So, the National Debt is just a joke at this point..

Congress has devolved in to open bribery and corruption …. no surprise they are spending worse than drunken sailors.

It seems our government has evolved into a ponzi scheme.

Look at the fraud we are seeing in Minnesota. it seems that the hole point of the fraud is to prop up the economy in Minnesota by pumping as much money into the communities there. Federal funds are good for municipalities whether they are legally obtained or not.

Minnesota has a somewhat average population size for the US, so if you multiply the fraud there by 50, you can extrapolate and get an estimate on how much money we waste every year in the United States.

Every time we talk about cutting waste in these programs, the sleazebags getting all the money start campaigns about how we're cutting funding to needed social programs. It's disgusting.

We have to call out the Liberals for their position that the biggest threat to our country is funding cuts...

quote:

---

The only time you hear much about it from politicians is when the Ds are in charge; the Rs will then get very upset about the national debt.

But once the Rs are back in charge, they start spending like crazy with no mention of debt concern.

The Ds never express much concern about it.

---

This is all spot on, and R's literally dont give 1 sh*t about being "fiscally conservative" anymore, and honestly never even talk about it either any more. Aren't even ashamed to run up the debt as massive as possible and just continue to punt the problem down the road.

D's on the other side pretend no problem ever exists and we can never cut funding to absolutely anything (only need MOAR tax money), everything is always needed and zero fraud within it.

quote:

---

We're currently voyaging onboard a boat christened "Status Quo" at 40 Trillion in debt...

Literally nobody in our government gives a single frick.

---

They literally can't afford to.

Around 1/4 of GDP comes from government spending. We're currently on track to hit close to $2T in deficit spending alone this year with projections being nowhere close to as low as $1.5T as far as the projections go.

To put this into a little clearer context, the deficit was ~$1.775T last year while GDP grew only ~2.1%. When you look back over the last 50 years, deficits as a share of GDP were moderate, jumped up sharply from 2008-2019 and then jumped up even more sharply from 2020-present. This means that since the GFC the economy has become increasingly addicted to not just government spending, but deficit spending and now we're entering the period of addiction to excessive deficit spending.

Cutting enough spending to balance the budget immediately (while still servicing debt) would mean a cut of around 35% to all federal spending and would result in at least a recession (possibly depression). Balancing it in a decade would require something like a law forcing the freezing of spending for 10 years and then cutting ~$200B each year (going off projected 2026 deficit spending).

No one is going to run for (re)election on "I'm going to make sure the federal government doesn't give you more." Hell, this burgeoning DSA crap is built solidly on a foundation of the opposite (Mamdani is learning rhetoric can't overcome basic math, but reality doesn't stop the hardcore ideologists for long).

If they try, they'll get run out of office and they know it. So they try to keep kicking the can down the road until they can retire and let someone else deal with it.

quote:

---

At which number does the thing actually matter?

---

That's an excellent question. No one knows the real answer because we've never seen a currency with so much global power be held up with such an astronomical amount of debt while there also being no other true international option (because macro and micro level value determinants are intrinsically intertwined).

My guess (and that's all any of us can do) is that once debt servicing makes up at least 25% of the federal budget, things start breaking (due to the snowballing that comes from growing and continual deficit financing). With current deficit projections, that's ~2035 (estimated servicing for this year is expected to be ~19% of the budget) with deficits likely to be ~$3T.

quote:

---

That's an excellent question. No one knows the real answer because we've never seen a currency with so much global power be held up with such an astronomical amount of debt while there also being no other true international option (because macro and micro level value determinants are intrinsically intertwined).

---

This is why Trump's inability to keep his fricking mouth shut makes me nervous. If the USD loses world reserve currency status, our entire house of cards collapses damned near over night. Now, it's in everyone's best interest to keep our house of cards propped up, but you can only piss in a man's boot so many times before he says "you know what, frick it and frick you, I'll just walk barefoot for a while".

Our rating is in some part backed by our gigantic military

quote:

---

This is why Trump's inability to keep his fricking mouth shut makes me nervous. If the USD loses world reserve currency status, our entire house of cards collapses damned near over night. Now, it's in everyone's best interest to keep our house of cards propped up, but you can only piss in a man's boot so many times before he says "you know what, frick it and frick you, I'll just walk barefoot for a while".

