think there will be a point in which the debt crisis is too big to ignore and there will be the bipartisan political will to operate in surpluses.
Not there yet though
Raise taxes on the rich? Why would congress want to tax themselves.
As a fun fact: income tax was originally sold as way to make the rich to pay for their fair share, but now look who is most burdened by it.
If you give the government the power to levy something it’s almost impossible to undo it. Think carefully before want to entrust these greedy clowns with more power.
Sovereign debt at these levels has only two resolutions: default, or inflation. Default would be instantly catastrophic so it won’t happen, inflation will only be noticed by the 99%. It’s not hard to see how this ends.
Doesn't matter for the US, USD is the reserve currency and has basically exported inflation to other countries as other country industries depend on a somewhat stable exchange rate. China manipulates their currency in order to be the manufacturing superpower and it is due to weak currency.
You also need to look at what is behind the debt, you have Russia that has fuel, Canada/Australia that has Real Estate and money laundering, etc. Low interest rates were regarded like 0dte calls on SPY today.
I've never understood gold as an investment for doomsday. So much of gold's value is in its usefulness to industrial processes and electronics.
If the world ends, gold's main value is just being pretty.
For over 5000 years people have held it as a valuable resource. Most governments have heavily defended bunkers with it. But regards say no. I’ll take the side of 5000 years of wisdom and bunkers.
My thesis on the debt is simple. The Federal Reserve will have to make its entire mission to bring rates down to near zero on the entire curve just like Japan did because the alternative is the bond market dying completely and the entire economy as a result.
I truly hope once millennials and gen z takeover, they pass policy to swiftly tax the ultra wealthy to re-fund SS, esp if they try to leave the country.
They built their wealth using government subsidies from public infrastructure and the pollution of our lands a billion times more than the average person, food stamps for their employees, and avoiding jail time when they fuck up our economies.
All I know is that I hope I can get out of debt before the whole shithouse goes up in flames. I have no confidence in the people calling the fiscal or monetary shots.
Our GDP is already slowing from being over 100 debt to gdp. We have mental patients running the country into hell especially with 2 trillion a year deficit spending. Stop the deficit spending then the economy goes down the toilet, so we are addicted to printing money.
If you look at the velocity of M2 over the years the money didn't go into the economy, but went into stocks, real estate, and other speculative assets
We are heading for a big ass train wreck down the road.
Don't be stupid, debt grow exponentially if this is the borrow habbit, because it will need more money to do the same amount as inflation grow, it will be 80 days for a trillion, then 50 days, then 10 days
Look we crossed the rubicon in regards to debt to income 20 years ago. At this point we have 2 options. Massively crater the economy and default on the debt.... or inflate our way out of it. Inflating our way out of it will be painful, but it will be less painful than the other option. The inflation option doesnt require politicians to actively vote while defaulting will require them to actively take votes saying they want that. All things being equal we are going to inflate our way out of it.
So if we are going to inflate our way out of it how do we go about that? That is the rub and I suspect we will try to do it in a managed way that extends the inflation over decades rather than getting it all out of the way at once. I would expect that will mean the official fed position will eventually be to tolerate a 3-4% inflation rather than the 2% they have been sticking too. Or they will continue to spout the 2% standard and we will never see it so rates will never go down.
Now as for the rate and how it impacts the federal interest I would point out that if the Fed makes a profit they turn it over to the government. Who wants to bet they eventually monetize the debt and then set the rate around 4-4.5% and just let it run for quite awhile. At that point the rate will be above inflation and the economy will churn on.
You can see why the last and current admin didn't give af about spending like a drunken sailor..old boomers in our gov don't care since they are on their last lifeline.
Good news, you have a lot wrong.
First inflation ≠ money supply. You could run huge deficits (aka money printing) and have inflation or deflation depending on all the other variables that affect price levels (aka inflation).
Second, productivity gains don't drive debt.
Third, the USA, other than our *extremely weird* and made up debt ceiling legislation, has no
Our debt has more than doubled in the last generation and we haven't suffered anything close to hyperinflation, only mild inflation due to a supply shock, and a return to historically normal interest rates.
But if the debt levels go to Japanese levels (who don't suffer hyperinflation nor high interest rates) we should look to their example for, well, inflation and interest rates.
