Comments by "Grim Affiliations" (@grimaffiliations3671) on "What Happens When The US Debt Reaches Critical Levels? | Business Insider Explains" video.

  1. The government shouldn't reduce spending. Unlike you and me, it's actually a good thing when the government runs a deficit because their deficit is our surplus. If the government starts running surpluses, that would mean we in the private sector have been pushed into deficit, and thats is a recipe for disaster. This is why every depression in US history has occurred after a period of deficit reduction
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  2.  @Ironstarfish  Terrible idea. Tying your money supply tp some shiny rocks will leave you in a very bad position when demand for money shoots up during recessions. We would not have survived 2008 or covid if we were on the gold standard. Theres a reason depressions were so common before we left it
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  3. that explains why we had so many depressions during the gold standard, tying our entire money supply to shiny rocks was a bad idea
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  4.  @royvirafayet6687  that's like 0.5% of the budget lol, it has virtually no impact on anything
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  5. ​ @LyricsQuest  tax revenues cant pay for the current budget because tax revenues don't pay for anything the federal government does. Taxes are debited out of existence at the IRS, they're deleted. The government doesn't make us pay them because they need our money (that wouldn't make sense since they had to spend that money into the economy before we could use them to pay taxes) They make us pay taxes to create demand for the currency. And bond sales don't pay for government spending either, for the same reason as the taxes. They have to spend money before we can use it yo buy bonds
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  6.  @lukeh3020  We were told if a country has a debt to gdp ratio half as bad as Japans that they would suffer hyperinflation or lose control of their interest rates. None of that happened. So this idea that our debt is at critical levels is nonsense. Granted their economy has been suffering from slow growth, but that's because of their 20% consumption tax and other contractionary fiscal policies.
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  7. nothing wrong with spending as long as you don't spend beyond your economy's productive capacity
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  8. the government doesn't spend your tax money. Federal taxes are debitted out of existence
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  9.  @morningstarrss  I think he means that most US sending is in things like social security and medicare, which have done a lot to improve quality of life and reduce poverty for american seniors
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  10. Yup, all these doomers need to read The Deficit Myth by stephanie Kelton or watch the new documentary Finding The Money
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  11.  @ambition4195  no it aint. The US has rarely ever operated at full capacity
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  12.  @notKhalid  Yup. People don't realize that the government has full control of interest rates, so the debt will always be sustainable. They also don't realize that selling bonds isn't even necessary. They could stop selling bonds and adding to the debt at any time
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  13. @sandponics spending money is good
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  14.  @henrygustav7948  You're like Morpheus unplugging these people from the matrix lol
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  15.  @LyricsQuest  No it doesn't. There's no pot of money from which the government must spend it simply creates as much money as it needs as it goes
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  16.  @Ironstarfish  Nothing. The only way to remove the dollar as the worlds reserve currency would be for all the countries currently running trade surpluses against the US to start running trade deficits. Buying more of our goods than they sell to us. Giving the US a big trade surplus isn't a bad thing for the dollar
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  17.  @michaelbananas461  No, they happen due to extended periods of government surplus. Government deficits translate directly to private sector surpluses, so the only way for the private sector to grow while the government is in surplus, is if It takes up debts larger than that of the government surplus. And of course, the private sector cannot sustain deficits like the government can, so it promptly collapses. This is why every depression in US history happened after a period of deficit reduction. Government deficits are food, not drugs. Trying to live without it never lasts long
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  18. theres nothing responsible about austerity. Not only does it hurt people and slow the economy, it doesn't save you money in the long run
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  19.  @Xyz99899  The governments deficit is our surplus, so if the government balances its budget, that would simply push the private sector into deficit. That's not a good thing for the economy. Government deficits provide the only way for the private sector to net save. Also, government deficits can be maintained. The fed has full control of interest rates, so they can always put the interest rate below the growth rate of the economy. They could also stop selling bonds and adding to the debt at any time
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  20.  @Xyz99899  The free market can't function without the nations currency. The government's deficit is our surplus. If the government runs a surplus, that means its pushing us in the private sector into deficit. Only way for the private sector to net save is for the government to net spend
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  21. they could stop selling bonds and adding to the debt at any time. Bond sales are just something they did in the past to control the overnight interest rate. But they've bee paying interest directly on reserves since 08, making the whole thing redundant
