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Started By
Message
re: US Debt Default
Posted on 5/21/23 at 8:03 am to NC_Tigah
Posted on 5/21/23 at 8:03 am to NC_Tigah
My brother expects the debt ceiling be raised in the next day or two.
Then, he expects Joe Biden to make an executive order to declare the debt ceiling as unconstitutional. That will send it to the Supreme Court for a ruling which will hopefully eliminate the debt ceiling for good.
An end to political theater and an opportunity to actually legislate for a better budget.
Then, he expects Joe Biden to make an executive order to declare the debt ceiling as unconstitutional. That will send it to the Supreme Court for a ruling which will hopefully eliminate the debt ceiling for good.
An end to political theater and an opportunity to actually legislate for a better budget.
1
Posted on 5/21/23 at 8:15 am to Pendulum
quote:
It's not about paying back the debt, we could just not do that; but it's about selling more debt. If we can't sell more debt, then we are dead.
Well, the Covid cost on the world is enough reason to tell China to fu** off. Send them the bill.
This post was edited on 5/21/23 at 8:16 am
Posted on 5/21/23 at 9:51 am to lsusteve1
GETTING RID OF THE ZERO'S and doing the math. (Approx.)
Revenue: 4.9 Trillion
Budget: 6 Trillion
New Annual Debt: 2 Trillion
National Debt: 31.12 Trillion
Thats like a family having an income of 49K, with a budget of 60K, every year adding 2K to that; with a total debt of $311,000. And somehow being pissed that the cc company won't raise the limit even though they can barely make the payments now and can't control their spending.
Revenue: 4.9 Trillion
Budget: 6 Trillion
New Annual Debt: 2 Trillion
National Debt: 31.12 Trillion
Thats like a family having an income of 49K, with a budget of 60K, every year adding 2K to that; with a total debt of $311,000. And somehow being pissed that the cc company won't raise the limit even though they can barely make the payments now and can't control their spending.
Posted on 5/21/23 at 10:14 am to meansonny
That’s not how this works…
Posted on 5/21/23 at 12:00 pm to meansonny
quote:
The only institution in the world that is permitted this debt theology is the US federal government.
Every government runs on this.
It has nothing to do with the US federal government alone.
But as long as the US remains stable and credit-worthy, the US can borrow indefinitely and repay as bonds mature.
Posted on 5/21/23 at 6:12 pm to meansonny
quote:quote:
Default will happen sooner or later.
That's funny.
That would be like not paying your Bank of America mortgage payment for 3 months because you are pissed that BOA took bailout money.
No one is that stupid to let the default happen.
The USA is too big to just let fail like that.
The federal government is absolutely stupid enough to let that happen.
"Too big to fail" applies only when there's an entity with deep enough pockets to bail the other entity out. If the US economy crashes under the weight of continued debt accrual, no one is coming to bail us out (instead, they will be coming to take what they can).
Since 2020 we've had $1T+ annual deficits and the Office of Management and Budget estimates that will continue for the foreseeable future.
For example: for FY2022 the government took in $4.897T in tax revenues while spending $6.273T, leaving a deficit of $1.375T. That means the budget for the year would have had to be cut by 22% just to balance. Going back to the 1940s the average deficit is 3% over revenues while the OMB projections through 2028 show ~20% per year.
Every year we run deficits that high not only increases the debt, but it's going to eventually push interest rates on the debt higher as potential investors begin to worry that buying those securities is becoming riskier (meaning higher rates will be needed to attract buyers). This means that as long as this is the path, it inevitably leads to default or the federal government will spark hyperinflation by creating a frickton of USD to cover the increasing debt.
Even if the House GOP is able to push through a deal that cuts total spending YoY (not just cutting the growth of spending), it will take years of such cuts to get spending down to a level to really matter. In all reality, that's never going to happen. This means a default is inevitable because the federal government is indeed stupid enough to let that happen.
Posted on 5/21/23 at 6:39 pm to oneg8rh8r
quote:
Thats like a family having an income of 49K, with a budget of 60K, every year adding 2K to that; with a total debt of $311,000. And somehow being pissed that the cc company won't raise the limit even though they can barely make the payments now and can't control their spending.
Except around 50% of the 311,000 was borrowed from themselves..
Posted on 5/21/23 at 6:51 pm to AndyJ
quote:
That’s not how this works…
When was the debt limit started and why.
Once you figure that out, you will realize that it serves zero purpose today.
Then, reread the constitution and see if it says anything about voluntarily defaulting on debt (i.e. not increasing the debt limit voluntarily).
"How it works" does not have to be how it works.
Someone could bring a lawsuit against the federal government and still serve the same purpose (getting a decision from the Supreme court). But an EO would fast track it for sure.
Posted on 5/21/23 at 7:04 pm to Bard
You are talking about 2 different things.
Stupid spending.
And killing the credit rating.
There is a ton of political theater. But no one is dumb enough to kill the US credit out of sheer stubbornness. It won't happen.
Stupid spending.
And killing the credit rating.
There is a ton of political theater. But no one is dumb enough to kill the US credit out of sheer stubbornness. It won't happen.
Posted on 5/22/23 at 8:10 am to meansonny
quote:
But no one is dumb enough to kill the US credit out of sheer stubbornness. It won't happen.