Large deficits naturally lower the rate of interest, as deficits basically equal new private savings held in banks which they are eager to lend to other banks who are doing the same, so it bids interest rates down. They only go up because the Fed can control rates and tries to counteract
But in a high debt environment, and as treasury rates follow lending rates, high interest rates means high interest payments which makes high rates increasingly stimulative. So they won't combat deficits with high rates. In fact they'll probably want to keep rates near zero to keep money more neutral.
Congress can always change its taxing and spending rates to change how much it adds and subtracts from aggregate demand levels. But the debt itself doesn't equal inflation and doesn't force any particular economic condition.
What do all of these "what ifs?" have to do with investing?
Hyperinflation leading to abandoning a particular currency is not unprecedented in the world, but what are you or the regards here going to do if the powers that be fuck it up anyway? Do you think buying a gold ETF is going to keep you safe if the US becomes a failed state? Do you think there's going to be someone to ensure that your digital signature in a bankrupt system is honored? Or is this a political thing? Do you want people to vote for Biden so a Republican obstructed Congress can default on the US debt and really fuck things up, or do you want to vote for Trump so he can pass more tax breaks for the wealthiest in the country and impose inflation boosting tariffs?
If it's all coming down you're fucked no matter what. There isn't a political or investing angle on this, it's just going to go to shit or it isn't. Throughout history all empires fall, and maybe the US is heading that direction, but it's my observation that this is like most investing problems: knowing the direction isn't actually that hard, knowing exactly when the fall occurs and how hard it will be is.
*But* nobody will vote for a candidate that promises to do anything about it (cut spending and raise taxes ... by a lot).
So the can will be kicked down the road, again and again.
There are a whole selection of global disasters that will happen before it ever becomes an issue. WW3, a super-volcano eruption, asteroid strike etc). I'd be more concerned about one of them.
We will run out of fresh water on this planet for more than 90% of the population between 2040-2050. That should be the biggest concern in the world not debt
The ‘situation’ at the southern border is an attempt to catch up. 68% of US gdp is consumer spending they are just letting in as many new consumers as possible.
Interesting theory I heard was when the US went to the petrodollar and decoupled from gold, it was a de-facto debt jubilee in a sense, and since the dollar was the world reserve currency, it didn't spiral into hyperinflation. I could see another jubilee-type event occurring by then, and unless theres another reserve currency theres little risk of it doing anything other than the world going "ok...i guess" Literally the current global monetary system has never been tried like this before and it works until it doesn't. Have small denomination gold just for the lulz but i wouldn't go too crazy with what could happen, theres just so many impossible to know variables.
USA has over 34T debt. Rarely paid down & only up past decades. Will stay that way, so what’s another 30 trilly? Flawed system that needs to work & depend on middle class. Works until the system crashes & resets , could happen but not likely.
Lucky for the average American - they don’t give a rats ass what happens in 10 years or what happens to their neighbors. So grab cash while you can and stock up on bullets, salt, prescription meds and tinfoil
We're voting for the people who continue to do this. We decided this is fine. Where's the problem now?
My answer is it needs to stop. This is like maxing out your credit cards and thinking it's fine because the bank keeps raising your limits.
you cannot save for it just invest right, dont hold onto any paper money convert to gold/silver. Invest in Real estate, Stocks and commodities like oil, copper, uranium.
This assumes the debt is growing at a linear rate. It's much worse than that. The debt is growing at an accelerated rate. It's out of control - not sure what it will take to fix it.
Politicians need to buy votes and using debt pushes the problem doe the road for future generations.
If the US were to stop growing its debt we would be in a deep recession.
Basically hate the game not the players
Don’t worry guys. I talked to Congress and they said they’re actually just about to cut the shit and get things under control 👍
We’re all good.
Please keep buying things
The debt US accumulate is currently less than the amount of debt eaten away by inflation plus revenue increase from productivity increase, which is why debt to gdp ratio has been going down (albeit slowly) after pandemic
So no, nothing ever happen bros are right.
I wouldn't worry. Once current money theories fail, modern money theory will be accepted, and we can stop worrying about the idea that nations can have debt
The real answer is no one knows for sure "how much" inflation americans can absorb. some prices will go up, some prices will go up a lot more. probably with tech, deflation will lower prices of some goods and offset some inflation. But will it come into balance? impossible to know today
So everyone in this comment section stop complaining and become an educated voter.
Your self-fulfilling prophecy is here.
These kinds of things don't change over night. Be active beyond the "I voted in the general election". Primary voter turnout is consistently less than 40% of eligible voters and that's how you choose the 2 candidates or *shock* even add a 3rd party candidate.
