View Full Version : What does the increasing national debt mean for us?
I'm not an economist and don't understand what the national debt means for us, but I have a feeling it is not good. How high can it go before there is a collapse? What does it mean for us?
I know from personal experience what it means to get over your head in debt. That happened many years ago and is how I discovered this forum. I worry a lot about what the national debt will mean in the future. Sure the stock market is booming now, but the current administration appears to be kicking the can down the road.
Nobody wants to hear frugality from a president. Looks what happened to Jimmy Carter (bless his heart) when he told us to turn down the thermostat and wear a sweater.
Thoughts?
ApatheticNoMore
8-27-19, 10:29am
Maybe there's never really going to be collapse from that. From environmental problems yes but not that. Maybe there would be an economic collapse if we STOPPED issuing debt. It may not be for good reasons that this is so, the U.S. has raw power afterall and wields it, but ... Maybe if not some other country would have to issue the world's debt.
I don't understand all the economics, but it's seldom economists who are worried about it, it's politicians, most of which have their own agenda having nothing to do with concern about the debt.
ToomuchStuff
8-27-19, 1:03pm
It means we are spending more then we take in on taxes, while kicking the can down the line.
https://en.wikipedia.org/wiki/United_States_debt_ceiling
https://en.wikipedia.org/wiki/United_States_federal_budget
https://www.thebalance.com/u-s-debt-ceiling-why-it-matters-past-crises-3305868
The only way to eliminate it, is STOP ALL FEDERAL SPENDING. This means no defense, no entitlements (or the people that cut the checks to them), no federal money for infrastructure, no money to help "disaster area's", etc. etc.
As to the limit, the fear is what happens when we reach 100% of our GDP, instead of the nearly 80% we are about now.
What form does the "debt" take?
What is "money"? Where does money come from?
iris lilies
8-27-19, 2:12pm
I dont like it and try not to think about it.
Ot wouldn't be so bad if we weren't picking a trade war with the country that owns so much of our debt.
dado potato
8-27-19, 8:06pm
The 77th US Secretary of the Treasury is responsible for maintaining the payments on the national debt. I refer to Steven Mnuchin, former investment banker for Goldman Sachs and former hedge fund manager. He graduated from Yale. In 2017 at the age of 56, he married Louise Linton, a "Scottish actress", who is about 20 years younger. In an interview she said that she Ubers everywhere... and that Steven bought her a lifelong sponsorship of an endangered rhinoceros. "So romantic."
I trust that in the Treasury Department Steven has underlings who really will be responsible, when I want eventually want to cash in my Treasury I Bonds.
When I took Macroeconomics back in 1988, my professor said it doesn't matter. I remember how surprised we all were. I no longer recall all of the details of her why.
When I took Macroeconomics back in 1988, my professor said it doesn't matter. I remember how surprised we all were. I no longer recall all of the details of her why.I think the theory is, as money is spent (even borrowed money) it goes into new pockets who then spend it again in markets where it is spent yet again, all the while creating value and driving economic growth.
I think that only works on a macroeconomic scale, I wouldn't suggest we try it ourselves.
When I took Macroeconomics back in 1988, my professor said it doesn't matter. I remember how surprised we all were. I no longer recall all of the details of her why.
That's what Alan Blinder told me in Macro in 1983 as well. And he wrote the book.
It is a pleasant premise isn’t it? Trillion dollar deficits don’t matter because we can make up the difference with increased debt, inflation and debt fueled growth. A snake eating it’s own tail need never go hungry. An Argentina style crisis could never happen here.
I’m just a troglodyte paleo conservative deficit hawk. We’re nearly extinct, but in my primitivist view, we are essentially imposing a tax on future generations. But who am I to quarrel with the sophisticated economics of Mr. Sanders and Mr. Trump?
iris lilies
8-28-19, 11:31am
I have heard this theory about why a large national debt doesn’t matter. But – I’m deeply skeptical of it. In things financial if you don’t understand them stay away from them. I run my household with no debt because in my world interest is The Enemy.