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  22. Only if you think mismanagement = deficit spending even though government deficits are literally the only thing keeping the economy out of recession
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  23.  @morgandragon5581  Not selling bonds wouldn't cause inflaiton. There's no difference between financing a deficit through bond sales or money creation. It wouldn't entail higher mortgages either, personally i think bond interest rates should be at 0% permanently
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  24.  @wyw201  As long as the debt is in your own currency, it doesn't matter whether its bought domestically or by external parties, you'll be fine
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  25. ​ @frpgplayer  This is wrong. the 3 sectors of the economy (private sector, public sector and foreign sector) can't all be in surplus at the same time. The only way for the private sector to run a surplus (which it needs to do to stay out of recession) is to draw that surplus from one of the other sectors. And since it can't draw the surplus from the foreign sector because of our trade deficit, it must draw it from the government. So until we get rid of our trade deficit (which can't happen unless the US loses it's reserve currency status) the private sector will rely on government deficits to stay afloat and calling for a "balanced budget" is basically calling for a recession. This is why every depression in US history came after a period of deficit reduction And no, more money doesn't need to be taken from the public to pay the interest of the debt. The government pays this interest by rolling over the debt, taxes do not pay for this. The fed rolled over 120 TRILLION dollars worth of debt in 2021 alone. Also, there's no rule that says deficits must equal borrowing. The government could run deficits without selling bonds, since bonds don't finance government spending. Bonds were sold to control the interest rate, not to fund the government. But since 2008, the fed has paid interest directly on reserves, making bond sales (borrowing) no longer necessary. Countries can indeed go bankrupt, but only if they borrow in someone else's currency. Every country you can name that has ever gone bankrupt in a fiat system did so because they raked up too much foreign currency debt. But you can never go bankrupt in your own currency. Just ask Japan, who are perfectly fine after raking up a debt to gdp ratio of 250%
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  26.  @w1-em4nq  spending on people is much better than spending on tax breaks for rich people
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  27.  @zaaxi7424  So am i, which is why i mentioned our interest rate policy for most of the last decade
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  28. ​ @Chris-pq3wp  No, when you owe in your own currency, you have the power to overrule any unwanted move in your interest rate. Greece saw it's interest rates explode because it owed in a currency it did not control, the Euro. The UK didn't lose control of their interest rate, that was just the market betting on what the central bank would do. The currency depreciated so rapidly it led markets to speculate it would force an independent UK central bank to raise rates to prevent cost of living crisis getting worse, and they did. Whoever controls the currency the debt is in, controls the interest rate. Draghi controlled the Euro, so he was able to bring rates down for Euro zone countries with his famous "whatever it takes" declaration. Japan controls their own currency, and thats why the market has failed miserably to move their interest rate higher, even as they raked up the largest debt to gdp ratio in the world at 250%. The US controls their currency, which is why rates remained stable at 2% or lower after 2008, even though the financial crisis started in their country
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  29. yeah, if it didnt happen during covid, it aint happening
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  30.  @MonkeyMind69  This is false, inflation is actually negatively correlated with deficit spending
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  31.  @henrygustav7948  wait till these guys find out the fed rolled over 120 TRILLION dollars worth of debt in 2021 alone
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  32. lol
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  33. How naïve you are that you think the US government needs to borrow it's own currency from other countries.
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  34. It actually started a lot sooner. People have been screaming "The End Is Nigh" since it hit 1 billion. What they don't realize is that all debts have assets on the other side of them, and the governments debt is the private sectors assets. It's a source of wealth and savings for millions of Americans, so it's not a bad thing
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  35. ironically that was the one of the few times he was right, because we can
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  36. That means the government is salve to the people. Because most of the national debt is wed to american citizens
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  37.  @thaatsriight  why is that so bad?
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  38.  @thaatsriight  why is it a race to the bottom? SS has reduced old age poverty from 50% to 15%. That's a sign of prosperity, not a race to the bottom. Why shouldn't people be able to vote themselves programs that help eradicate poverty and widely share prosperity?
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  39.  @elymayer4860  A much better and simpler answer would be to just stop selling bonds. There's no rule that says we need to match deficits with bond sales. Bonds don't finance government spending
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  40.  @royvirafayet6687  i would support lowering the defense budget, but i wouldn't say its necessary.