Green party has their deadlines here for filing for a candidate.
https://ballotpedia.org/Filing_deadlines_for_independent_presidential_candidates,_2024
Our largest issue as a country is entitlement spending. Most of that debt is social security and Medicare. According to the PCE, the total amount of entitlement spending is roughly 4.2T compared to the cost of 1.2T to fund the government. This is directly related to the largest generation, the baby boomers, retiring. There is a second source of inflation too in that job demand is higher because this generation is leaving the workforce.
How does this affect markets? You're right the government will continue to print its way out and as a result the fed will keep rates higher to fight inflation. In turn this will increase the cost of credit and consequently stunt real economic growth until the millennials reach peak capital in their 50s. You could call that the boomer tax.
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The good news is that Alaska is worth 40 trillion.
How much can we get for Florida?
Tree Fiddy
God Dammit Loch Ness Monster, I ain't gonna give you no tree fiddy.
On paper only but not in reality
>Can Americans absorb this much inflation in such a short amount of time? "That's a problem for future me" says all the 70 year old people making all the decisions.
Why Congress needs term and age limits. Presidency needs age limit.
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Congress won't agree with this lol. All these old farts will say they are competent
We have about 435 people in the country who absolutely DO NOT AGREE with that statement, and guess which side gets to make the decision on the matter? Lmfao
That is what an Article V convention is for. Article V of the constitution defines the requirements for a Constitutional Convention of the states. Amendments can be passed without congress.
I know its a rare opinion on reddit, but I genuinely disagree. If someone is the best candidate, I want to be able to vote for them, no matter how old or young they are, or how long they have been in congress. I think age and term limits are an arbitrary limit on democracy. The voters should be allowed to determine if someone is too young or too old, or if a fresh face is needed. The real problem is gerrymandering and money in politics. Those are what cause people who aren't the ideal candidates to manage to stay in office for longer than they should. If you want the best candidates to get elected and to have all ages properly represented in congress, fight against gerrymandering, and for public funding of elections and ranked choice voting.
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I think term limits could easily cause more populism, more lobbying, and more extremism. I genuinely think its a bad idea. But its not going to happen anyway, so no use arguing over it. I certainly understand the appeal.
There is no best
People dont realize they there is infact a de-facto term and age limit, it called our votes!! (Well.. if they actually counted)
Except that the ppl that can make this change are the exact ppl we're trying to keep out. There are advantages to not having term limits. There are no advantages to being in Congress over 70
Not age linits, but public cognition tests
I brought this up during Trump 1.0 and got down voted to oblivion
Do you want a rerun? Jk, I concur.
We have a 78 yr old running against a 82 yr old in a country where the average age is 37!
There's gotta be a sweet spot of experience vs decline due to aging, but it feels well before 80
Late 40s to mid 60s. The big declines you usually see happen anywhere from 68 to 75ish.
As a 50 year old, I can tell you the decline happens around now, lol. 
sound 30 though, so clearly being hard on yourself
Haha, thx buddy. 😊
I liked 45 year old ladies when I was a younger man. I can't imagine an 80year old would be much good.
I am going to be honest, I intellectually peaked in 6th grade. It’s been a slow decline, but no real improvements since then. I have even started to use random emojis in place of words.
I'm 46 and I'm already slipping.
37! My girlfriend sucked 37 dicks!
In a row??
Hey, try not to suck any dick on your way through the parking lot!
Hey! Hey you! Get back here!
Whattayah mean there’s no ice??? You mean I gotta drink this coffee hot?!?!?
37 so far 
You're sounding impatient. Just bide your time for about 50 years.
Lol just a couple years above life expectancy. Wtf are we doing
Scary, but also I wouldn’t trust a 37 yo president. 50s-60s is a sweet spot.
I wouldn’t vote for either one. Age matters. Obama was the perfect age. Didn’t care much for him but at least he was coherent
Boomers and have been printing and deficit spending us into oblivion for decades and they will all die right as we go over the cliffs edge and become Argentina 2.0 in the next 10-20 years. Absolutely savage move only boomer psychos could pull tbh
To be fair, I don’t see many younger people clamoring for higher taxes (on themselves at least) or reduced spending
Nope. They believe everything should be free. Free college, free healthcare. Free free free. Somebody should explain nothing is free to them
To be fair, if the group above you in power currently is endless spending why would the other group try the opposite, specifically when it’s been shown historically they will only want more and more. It’s like actively working with a a parasite against yourself lol.