---

I get it, I truly do, but that's the luxury of being the skinniest kid at Fat Camp even though you and everyone else are diving into the buffet.

Our dominance as the primary world reserve currency has been waning for decades, but it's still somewhere over 50% (which means it's being used more than every other currency combined). As long as no other currency is deemed more valuable/worthy, that's probably the safest value metric.

The USD's value is essentially a three-legged barstool. My worry is the bond auction leg. The more this rolling snowball of debt gains momentum, the higher tails are going to need to be to attract buyers. As that snowball gains mass, initial yields and/or tails will have to increase. Eventually they'll get so high that it scares off investors. If the Fed can't step in and an auction fails, the barstool falls.

quote:

---

Our dominance as the primary world reserve currency has been waning for decades, but it's still somewhere over 50% (which means it's being used more than every other currency combined). As long as no other currency is deemed more valuable/worthy, that's probably the safest value metric.

---

Dedollarization would be moving much faster if it weren't for the Gordian Knot of tangled dollars in the global debt stack. There's approx $15T of Eurodollar debt on the planet. If Vietnam owes Belgium a billion dollars that debt will be paid in dollars. It can't just be converted to Vietnamese dong or Euros due to the built in incentive structure. Belgium certainly doesn't want dong (lol) and they likely don't want Euros either since they are probably planning to spend that money internationally and everyone takes dollars. As long as the purchasing power of every other currency is eroding faster than dollars that $15T of debt will remain denominated and paid in dollars. As much as Trump, Bessent and Miran talk about devaluing usd and reshoring, it remains an uphill, extremely slow process due to the demand for dollars globally to service that $15T.

This is why the dollar will remain GRC for a very long time. The more important aspect of dedollarization, that is accelerating, is its role as the primary sovereign reserve asset (treasuries). Global central banks have basically stopped buying on net. They still show up at auction and buy US long bonds but this is to replace treasuries that recently matured. The excess balance sheet capacity, the usd denominated increase in their trade surpluses, is going to gold and has been for several years now.

In other words, demand for US debt has flatlined while supply is going parabolic as US interest expense rises, boomers retire and entitlement spending goes vertical as a result of said retirements. This further blows out US deficits which increases inflation, interest rates and along with it interest expense. This is the doom loop and the only way to plug the holes is for the Fed to step back in as a large buyer and/or the Treasury just stops issuing duration and funds itself with bills.

When Bessent says the only way out is to grow our way out he is correct. What he's not saying is it's mathematically impossible for real growth to exceed real debt growth, nominal growth however can do it, i.e., he is telling you we are going to inflate our way out.

quote:

---

When Bessent says the only way out is to grow our way out he is correct. What he's not saying is it's mathematically impossible for real growth to exceed real debt growth, nominal growth however can do it, i.e., he is telling you we are going to inflate our way out.

---

It is a prayer (not a policy), but AI could lead to the productivity growth needed to deflate goods and essentially grow our way out of debt. There is an obvious question if this is possible. And if it is possible, how soon could we see the productivity boon?

quote:

---

It is a prayer (not a policy), but AI could lead to the productivity growth needed to deflate goods and essentially grow our way out of debt. There is an obvious question if this is possible. And if it is possible, how soon could we see the productivity boon?

---

I think some are hoping for this. I’m not the best person to give a qualified opinion as AI is outside my area of interest. The British got two full rounds out of their empire due to a productivity miracle. They were tits up in debt when the industrial revolution bailed them out and gave them another 80 yr run. My personal opinion is the Chinese are going to win the AI race, not because they have better developers but because their models are open source. Worldwide community development and input will beat 4 autists in a room imo. It’s bizarre to me that we don’t get that here. I also believe open source minimizes the potential for negative outcomes, human enslavement for one, compared to closed source modeling.

But back to your point, yes, an AI productivity miracle is possible but let’s play that out. What happens first? Layoffs at levels last seen in the ‘30s, probably higher, all white collar. Tax receipts plummet and transfer payments to individuals skyrocket blowing the deficit out further. When severance for the newly unemployed dries up they qualify for Medicaid which blows the deficit out further. They’ll obviously have to tax AI but will it be enough to support the idle masses? Are the idiots in DC even asking these questions?