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  41.  @royvirafayet6687  Nothing, that's my point. We don't have a debt problem because all of our debt is in our own currency. This means we have full control of interest rates, they could always put the interest rate below the growth rate, making the debt perfectly sustainable. They could even just stop selling bonds. No bonds no debt
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  42.  @royvirafayet6687  nothing needs lowering, that's my point. The debt is perfectly sustainable since its in our own currency. When it's in your own currency you have full control of interest rates, which means you can always set the interest rate below the growth rate. You could even stop selling bonds altogether if you wanted to
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  43.  @sparky9327  private sector relies on deficits
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  44. ​ @morgandragon5581  First of all its debateable that the middle clsas is shrinking, The middle class became the richest ever (net worth) in 2022 and is far richer than 2019 now. As of Q4 '23, bottom 50% group net worth (real) up 53% vs. pre-pandemic, while 50th-90th group up 17%. But even if they were shrinking, government spending wouldn't be why. Government spending helps growth. Cutting back on spending is actually what would be hurting the middle class, since every downturn in US history (except covid) happened after a period of deficit reduction. Government spending isn't inherently inflationary, in fact If you compare budget deficits % GDP and inflation vs. year ago (1948-2023), there is a small negative relationship. Inequality is a problem, but thats thanks to a tax code that favors the rich, as well as falling union memberships, not spending. The interest on the national debt is not paid for by taxes, it's paid for by rolling over the debt. The interest payments aren't hurting anyone, and they are not difficult to pay. They rolled over 120 TRILLION dollars worth of debt in 2021 alone. But if you're so bothered by it, then you should be calling for the government to stop selling bonds and adding to the national debt. There's no rule that says we need to sell bonds every time we engage in deficit spending
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  45. It's neither. The debt is perfectly sustainable since the fed has full control of interest rates. Also they could stop selling bonds and adding to the debt at any time
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  46.  @starventure  terribly
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  47.  @OmarOsman98  not sure what youre on about
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  48. it's mathematically impossible to avoid recession if the govenrment balances it's budget, so balancing the budget is bad
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  49. ?
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  50. the national debt is proof we have a positive net worth. If the government paid it off, The government would have a positive net worth, but america would be in deficit
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  51. It's not critical if you can turn off the tap ay any time. Bonds sales are no necessary for government spending
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  52. Neither is necessary. The fed has full control of interest rates, so they can always put that rate below the growth rate of the economy. Also, they could do away with the whole process of selling bonds at any time. Bond were only issued in the first place to control the overnight interest rate. But since 08, the fed has paid interest directly on reserves and has thus been able to alter the interest rate simply by declaring a new rate. This makes issuing bonds and adding to the debt optional
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  53.  @LyricsQuest  Why hurt people by cutting public services when you can just stop selling bonds? There's no rule that says we need to sell bonds and add to the debt every time the government runs a deficit
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  54.  @LyricsQuest  Tax revenues don't pay for anything the government does on the federal level. They're debited out of existence. Anything the government needs, it simply creates as it goes. They rolled over 120 trillion dollars worth of debt in 2021 alone. Thats trillion with a T. Besides, neither taxes nor bond sales can finance the government since spending comes before taxing or borrowing
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  55.  @randomlygeneratedname7171  what was?
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  56.  @MrThatGuyYouForgot  Yeah, people don't seem to realize that a government deficit is a private sector surplus, so when they call for a balanced budget they're asking for the government to strangle the private sector by taxing away everything they spend into the economy
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  57.  @chion918  it's not supposed to be paid off. It's supposed to exist as peoples savings abd assets. Wiping it out would he detrimental to the economy
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  58.  @morgandragon5581  So what if the government leaves more money in the economy than it taxes away? There's nothing wrong with that, in fact it's a boon to the private sector. The government taxing away everything it spends would be bad, history tells us the economy always collapses after periods of "deficit reduction". The government running a surplus would force the private sector into deficit, and unlike the government, they cant sustain deficits for long. The government doesn't need to sell debt to pay for anything, bond sales are not a source of financing for the government, since the money used to buy the bonds was first spent into the economy by the government themselves. Instead of rolling over the debt forever like they do now, they'd just pay the interest by crediting the necessary bank accounts
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  59. we already do
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  60. they;d be able to keep rates low even if demand was much lower, as long as they borrow exclusively in their own currency. Look at japan
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  61. Terrible idea. The governments deficit is our surplus. So balancing the budget just means pushing the private sector into deficit. You're basically calling for a depression
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  62.  @erickanter  false choice
