Sorry folks this is my fault. My partner and I and some friends have been saving for a decade to buy a home together and this is the year we finally had enough saved because it literally takes 6 people to buy a house in America these days. We’ll still end up buying one at whatever interest rate we have to because we fucking have no choice now and then they’ll tank so no worries it’ll be fine next year.
Buying a house is like planting a tree. The best time was 29 years ago, but the second best time is now.
Fiscal responsibility would have been preventing climate change instead of paying 10(+)x the cost mitigating it on top of still paying to slow it.
Fiscal responsibility would have been not bail out and continuously subsidize free market failures.
Fiscal responsibility would have been to cut defense spending ever. Or maybe just don’t invade Iraq the second time for no goddamn reason.
Fiscal responsibility would have been building a robust public transit and freight rail infrastructure instead of continuously building and rebuilding roads that destroy themselves faster and faster under more and heavier vehicles.
Fiscal responsibility would be not spending more on means testing than it costs to just give people help who ask for it.
This next one’s going to be real hard for people who aren’t math geniuses like me, but fiscal responsibility would also mean having enough taxes to cover your spending.
Define ‘debt’
This asshat is only focused on federal deficit which means not enough austerity, cut public programs please, etc
Real debt is over leveraged banks, trillions in derivatives that cant be covered in a default, unregulated ‘over the counter’ swaps and oh hey look at those securities of bundled commercial real estate mortgages. All debt. All ready to pop. But yeah, blame social security lol
Hey hotshot prof, read Greenspan’s lips: The United States can pay any debt it has because we can always print money to do that.
Yeah there are people in modern monitory theory who agree completely, saying deficits don’t exist if you can print more money at the money factory. To a certain extent I agree, but it requires currency supremacy. Thanks to Ukraine sanctions and swift shutoffs however the world is de-dollarizing which will weaken the US’s ability to always just print more and demand foreign debt be held in dollars.
Yup, things are changing pretty quickly. The US’s ability to expropriate through neocolonialism is slipping as well, and our capitalist class still has little interest/incentive to rebuild the indigenous industrial capacity that they offshored decades ago.
Debt doesn’t “trigger” anything. Debt is irrelevant until something else triggers a meltdown, and only after that does debt become a problem. The debt, on its own, doesn’t actually matter. Debt is predictable. It takes something unexpected to actually cause a meltdown.
The 2008 meltdown was caused by the banks writing bad, subprime mortgages which they knew were going to default. So in that case, the root cause was in fact the debts themselves. The trigger could have been any number of small things, since the meltdown was already overdetermined by the subprime mortgages, like overheated water that starts boiling at the slightest bump. The proximal cause is always of course that people start defaulting on their debts.
Mortgages went underwater because housing prices fell after the housing bubble popped, but the debt didn’t cause the bubble to pop. What caused the bubble to pop was lower sales and rising inventories, which lead to falling prices, which then lead to defaults from bad debt. The debt, itself, doesn’t trigger anything. I think of debt more like fuel. Having a lot of fuel doesn’t cause the explosion, just fuels it.
The pedantic argument that debts don’t trigger anything implies that any arbitrarily large amount of debt can be created, but never blamed. The root cause of the largest economic collapse since the great depression was the millions of ludicrously bad, known-to-be-unpayable debts, which were the cause of the massive real estate valuation bubble in the first place.
It’s not that an arbitrarily large amount of debt can be created, but the amount of debt that can be created is predicated on the amount of economic growth that can happen. Eventually growth slows down and then the debt goes bad, but it wasn’t the debt that caused growth to slow down. The growth slows down because growth, itself, can never actually be infinite. It always slows down.
That’s why markets regularly go into crisis. They need infinite growth to work, so the housing market (for example) needs to always be building and selling more houses to be a sector for growth. The problem is that you can only sell so many houses before you reach the carrying capacity of the market, after which sales fall and inventories rise, and then prices fall, and then the debts go bad. The debt, itself, doesn’t cause the crisis. The limits to growth are what cause the crisis, and this is inevitable in all market economies.