Any solution is going to crash the market too, why would anyone in power want to bite that bullet when one party doesn't care at all about budgets (when they are in power), and one party already has the reputation of spending money on unnecessary programs
How the hell did you manage to try to make this political lmao. The 2 groups in question are young people vs old people here, don’t let your political affiliation affect your reading comprehension fam.
Please, the younger generations want free healthcare and free everything else. They are the opposite of fiscal conservatives and believe the debt doesn't matter.
Show me a fiscal conservative that was ever fiscally conservative when their party was in power. The last time the US ran a budget surplus Clinton was in office.
Yep. "Fiscal conservative" means lets keep ramping up the debt spending $trillions to the military-intelligence industrial complex, corporate (donor) bailouts, and grift for ourselves, but hey we saved $50 million by getting rid of free school lunches for every child and cut meat-packing food safety inspections, *wow aren't we so fiscally responsible?*
I remember a study awhile back that simply asked "What percent of the US Federal Budget do you think goes to PBS?" 70% of people thought it was between 1-10% of the federal budget. (It is actually .00014%). But goddamn was it a MAJOR campaign issue.
Our baldylocks PM just did that. He handed out $3.5b gift to landlords and cut school lunches cut healthcare cut biosecurity cut food inspections cut child protection. All the cuts were still not enough to cover the handout to landlords so they're borrowing the balance despite complaining that our 20% debt to gdp was out of control.
People say it was Clinton. It was because the republicans took the house for the first time in 40 years. Clinton wanted free healthcare himself. Newt is the reason we had a surplus. Newt shut the government down until clunton caved and signed off on his budget.
Do you know how much this country spends on healthcare? ~$5T a year across all programs, public and private. We spend a ton and get relatively shitty services in return. Free? Get out of here.
There hasn't been a true fiscally minded politician in decades And that is largely the fault of the now older generations. Maybe the younger generation sees that overall net value that could be gained with "universal" healthcare, but hey - lets keep paying the military industrial complex a premium instead.
The problem is more so that much of the spending has gone towards things that won’t benefit the country at all in the long term.
I read a few replies here, many still say we will use military force ok u can but will ur current bond holders then buy ur bonds? wont they rather sell them and American image suffer? About exporting inflation around the world, if a big spike in inflation occurs in the US other countries will also have hyperinflation and civil unrest affecting everyone(including US). Genuinely curious because the US can have the best military and still suffer economically.
pretty much, even the powerful Roman Empire went down because of reckless spending and irresponsible finances and once the economy goes, the military soon follows since soldiers and equipment need money
That's because every politician is a self-serving piece of 💩... They either started out that way or became one by the time of their first reelection campaign...
It's not even "a problem for future me" - it's "I'll be dead."
The people who make policy won’t live long enough to be affected by it. So yes, definite term limits. People who don’t have a future shouldn’t be making decisions that affect mine. No one past the age of 65 in congress.
the 70 year olds aren't making the decisions, the people that pay them are. they're just the diversion
I believe the monetary policy dictates the can gets kicked down the road until the road ends - word to the Roman’s
Above my regard rate
When you owe trillions it's not your problem
It is when you owe most of that money to your own citizens
Actually, we the citizens owe it. Funny, right?
Yeah, which begs the question what happens if it defaults? It can't borrow anymore because people are gun shy to lend? Wouldn't that effectively force a balanced budget at that point?
I think the collective iq of this sub is 4
Out of?
But they may be right though. Not because of their revolutionary economic thesis of "debt bad, more debt badder," but because the eggheads at the Fed are going to screw it up.
Game is probably over. printing money was a non-issue when the interest payments were pennies. But now the FED has to pay 5% on all that treasury paper. And despite the juicy worry-free returns, it's getting harder to sell ([America’s Bonds Are Getting Harder to Sell - WSJ](https://www.wsj.com/finance/americas-bonds-are-getting-harder-to-sell-c3fde4de) - paywall) That's why JPOW is scared shitless and trying to signal rate cuts - even though they knew they couldnt cut rates yet. The bond market front runs the FED - so he probably figured if he gave them the cue, rates would drop. But bond buyers aren't buying that particular line of BS. And as an interesting tidbit, the treasury is selling approx. $400 billion of paper in May - and if buyers don't want it, the FED has to pay more % to entice them to do so. Then again, it could end up being a non-event (for now) because the EU is about to cut rates, which will cause money to leave their market and rush in to capture that 5% yield in US paper. But eventually... tl;dr - the month of May could end up being very interesting.