Again, everyone that I distrust is telling me this: Wall Street bankers that rely on gov't spending and need the money flowing, Democrats who want their stupid green new deal (inflation reduction act) spending to stay in place, and the Republicans who can't wait to fund Ukraine or whatever foreign entanglement they want to engage in next.
I'm on the default pain train. If that's what it takes to get us back on a path of fiscal conservancy, then I'm in. At some point, we have to tell the junkie/freeloader NO MORE.
Posted on 5/22/23 at 8:53 am to Aubie Spr96
Yea, the first thing anyone would want to do when they want to get their books in order is explode interest rates on their existing debt, textbook.
It's not like we default and the 31 trillion debt disappears, it just becomes heavier and harder to service.
It's not like we default and the 31 trillion debt disappears, it just becomes heavier and harder to service.
This post was edited on 5/22/23 at 10:16 am
Posted on 5/22/23 at 8:57 am to Aubie Spr96
quote:
I'm on the default pain train. If that's what it takes to get us back on a path of fiscal conservancy, then I'm in.
Defaulting doesn't fix that problem, though. The debt ceiling issue is in regards to money that's already spent.
Posted on 5/22/23 at 10:25 am to Aubie Spr96
quote:
I'm on the default pain train. If that's what it takes to get us back on a path of fiscal conservancy, then I'm in. At some point, we have to tell the junkie/freeloader NO MORE.
Will never happen because there aren't any consequences for these people. There is no fear of jail, being voted out, and they will be just fine if we default.
Posted on 5/22/23 at 1:19 pm to Aubie Spr96
It’s high stakes poker
When republicans are in control, they talk about the importance of raising the ceiling.
Spending needs to get under control well before the deadlines approach. Politicians ought not be handling this issue
Spending ought to be a determined on the prior years tax income with an allowance for debt. The allowance for that debt should be done annually based on a percentage of the overall spending allowance. Any surplus should be automatically applied to debt.
When republicans are in control, they talk about the importance of raising the ceiling.
Spending needs to get under control well before the deadlines approach. Politicians ought not be handling this issue
Spending ought to be a determined on the prior years tax income with an allowance for debt. The allowance for that debt should be done annually based on a percentage of the overall spending allowance. Any surplus should be automatically applied to debt.
Posted on 5/22/23 at 2:25 pm to CAPEX
quote:
quote:
The only institution in the world that is permitted this debt theology is the US federal government.
Every government runs on this.
I can only speak for the USA. I can't say that I have ever looked at another country's budget.
But no state does this.
No county does this.
No city does this.
There may be unfunded future obligations (i.e. pensions).
But the budgets balance.
Posted on 5/22/23 at 2:32 pm to SlidellCajun
quote:
The allowance for that debt should be done annually based on a percentage of the overall spending allowance. Any surplus should be automatically applied to debt.
They should force debt ceiling to increase relative to GDP growth YOY imo. There would have to be some type of exclusion for wartime conditions obviously, but they could make that rule in a way that it has to made up later. That would incentivize politicians to not sabotage our own economy for dumbass political gains. No one is getting elected to spend less money, so put up guardrails that force them to keep debt in line with economy.
Posted on 5/22/23 at 2:40 pm to Pendulum
quote:
They should force debt ceiling to increase relative to GDP growth YOY imo.
What is your argument to keep the debt ceiling in existence?
Posted on 5/22/23 at 2:43 pm to meansonny
quote:
You are talking about 2 different things.
Stupid spending.
And killing the credit rating.
At the levels of deficits and debt we have now, the two are inextricably linked. There is, neither financially nor fiscally, any way the federal government can maintain annual deficits 20% over revenues without it eventually impacting the credit rating.
Current projections have debt servicing taking over Social Security and Medicare as the top expense in the next 20-30 years.
quote:
But no one is dumb enough to kill the US credit out of sheer stubbornness.
They absolutely are because they believe they can continue to spend without repercussions. Why do you think MMT is gaining traction in DC? It basically posits that a government with a fiat currency can simply create whatever money it needs without any repercussions (as long as it's taxing that money back out of the system). It's a movement to a new philosophy done out of desperation to not have to change (ie: cut spending significantly enough to make an impact to balance the budget, much less create a surplus to pay down on the debt).
Posted on 5/22/23 at 2:45 pm to Bard
Lol
Posted on 5/22/23 at 2:57 pm to Aubie Spr96
quote:
I'm on the default pain train. If that's what it takes to get us back on a path of fiscal conservancy, then I'm in. At some point, we have to tell the junkie/freeloader NO MORE.
Defaulting isn't an option, it's a certainty. The only thing we have control over is "when".
I say it's not an option simply because the federal government can't (and won't) cut enough deficit spending to prevent an eventual default. The amount of cutting it would take just to balance the budget would guarantee many in Congress wouldn't get re-elected (because most who call for cuts, both elected officials and voters, are really caveating it with "as long as it doesn't impact programs which benefit me"). No one goes to DC just to sacrifice their political careers.
So what's the only logical outcome? That increasing deficit spending continues to increase the debt and that increase consumes more and more of the budget (currently it's over half a trillion dollars). As it consumes more, it will take more deficit spending to maintain spending (whether it's Medicare, Section 8, paying the electricity bill at the White House, etc), which then mandates needing more to just service the debt, meaning etc. etc.
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