US Debt in real time

[Still-One]

Originally Posted by wpascoe

And what happens when inflation hits (as it inevitably will, after years and years of "quantitative easing") and our interest costs go up by a point, or two, or three?

With the global economy seemingly mired in a stagnant phase for the foreseeable future there is little chance of us seeing rapidly rising interest rates. What is your reasoning for having no debt?

Actually no US debt "could" create unforeseen issues. Without debt there would no need for T-bills. Where would all of that global money go? (I have no idea)

I am not advocating for unlimited debt ceilings. The bigger problems I see for our economy moving forward are: 1) the move towards part time employment as a business strategy 2) the elimination of defined pensions 3) the movement of our manufacturing base offshore

[blacsno]

Originally Posted by Still-One

With the global economy seemingly mired in a stagnant phase for the foreseeable future there is little chance of us seeing rapidly rising interest rates. What is your reasoning for having no debt?

Actually no US debt "could" create unforeseen issues. Without debt there would no need for T-bills. Where would all of that global money go? (I have no idea)

I am not advocating for unlimited debt ceilings. The bigger problems I see for our economy moving forward are: 1) the move towards part time employment as a business strategy 2) the elimination of defined pensions 3) the movement of our manufacturing base offshore

AMEN!! One last piece of info! Another sore point with me is Asian automakers are allow dump vehicles into US. If US Citizens had to pay FAIR markets value as one does with European vehicles. Citizens would think twice about on the products they would buy. My hero President Reagan signed into law measures, but Bush senior undone those controls!! This is why original post is so spot on!!

Ken

[eljr]

I used to walk by the debt clock every day, 33rd and 7th in Manhattan. That was decades ago.

The nature and size of he debt is little understood and "experts" can't even agree on what is prudent.

[eljr]

Originally Posted by Still-One

With the global economy seemingly mired in a stagnant phase for the foreseeable future there is little chance of us seeing rapidly rising interest rates. What is your reasoning for having no debt?

Actually no US debt "could" create unforeseen issues. Without debt there would no need for T-bills. Where would all of that global money go? (I have no idea)

I am not advocating for unlimited debt ceilings. The bigger problems I see for our economy moving forward are: 1) the move towards part time employment as a business strategy 2) the elimination of defined pensions 3) the movement of our manufacturing base offshore

excellent post

[PHC1]

A rather simplified explanation from investopedia but it covers most of the important points about The National Debt.


How the National Debt Affects Everyone
Given that the national debt has recently grown faster than the size of the American population, it is fair to wonder how this growing debt affects average individuals. While it may not be obvious, national debt levels directly affect people in at least five direct ways.

First, as the national debt per capita increases, the likelihood of the government defaulting on its debt service obligation increases, and therefore the Treasury Department will have to raise the yield on newly issued treasury securities in order to attract new investors. This reduces the amount of tax revenue available to spend on other governmental services, because more tax revenue will have to be paid out as interest on the national debt. Over time, this shift in expenditures will cause people to experience a lower standard of living, as borrowing for economic enhancement projects becomes more difficult.

Second, as the rate offered on treasury securities increases, corporations operating in America will be viewed as riskier, also necessitating an increase in the yield on newly issued bonds. This in turn will require corporations to raise the price of their products and services in order to meet the increased cost of their debt service obligation. Over time, this will cause people to pay more for goods and services, resulting in inflation.

Third, as the yield offered on treasury securities increases, the cost of borrowing money to purchase a home will also increase, because the cost of money in the mortgage lending market is directly tied to the short-term interest rates set by the Federal Reserve, and the yield offered on treasury securities issued by the Treasury Department. Given this established interrelationship, an increase in interest rates will push home prices down, because prospective home buyers will no longer qualify for as large of a mortgage loan, since they will have to pay more of their money to cover the interest expense on the loan that they receive. The result will be more downward pressure on the value of homes, which in turn will reduce the net worth of all home owners.

Fourth, since the yield on U.S. Treasury securities is currently considered a risk-free rate of return and as the yield on these securities increases, risky investments such as corporate debt and equity investments will lose appeal. This phenomenon is a direct result of the fact that it will be more difficult for corporations to generate enough pre-tax income to offer a high enough risk premium on their bonds and stock dividends to justify investing in their company. This dilemma is known as the crowding out effect, and tends to encourage the growth in the size of the government, and the simultaneous reduction in the size of the private sector.

Fifth, and perhaps most importantly, as the risk of a country defaulting on its debt service obligation increases, the country loses its social, economic and political power. This in turn makes the national debt level a national security issue.

The Bottom Line
The national debt level is one of the most important public policy issues. When debt is used appropriately, it can be used to foster the long-term growth and prosperity of a country. However, the national debt must be evaluated in an appropriate manner, such as comparing the amount of interest expense paid to other governmental expenditures or by comparing debt levels on a per capita basis.

[PHC1]

Tick, Tock, Tick, Tock... $27 Trillion and rising. Debt to GDP ratio of 130%.

https://usdebtclock.org/index.html#

It has been 5 years since I have updated this thread. Let's just say debt is not going away.

[bart]

We're not better off here, neither is China.
Is a global crash imminent?

[PHC1]

Originally Posted by bart

We're not better off here, neither is China.
Is a global crash imminent?

Bart, in order to answer that question, one must first answer the question of "Is Infinite Growth on a Finite Planet Possible"? Many experts say NO.

[JemHadar]

Originally Posted by PHC1

Bart, in order to answer that question, one must first answer the question of "Is Infinite Growth on a Finite Planet Possible"? Many experts say NO.

The almost impossible aspiration to control inflation, the fact that central banks, for all intents and purposes, keep printing money, the insatiable hunger for growth that can only be sustained through inflation and the evaporation of value has reduced many economies to glorified Ponzi schemes. Infinite growth is an illusion and a fallacy indeed.

[bart]

It was a rhetorical question.