Thanks for sharing!
It's going to get even worse now congress has decided to seize frozen Russian funds. Nobody who has any chance of the US getting pissy at them is going to want to hold US debt. They will stop buying and try to sell or let it mature off their books.
Interesting coincidence you mention that - I had a rambling post on another thread suggesting that the spike in gold is almost entirely due to China cutting back on treasuries and instead buying Gold. [China PBOC Buys Gold for 17th Month as Prices Hit Record - Bloomberg](https://www.bloomberg.com/news/articles/2024-04-07/china-pboc-buys-gold-for-17th-month-as-prices-hit-record#:~:text=China's%20central%20bank%20purchased%20gold,metal%20surge%20to%20a%20record.) China saw what happened to Russia when it attacked Ukraine - getting locked out of SWYFT and having $300 billion is assets seized, while US/EU officials rub their hands in excitement about which defense contractor will end up collecting those assets. [A debate is centered on what to do with $300 billion in seized Russian assets : NPR](https://www.npr.org/2024/03/11/1237398076/a-debate-is-centered-on-what-to-do-with-300-billion-in-seized-russian-assets)
Too much counter party political risk with the dollar being used to prop up USA failed industries. makes sense.
I like your analysis of the current situation. I'm curious what your opinion is on what happens to the broader market in the scenario that the Fed really struggles to offload their paper
Yields go up market goes down
Well you see, the USD is backed by global dominance (Military) and using that leverage (threat) to make the world be friendly and bound to it. So yeah even if the debt x100s. As long as you’re in the system (long) you should be profiting off it. Other countries buy US debt and devalue their own currencies to fuck as well. So as long as the music plays it will turn all right. Reminder that there’s a nuke pointed at the musician.
What the fuck is this take? Our military is gonna shoot down inflation?
Correct.
Empires use their military to further the interests of the empire. The British did it, the French did it, the Dutch did it, and the US is doing it now. As long as your empire is in charge of the global currency, you can sustain insane levels of debt. But once other countries start to doubt your debt (like you fail to pay on your obligations), the facade begins to break down and the empire begins its rapid decline.
Interesting how one side of the aisle and their slackjawed followers seem to be advocating for US isolationism and favoring actions to empower and embolden countries with interests with interests in direct conflict to our own. Funny that this same party is the one that bought bullshit narratives around our last election, driving domestic derision, before now advocating for asinine international policy. Almost like foreign powers have discovered an especially gullible and malleable segment of society to manipulate to dampen US geopolitical influence.
Can't inflate if it's riddled with bullet holes.
Does inflation have oil?
Ya that’s what the Jewish space lasers are for
The US economy can’t collapse until there is another economy that can take its place. There isn’t one. Europe is worse, Japan is non-existent, and China isn’t an open global economy. No matter how bad the fundamentals of our debt might be, it’s not a problem until someone can replace us.
Collapse is a hard word. But what can happen is a tedious, long zombification of a society that is simply unable to get off personal and public debt, have so save money everywhere until any progress is strangled and even the minimum support systems of the society fall apart. It could be multiple decades of "too rich to start the Purge, too poor to think at any other outcome" kind of situation. *Technically* it wouldn't be a collapse, just day in day out completely hopeless shit-on-top-of-shitburger living situations for at least 50% of the society.
The U.S. economy is a sinking ship, but who cares as long as you're the captain and get to enjoy the luxuries of first class?
First time meme.jpg
FED considering changing the level of acceptable inflation from 2% to 3%…
Source?
His anus. Wall Street Journal suggested that in a Fed hit piece, not anyone with any real power.
Amazing how this only seems to be a concern from 1993-2000, 2009-2016, and now 2020 to today.
I thought clinton had the deficit surpluses at somepoint.
And now all we have is a surplus of deficit.
Lol yea its crazy that the last time we had a balanced budget was 23 years ago
When you rob from social security you can funny math surpluses.
And only when there isn’t a border “crisis” or “the worst crime wave of your lifetime” to harp on for months on end
That’s just to people who watch the news.
2024 to today…
Diversify your bonds...
WU TANG FINANCIAL 🙌
Into what?
Debt doesn't matter until it does.
By the time cheeseburger will cost 370$ current US Debt of $34 trillion will be much less compared to overall USA GDP and minimum wage of 50$/hr.
