The accumulation of large debt by the US troubles me.

My education contained a bare minimum of instruction in economics. However, in my 40-year career as a purchasing agent and contracting officer I tried to educate myself, especially after I became a director. I developed a keen interest in eco theory. I bought and read books recommend by a friend (a university economics chair).

I monitored the consumer price index and tried to follow trends. The purchasing association I belonged to issued a monthly report that was part of information used by Alan Greenspan’s office to issue forecasts. In other words, economic trends affected my work and I became quite interested in knowing more.

It’s an inexact science that is affected by many unpredictable influences, like people’s expectations, weather, science, politics and you name it. My friend the professor said the only sure thing in his field was that you could seldom find two economists that agree.

For the life of me, I don’t understand why it’s good for a govt to incur large debt. I understand how borrowing can be useful. Govts have emergencies and may need to borrow. Many “experts” have praised the accumulation of govt debt and how it stimulates the economy. It seems to me that huge govt spending enriches certain govt suppliers and supplies a few jobs, but does little for the long term good of the country.

I thought the debt incurred by the Bush and Obama administrations was bad for the country. The piling on that has taken place due to COVID has reached astronomical proportions.

Some kind of “leveling” is surely coming. What? Perhaps a drastic decline of the dollar’s value (goodbye 401 K) or a loss of the dollar as world standard?

Whether a decline is by design or just circumstance (Did China release the virus to attack us not by military but by economic aggression?) I don’t see how present economic values can be sustained. Our pols in DC seem unconcerned. I think we’re due to a big fall and changes that will drastically affect life styles. It may be after I’m gone (I’m 72) but I don’t see how we can generate the funds to pay down the current debt.

Is a crash of some kind in the future? Given the political orientation of the younger generation, who are saddled with this debt, I see them as unwilling and unable to address the debt. I can picture a political decision by a leftist US Govt to simply abdicate the leadership role as the economic standard of the world and “cancel” the debt and start over with a new currency leading to an economic mess.

I understand that many outcomes are possible.


What are your opinions on our debt accumulation?

This message has been edited. Last edited by: maxdog,

I used to think a crash was coming, but I'm no longer as convinced. It's been the conventional wisdom that we were about to go over the cliff since I was a kid 50 years ago, but here we are. I seriously don't know why it hasn't come about, but wouldn't count on it.

At this point it doesn't matter. Prepare as much as you can. Focus on skills and producing goods of value. Pray and live life. I don't see politicians changing anything until it does.

Even in the 'good times' (mid 80's & 90's?) the .gov was operating on an approx. 30% shortfall between tax receipts/income to the US Treasury and it's annual expenditures.

Since at least as far back as 2008 (when BHO took office), Congress hasn't passed a single budget, and has been operating with 'Continuing Resolutions' that, among other things, have built in spending increases! It's also MUCH easier to hide the all the waste and political favors/payoffs that way!

The 'Pandemic' has blown all the previous gross levels of .gov fiscal irresponsibility completely out of the water! Incredibly, under the thin disguise of COVID Relief, the most recent 'Continuing Resolution' was so egregious, it's almost as if they're not even trying to hide it anymore.

The current administration promises further increases in spending which would raise the irresponsibility factor to almost inconceivable levels. Just the 'Green New Deal' has the potential to completely blow up the 'House of Cards' that currently exists, and while a strong economy is absolutely essential to sustain this seemingly unsustainable debt load, promised tax increases will certainly undermine it.

Currently the Budget Deficit (Actual) is more than 50% of the Actual Federal Spending! The fact that the interest rates remain essentially at ZERO, is the only thing that keeping things seemingly under control. At some point, the US Treasury will not be able to find anyone to purchase the debt and the Fed will be forced to raise interest rates. At that point this train will become harder and harder to keep on the rails.

NO, the US debt is NOT sustainable....Not by a long shot!

quote:

Originally posted by SIG4EVA:
At this point it doesn't matter. Prepare as much as you can. Focus on skills and producing goods of value. Pray and live life. I don't see politicians changing anything until it does.

Wise words.

The USG will do the same thing that all other govts have done; repudiate the debt by re-issuing currency at a conversion rate for old currency for new currency (France, Hungary, Germany, Argentina, etc).

It’ll be called the “Great Reset”.

Yep. Bankrupt the country, implement the great reset. Hello Socialism!

quote:

Originally posted by P220 Smudge:

quote:

Originally posted by SIG4EVA:
At this point it doesn't matter. Prepare as much as you can. Focus on skills and producing goods of value. Pray and live life. I don't see politicians changing anything until it does.

Wise words.

My plan. I am collapsing inside my own fencerows. I have some sustainability in place. I am near debt free. I am still invested in “the game”, but we will just have to see how that shakes out.
I will control what I can control. And try to take care of my family in the mean time.

nhracecraft gave a good answer.
NO, the US debt is NOT sustainable... Not by a long shot!

But... at this point there's not much we can do.
At this point I think it's beyond just "growing our way out of it" by expanding the economy relative to government spending. That could have worked... but the government always finds an excuse to increase spending faster than growth in the economy.
For now, it's just "pretend and extend" until someday it can't be extended.

I think the “Great Reset” will be ugly. It will be global, too. But I have no idea when it will happen.

Para's Comet will cancel the debt.

If it costs 3% to borrow the money and you're making 6% with the borrowed money - you win.

Same concept for a country's debt.

Save more, spend less, accelerate paying off your debt. I'm currently in the I'm-might-lose-my-job mindset, not that I will but so that I'm prepared if it does happen.

Well the short answer is no, it’s not sustainable.

However I don’t think anyone actually cares about the debt any longer as they have all convinced themselves that they really don’t ever have to pay it back.

Whether or not the debt holders agree or not.

I've been hearing this my whole life and have zero control over it so no longer worried.
I suspect my grandparents did too and they're long gone..

Given a good President for eight years, I could see that debt getting worked down some. Droolin' Joe for four is another story entirely.

No..

quote:

Originally posted by Il Cattivo:
Given a good President for eight years, I could see that debt getting worked down some. Droolin' Joe for four is another story entirely.

No way. A president has very little control over the debt. Biggest portion is entitlements. These aren't going away. And what's worse is that our population is aging, and living longer. And by legalizing immigrants, there will be an even greater demand.

This is not something a president can fix. Entitlements are the third rail. No one's gonna touch it.

the good: our population is growing. that bodes well for total economic activity. Japan's population shrank and it CRUSHED their economy for decades


the bad: fiscal discipline does not appear to be on ANY politician's radar at this point.


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It's a talking point and it's been a long time since anybody was listening. Cutting debt isn't sexy and runs smack into the political need to grease wheels to get re-elected. The days of the GOP caring, if they ever really did, are long gone.

Some may question the expertness of the source. Others may indicate that economics have changed in the past few centuries, such is no longer true. John Adams commented along the lines "there are two ways to conquer a nation, by the sword or by debt". I believe there are fundamental economic realities that don't change.

One is the damage of unpaid (or underpaid) debt. If you don't repay, or if you repay with grossly inflated money, someone will get burned, which will impact economic decisions going forward.

Of maybe greater concern to me is unfunded liabilities, money promised to pay in the future that exceeds the money that you will have to make the payments. CA public pensions, and social security, are good examples. When the gov't payments are due, and the bank account is effectively empty, what to do?

The feds will print new money, leading to massive inflation; or and/or increase taxes, both will harm the economy. The state (CA) will increase taxes, pushing more people out of the state (except for illegals and those on welfare). Or CA will cut benefits to public employees, who will effectively shut down gov't services.

I think sooner or later, gov't debt will burn us.