But this is black-and-white thinking from someone of the lower orders in flyover country who could never have gotten into Princeton let alone pass that macro economics course from the guru himself, the spinner of the myth, the teller of the tale.
Ot wouldn't be so bad if we weren't picking a trade war with the country that owns so much of our debt.
If we owe China, say, a trillion dollars. Which of us has the bigger problem?
But this is black-and-white thinking from someone of the lower orders in flyover country who could never have gotten into Princeton let alone pass that macro economics course from the guru himself, the spinner of the myth, the teller of the tale.
I passed the course, true.
But I maintain no debt myself, and do most of my personal transactions with baskets of smoked salmon, or silver coin. Perhaps I understood all too well what he was saying? :-)
It is a pleasant premise isn’t it? Trillion dollar deficits don’t matter because we can make up the difference with increased debt, inflation and debt fueled growth. A snake eating it’s own tail need never go hungry. An Argentina style crisis could never happen here.
I’m just a troglodyte paleo conservative deficit hawk. We’re nearly extinct, but in my primitivist view, we are essentially imposing a tax on future generations. But who am I to quarrel with the sophisticated economics of Mr. Sanders and Mr. Trump?
I didn't say I agreed then nor now. I can't imagine that the debt is harmless. What I would like to see is stopping the annual deficits.
How many states have a law on the books that the budget must balance every year? Idaho does it every year. Always a buffer available.
It depends on the website you hit: some say 38 states, others say 49.
Like many of you, we have no debt. Got out...staying out!
How many states have a law on the books that the budget must balance every year? Idaho does it every year. Always a buffer available.
It depends on the website you hit: some say 38 states, others say 49.
I believe 49 states require a balanced budget either by statutory requirement or constitutional citation, with Vermont being the outlier.
While a little leeway in times of war might be nice, I'd like to see it as a Federal requirement as well.
I believe 49 states require a balanced budget either by statutory requirement or constitutional citation, with Vermont being the outlier.
While a little leeway in times of war might be nice, I'd like to see it as a Federal requirement as well.
I would like to see rigorous elimination of waste and duplication of services combined with a corresponding increase in tax revenue to that end.
One thing I believe the current administration is doing right is seeking to move federal offices out of the DC area. Reducing fraud, waste and abuse where you find it is the right thing to do, but I doubt that’s where the real money is. If you truly want to reduce spending you need to reduce programs. We seem to be moving in the opposite direction, however.
I have read that before long the interest on the national debt will exceed what it spends on the military. I have wondered why we don't just create electronic money in the federal treasury rather than borrow. It not like we are ever going to pay it off.
I suspect there is an upper limit to debt, but we won't know what it is until we get there.
At some point it will hit home that money is just numbers in paper. Then only those things with intrinsic value will matter. Precious metals mar or may not make the cut. It depends how hungry and thirsty we are.
At some point it will hit home that money is just numbers in paper. Then only those things with intrinsic value will matter. Precious metals mar or may not make the cut. It depends how hungry and thirsty we are.
I've never had anyone turn down smoked salmon. Just sayin'....
frugal-one
8-29-19, 4:37pm
I believe 49 states require a balanced budget either by statutory requirement or constitutional citation, with Vermont being the outlier.
While a little leeway in times of war might be nice, I'd like to see it as a Federal requirement as well.
Didn't trump say he would balance the federal budget as a campaign promise? I heard US debt is up by 27% since trump was elected.
Didn't trump say he would balance the federal budget as a campaign promise? I heard US debt is up by 27% since trump was elected.I don't recall him saying that but I'll take your word for it. Personally, I don't think we'll ever see a balanced budget again because it will require less entitlement spending. We've reached a point politically where no one can survive that.