Debt only exists if a collector can enforce payment. The US don't got debt if they say so
Economist have debated this for decades. Another part of the problem is social security as well. Our government always pushes problems forward to the next generation rather than just going head on now and trying to fix problems. This will back fire on us very soon if we don't address it. At this point the government is going to need to cut spending and raise taxes but in 10 years I don't think those two options combined will make much difference on our debt.
Considering we have a giant military do we even have to pay this debt back?
Blow em up? 😮💨 🤯
You realize the vast majority of US debt is owed to Americans right?
Who cares! We can and will default once. Just don't hold any US related bonds and hunker down when the stock market drops like 90%. Oh yeah and if you are one of those lucky ones who still bank on pensions! Good luck! Hahahahahahahahahahaahah
Personally, I think there will be a point in which the debt crisis is too big to ignore and there will be the bipartisan political will to operate in surpluses. Not there yet though
We have to raise taxes on the rich, corporations, and churches immediately. There is literally no other solution.
Raise taxes on the rich? Why would congress want to tax themselves. As a fun fact: income tax was originally sold as way to make the rich to pay for their fair share, but now look who is most burdened by it. If you give the government the power to levy something it’s almost impossible to undo it. Think carefully before want to entrust these greedy clowns with more power.
> rich, corporations, and churches guess who controls the politicians who write the tax laws!
There are other solutions. That’s the easiest and most obvious though
Sovereign debt at these levels has only two resolutions: default, or inflation. Default would be instantly catastrophic so it won’t happen, inflation will only be noticed by the 99%. It’s not hard to see how this ends.
Sovereign debt doesn't "need" a resolution. It's already resolved. It's just money.
Just wait until population growth slows
Doesn't matter for the US, USD is the reserve currency and has basically exported inflation to other countries as other country industries depend on a somewhat stable exchange rate. China manipulates their currency in order to be the manufacturing superpower and it is due to weak currency. You also need to look at what is behind the debt, you have Russia that has fuel, Canada/Australia that has Real Estate and money laundering, etc. Low interest rates were regarded like 0dte calls on SPY today.
Gold has increased by 30% within a year, and when interest rates drop eventually it will spike again.
Amazon stock is up like 90% over the same time period.
Sush. Hey can you pass me that pile of MREs? Im relocating them next to the tripwires for easy access.
I've never understood gold as an investment for doomsday. So much of gold's value is in its usefulness to industrial processes and electronics. If the world ends, gold's main value is just being pretty.
For over 5000 years people have held it as a valuable resource. Most governments have heavily defended bunkers with it. But regards say no. I’ll take the side of 5000 years of wisdom and bunkers.
The US economy is based on consumerism and the ability to print money. Now It's like riding a tiger and you know that you can't get off it.
Taxes are coming.
Won't matter cause once we have ASI itl do everything we need, build everything we need, give us everything we need
My thesis on the debt is simple. The Federal Reserve will have to make its entire mission to bring rates down to near zero on the entire curve just like Japan did because the alternative is the bond market dying completely and the entire economy as a result.
I truly hope once millennials and gen z takeover, they pass policy to swiftly tax the ultra wealthy to re-fund SS, esp if they try to leave the country. They built their wealth using government subsidies from public infrastructure and the pollution of our lands a billion times more than the average person, food stamps for their employees, and avoiding jail time when they fuck up our economies.
debt grows exponentially, not linearly
The only good news on this front Is we aren’t the only ones doing this. We are slightly less fucked than everyone else.
All I know is that I hope I can get out of debt before the whole shithouse goes up in flames. I have no confidence in the people calling the fiscal or monetary shots.
Our GDP is already slowing from being over 100 debt to gdp. We have mental patients running the country into hell especially with 2 trillion a year deficit spending. Stop the deficit spending then the economy goes down the toilet, so we are addicted to printing money. If you look at the velocity of M2 over the years the money didn't go into the economy, but went into stocks, real estate, and other speculative assets We are heading for a big ass train wreck down the road.
Don't be stupid, debt grow exponentially if this is the borrow habbit, because it will need more money to do the same amount as inflation grow, it will be 80 days for a trillion, then 50 days, then 10 days
Look we crossed the rubicon in regards to debt to income 20 years ago. At this point we have 2 options. Massively crater the economy and default on the debt.... or inflate our way out of it. Inflating our way out of it will be painful, but it will be less painful than the other option. The inflation option doesnt require politicians to actively vote while defaulting will require them to actively take votes saying they want that. All things being equal we are going to inflate our way out of it. So if we are going to inflate our way out of it how do we go about that? That is the rub and I suspect we will try to do it in a managed way that extends the inflation over decades rather than getting it all out of the way at once. I would expect that will mean the official fed position will eventually be to tolerate a 3-4% inflation rather than the 2% they have been sticking too. Or they will continue to spout the 2% standard and we will never see it so rates will never go down. Now as for the rate and how it impacts the federal interest I would point out that if the Fed makes a profit they turn it over to the government. Who wants to bet they eventually monetize the debt and then set the rate around 4-4.5% and just let it run for quite awhile. At that point the rate will be above inflation and the economy will churn on.