Debt is what makes an economic downturn go from “bad” to “bad”.
i dont think itll be a issue. the economic crises of the past have always come from the private sector, not the Government. the mortgage rates could likely trigger a recession but not the Government debt. unless of course, the U.S. Government decides to knee-cap itself and cut spending.
This fear is echoing outside of Wall Street, too. The Black Swan author Nassim Taleb says the economy is in a “death spiral,” while Fed Chairman Jerome Powell says it’s past time to have an “adult conversation” about fiscal responsibility.
Fuck you Powell
The main issue with government debt is that it increases debt payments which in turn reduces the operating budget for the government.
Yea but they can create more debt or create money out of nothing (if they want to). Americans specifically have the “exorbidant privilege”
They really just want to cut spending (not military spending but welfare) using debt as an excuse
While I completely agree that they just want to cut spending, it’s worth noting that the whole exorbitant privilege hinges on the global demand for the dollar. The idea is that US can issue as much currency as it wants, and the rest of the world will buy it up. The main reason for this traditionally was that oil was traded exclusively in dollars, and every country needs oil to operate, so you had a constant demand for dollars. Now, there’s a whole alternate economy out there that’s completely independent of the dollar, and dollar based economy is shrinking every year.
Yea, with rise of alternate currencies, US dollar may lose the “exorbitant privilege” of being able to import whatever it wants.
However, that doesn’t mean U.S. or any other country cant mobilize internal resources by creating as much money as needed. The problem with the US is that it’s not investing in productive capacity, wasting away resources on military (which is always left out of the debt discussion).
There is also the fact that US and most western capitalist countries are always demand constrained because of inequality and unemployment.
Right, lack of productive forces and the fact that the resources that are present are being misused are the actual problems. The thing is that there’s no clear path from the way US economy operates currently to a more sensible economy. As long as the financial oligarchs are in charge they will insist doing what they’re currently doing. So, while the problems caused by debt are artificial, they are also inherent in the way the current system is structured. Addressing these problems requires restructuring the system.
Is this just the GQP trying to set up excuses ahead of time in case by some miracle their Orange Julius Caesar manages to win the election, but then fails to accomplish anything besides more crippling dept after yet another four years?
The federal government creates the money either through direct spending by Congress or back stopping money creation by private banks via the reserve system. Money is then destroyed through taxation.
The “debt” is literally the count of untaxed dollars in circulation.
Treasury securities are simply money that they pay interest on.
They create the money. How can they ever run out of money???
They don’t run out of money, but they do increase yearly debt payments reducing the overall operating budget for the government.
the account posting this let’s me know it isn’t a big deal
This is the best summary I could come up with:
A Wharton Business School finance professor, Gomes is issuing a warning cry many of his peers so far have chosen to ignore: America’s burgeoning public debt mountain.
Gomes admits he’s “probably” more worried than his colleagues about government debt, but refuses to stay silent on a broiling issue he believes will throw the global economy into disarray.
Gomes predicts America’s $34 trillion debt burden may upset the world’s financial markets as early as next year—should a president-elect announce a raft of expensive policies.
The Black Swan author Nassim Taleb says the economy is in a “death spiral,” while Fed Chairman Jerome Powell says it’s past time to have an “adult conversation” about fiscal responsibility.
Bank of America Research’s Flow Show team, led by investment strategist Michael Hartnett, calculated in February that the deficits run up under the tenures of Presidents Trump and Biden are the greatest since Franklin D. Roosevelt in the 1930s.
“Responsible budget proposals” may suffice to stave off any market upset, Gomes said, while “imposing major cuts on some programs … opens a Pandora’s box of social unrest that I don’t think anybody wants to think about.”
The original article contains 1,294 words, the summary contains 186 words. Saved 86%. I’m a bot and I’m open source!