I don't recall him saying that but I'll take your word for it. Personally, I don't think we'll ever see a balanced budget again because it will require less entitlement spending. We've reached a point politically where no one can survive that.
I think the GOP needs to get on top of that. Politifact says this is mostly true, although I'm sure it's not so simple.
Reagan took the deficit from 70 billion to 175 billion.
Bush 41 took it to 300 billion.
Clinton got it to zero.
Bush 43 took it from 0 to 1.2 trillion.
Obama halved it to 600 billion.
Trump’s got it back to a trillion.
Teacher Terry
8-29-19, 7:15pm
If people hate debt why do they keep voting Republican?
If people hate debt why do they keep voting Republican?
Because as Rogar suggests, it's not that simple.
If you'll recall, the Reagan era budgets were used to rebuild the military which had been neglected during the Carter years. That effort was so successful it facilitated the collapse of the Soviet Union and the liberation of East Germany and much of the rest of Eastern Europe.
Clinton had the benefit of a Republican House filled with young idealists and led by Newt Gingrich and his Contract With America. The Senate was also securely under Republican control. Bill basically just had to stay out of their way and accept credit for the results.
The Bush 43 numbers require a little sleight of hand. That 1.2 trillion number came in the 2009 fiscal year budget which made its way through Congress in 2008, the one Harry Reid held hostage until Obama took office and was actually signed by Obama, although it retains Bush's name. After that I believe there was only one formal budget completed during the Obama/Reed/Pelosi years as they decided it was easier to operate under continual spending resolutions. I'm embarrassed that Republicans took the path of least resistance and continued those.
And Trump, well he's actually a Democrat, always has been. ;)
Teacher Terry
8-29-19, 7:38pm
Trump is not for either party. He’s just interested in himself.
Because as Rogar suggests, it's not that simple...
It's probably still a little more complicated. If you add in 43's Iraqi war expenses I could start to see a connection between tax cuts, military spending, big deficit increases, and the GOP. I suppose we are stuck with our roll as global policeman as much as social security and medicare.
frugal-one
8-30-19, 7:16pm
Because as Rogar suggests, it's not that simple.
If you'll recall, the Reagan era budgets were used to rebuild the military which had been neglected during the Carter years. That effort was so successful it facilitated the collapse of the Soviet Union and the liberation of East Germany and much of the rest of Eastern Europe.
Clinton had the benefit of a Republican House filled with young idealists and led by Newt Gingrich and his Contract With America. The Senate was also securely under Republican control. Bill basically just had to stay out of their way and accept credit for the results.
The Bush 43 numbers require a little sleight of hand. That 1.2 trillion number came in the 2009 fiscal year budget which made its way through Congress in 2008, the one Harry Reid held hostage until Obama took office and was actually signed by Obama, although it retains Bush's name. After that I believe there was only one formal budget completed during the Obama/Reed/Pelosi years as they decided it was easier to operate under continual spending resolutions. I'm embarrassed that Republicans took the path of least resistance and continued those.
And Trump, well he's actually a Democrat, always has been. ;)
Trump just wants to build a stupid wall and build up entities that are self serving.
At some point it will hit home that money is just numbers in paper. Then only those things with intrinsic value will matter. Precious metals mar or may not make the cut. It depends how hungry and thirsty we are.
We almost got to see that ten years ago. But the people with real amounts of money, and who also pull the levers of monetary policy and procedure got creative and preserved the fiction that paper assets not backed by anything ‘real’ have value.
The traditional economic thinking is that when the government borrows money and increases the public debt, it tends to increase interest rates and quite possibly conttributes to inflation. On that most economists agree but the more important question is "what is the debt for?" If we spend mooney on goods which may improve the functioning of the economy and eventually raise the standard of living fof the great majority of people, that's different from givng tax cuts to those who are already in an advantaged position due to their ownership of property or with very high incomes. Another consideration is: how do we protect our environment from climate change? That is going to become a very major public expense.
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