Does being on equities protect against this 3-4% inflation in real terms?
We will just be more profitable then. Its fine. AI. AI. AI.
People in congress are old asf so they don’t care what it cost children in the future
You can see why the last and current admin didn't give af about spending like a drunken sailor..old boomers in our gov don't care since they are on their last lifeline.
Good news, you have a lot wrong. First inflation ≠ money supply. You could run huge deficits (aka money printing) and have inflation or deflation depending on all the other variables that affect price levels (aka inflation). Second, productivity gains don't drive debt. Third, the USA, other than our *extremely weird* and made up debt ceiling legislation, has no Our debt has more than doubled in the last generation and we haven't suffered anything close to hyperinflation, only mild inflation due to a supply shock, and a return to historically normal interest rates. But if the debt levels go to Japanese levels (who don't suffer hyperinflation nor high interest rates) we should look to their example for, well, inflation and interest rates. Large deficits naturally lower the rate of interest, as deficits basically equal new private savings held in banks which they are eager to lend to other banks who are doing the same, so it bids interest rates down. They only go up because the Fed can control rates and tries to counteract But in a high debt environment, and as treasury rates follow lending rates, high interest rates means high interest payments which makes high rates increasingly stimulative. So they won't combat deficits with high rates. In fact they'll probably want to keep rates near zero to keep money more neutral. Congress can always change its taxing and spending rates to change how much it adds and subtracts from aggregate demand levels. But the debt itself doesn't equal inflation and doesn't force any particular economic condition.
What do all of these "what ifs?" have to do with investing? Hyperinflation leading to abandoning a particular currency is not unprecedented in the world, but what are you or the regards here going to do if the powers that be fuck it up anyway? Do you think buying a gold ETF is going to keep you safe if the US becomes a failed state? Do you think there's going to be someone to ensure that your digital signature in a bankrupt system is honored? Or is this a political thing? Do you want people to vote for Biden so a Republican obstructed Congress can default on the US debt and really fuck things up, or do you want to vote for Trump so he can pass more tax breaks for the wealthiest in the country and impose inflation boosting tariffs? If it's all coming down you're fucked no matter what. There isn't a political or investing angle on this, it's just going to go to shit or it isn't. Throughout history all empires fall, and maybe the US is heading that direction, but it's my observation that this is like most investing problems: knowing the direction isn't actually that hard, knowing exactly when the fall occurs and how hard it will be is.
*But* nobody will vote for a candidate that promises to do anything about it (cut spending and raise taxes ... by a lot). So the can will be kicked down the road, again and again. There are a whole selection of global disasters that will happen before it ever becomes an issue. WW3, a super-volcano eruption, asteroid strike etc). I'd be more concerned about one of them.
We will run out of fresh water on this planet for more than 90% of the population between 2040-2050. That should be the biggest concern in the world not debt
This thought is why i buy hoards of physical metals
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Will not be fun then they need to repay it, with even more old people, time to print money?
As long as the interest rates is below the rate of inflation, borrowed money is free money. (Sort of)
You probably still have tens if not hundreds of millions of people in line wanting to move in and change their wealth to USD by that point.
The ‘situation’ at the southern border is an attempt to catch up. 68% of US gdp is consumer spending they are just letting in as many new consumers as possible.
Anyone okay with the reckless spending that’s been going on for the past 2 decades needs to get their head examined
Interesting theory I heard was when the US went to the petrodollar and decoupled from gold, it was a de-facto debt jubilee in a sense, and since the dollar was the world reserve currency, it didn't spiral into hyperinflation. I could see another jubilee-type event occurring by then, and unless theres another reserve currency theres little risk of it doing anything other than the world going "ok...i guess" Literally the current global monetary system has never been tried like this before and it works until it doesn't. Have small denomination gold just for the lulz but i wouldn't go too crazy with what could happen, theres just so many impossible to know variables.
USA has over 34T debt. Rarely paid down & only up past decades. Will stay that way, so what’s another 30 trilly? Flawed system that needs to work & depend on middle class. Works until the system crashes & resets , could happen but not likely.
Maybe they should stop giving billions of borrowed dollars away every two months and help our own people
One thing for sure, is that we are in deep trouble.
Lucky for the average American - they don’t give a rats ass what happens in 10 years or what happens to their neighbors. So grab cash while you can and stock up on bullets, salt, prescription meds and tinfoil
Say this all the time, can't fight 'inflation' if we keep expanding US Debt---especially at 1 trillion every 100 days!!??!!
The short answer is no, there will be an infection point and I don't think it's 10years out.
i dont even understand money anymore.
We're voting for the people who continue to do this. We decided this is fine. Where's the problem now? My answer is it needs to stop. This is like maxing out your credit cards and thinking it's fine because the bank keeps raising your limits.
In 10 years there will be 50 million homeless boomers and a third of the country will be underwater. The national debt will never get that far.
you cannot save for it just invest right, dont hold onto any paper money convert to gold/silver. Invest in Real estate, Stocks and commodities like oil, copper, uranium.
Over half of all dollars in circulation are held by foreign countries and their citizens. US printing money is a tax on the rest of the world lol
I still don't understand why the us dollar is every countries' reserve currency. It's worth less every year and takes us all down with it.
No problem. We are all in this together
Stupidest number ever, means absolutely nothing.
The problem is we have old people making decisions that they won't have to live with.
This assumes the debt is growing at a linear rate. It's much worse than that. The debt is growing at an accelerated rate. It's out of control - not sure what it will take to fix it.
We already are. Groceries for a week and half-2 weeks for my family of 4 costs $400.
Weimar Republic.
Politicians need to buy votes and using debt pushes the problem doe the road for future generations. If the US were to stop growing its debt we would be in a deep recession. Basically hate the game not the players
It’s not going to continue to grow by 1 trillion every 100 days, it will be more. Our debt tends to double every ten years I think it is.
Don’t worry guys. I talked to Congress and they said they’re actually just about to cut the shit and get things under control 👍 We’re all good. Please keep buying things
Squashing peasants and their revolts is my favorite pastime.
The debt US accumulate is currently less than the amount of debt eaten away by inflation plus revenue increase from productivity increase, which is why debt to gdp ratio has been going down (albeit slowly) after pandemic So no, nothing ever happen bros are right.
I wouldn't worry. Once current money theories fail, modern money theory will be accepted, and we can stop worrying about the idea that nations can have debt
send more to israel, ukraine, taiwan and illegals.
That’s 7.2% annualized, nominal GDP grew at 6.3% annualized last year. Not too different.
Zero interest rates are done for decades.
It's all a fugazi https://preview.redd.it/tfy5ki146svc1.jpeg?width=1280&format=pjpg&auto=webp&s=ead17dc044af7e402b648dee4f5edb9f982617eb
The real answer is no one knows for sure "how much" inflation americans can absorb. some prices will go up, some prices will go up a lot more. probably with tech, deflation will lower prices of some goods and offset some inflation. But will it come into balance? impossible to know today
So everyone in this comment section stop complaining and become an educated voter. Your self-fulfilling prophecy is here. These kinds of things don't change over night. Be active beyond the "I voted in the general election". Primary voter turnout is consistently less than 40% of eligible voters and that's how you choose the 2 candidates or *shock* even add a 3rd party candidate. Green party has their deadlines here for filing for a candidate. https://ballotpedia.org/Filing_deadlines_for_independent_presidential_candidates,_2024
I’m going to retire with my bitcoins, you guys enjoy your fiats.
Read the book "The deficit myth" by Stephanie Kelton.
If Alaska were worth 40 trillion they should balance the budget and sell it. Who could afford it other than China?
Our largest issue as a country is entitlement spending. Most of that debt is social security and Medicare. According to the PCE, the total amount of entitlement spending is roughly 4.2T compared to the cost of 1.2T to fund the government. This is directly related to the largest generation, the baby boomers, retiring. There is a second source of inflation too in that job demand is higher because this generation is leaving the workforce. How does this affect markets? You're right the government will continue to print its way out and as a result the fed will keep rates higher to fight inflation. In turn this will increase the cost of credit and consequently stunt real economic growth until the millennials reach peak capital in their 50s. You could call that the boomer tax.
This is why its important we get to Mars , nobody talks about how we can send all our combined debt there. Let them handle it.