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  63.  @Astrobucks2  No, im saying the only way for the private sector to be in a net saving position (surplus) is for the government to be in a net spending position (deficit). It's possible for the private sector to grow without government deficits, but that growth will be based on more and more private debt until something breaks. Only way to grow sustainably is for the government to run health deficits
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  64.  @JohnnyOU08  I remember a big crash while Clinton was bragging about balancing the budget. Only reason that didn't turn into a depression is because we went right back to running deficits
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  65.  @JohnnyOU08  Bubbles arises when too much private debt builds in the economy. Private debts necessarily increase when the government stops running deficits
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  66.  @JohnnyOU08  bubbles form when private debt levels explode, this was the case in 08. Government deficits reduce private debt levels
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  67.  @JohnnyOU08  private debt levels necessarily increase when the government stops running deficits, but government surpluses need not be the only trigger for them. In other words, bubbles always form due to rising private debt levels, but government surpluses are not the only way these rises come about
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  68. ​ @JohnnyOU08  It does, its a matter of sectoral balances. Just as every country on earth can’t simultaneously achieve a trade surplus (or deficit), each of our three sectors can’t be in surplus (or deficit) at the same time. The private sector cannot be the source of its own net financial surplus. Sure banks can increase the money supply by providing loans, but those loans exist as both an asset (on the bank’s balance sheet) and a liability (on the borrower’s balance sheet). Similarly, the deposit exists as both a liability (on the bank’s balance sheet) and an asset (on the borrower’s balance sheet). They cancel out. The private sector can only get net financial surpluses from outside itself, either from the rest of the world (which isn't possible due to our trade deficit) or the government
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  69. there is no critical point when you have full control of the interest rate
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  70.  @JohnDoeTheTroll  u elected the people voting for it
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  71.  @JohnDoeTheTroll  allowed what? paying us defense contractors?
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  72.  @JohnDoeTheTroll  most of it yes
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  73.  @zaaxi7424  No it wouldn't, Japan has had rates at 0 for most of the last decade, and they've actually struggled with deflation not inflation. That's despite a debt to gdp ratio of 250%. We've also had rates at 0 for most of the last decade, there was no inflation until covid screwed up the global supply chain
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  74.  @catmando4914  There's nothing to fix anyway, the national debt is just peoples savings and assets. Nothing to fear
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  75.  @Chris-pq3wp  It's a perfectly valid example, if people lose faith in your bonds, your interest rates are supposed to shoot up, whether or not you're a net exporter. That clearly didn't happen, even though the market has tried time and time again to bet against their bonds and force their rates higher. Don't move the goal posts. And like i said, we've seen no such move in interest rates during the 2010's in the US, even though their financial crisis started there. We didn't see in in ww2 either even though the debt shot up during that war.
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  76.  @Chris-pq3wp  All those countries with high debt and interest rates around the world borrow in currencies they do not control, or peg their currencies to currencies they do not control. Inflation in the 70's was caused by the oil embargo. And it was fixed by the resolution of the embargo. You're right, the funds rate was many times higher in the 80's than it is today, yet our national debt is also many times larger than it was back then. So why are our rates so much lower despite packing on many times more debt? Despite having our credit rating dropped twice in the passed 15 years? Because no one controls our rates but us.
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  77.  @evangreenberg1666  You can, when you control your interest rate, you can keep your debt perfectly sustainable simply by putting the interest rate below the growth rate of your economy. Heck, you can even stop selling bonds altogether, since bonds don't actually pay for anything the US government does
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  78.  @evangreenberg1666  They don't have to right now, the point is that we reserve the right to do either of this things at anytime. Our rate isn't determined by market forces or so called bond vigilantes. And if people decide adding to the debt at all is too undesirable, we could simply stop. This is the opposite of what the debt doomers would have us believe
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  79.  @Chris-pq3wp  That's nonsense, please read my comments above. This is true for countries like Japan as well. Canada has a much smaller economy than Germany, but it has a much higher degree of monetary sovereignty because it borrows in its own currency unlike germany. You're right that it is a lot harder for smaller countries to borrow in their own currencies, but it's not impossible. They need to break some of the structural traps that keep them from being able develop their monetary sovereignty (dependence on things like low value added exports, foreign imports for food and energy, tourism etc)
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  80.  @Chris-pq3wp  The government doesn't borrow, it spends. "Borrowing" implies that the government needs to get its own currency from other people and this isn't the case. Who said there are no limits to what the government can spend? There obviously are limits, but those limits are in real terms, not in financial terms. The only limit to government spending is the productive capacity/real recourse availability of the economy
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  81.  @liulaolao7269  Because the economy was growing very slowly thanks to obama's austerity
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  82.  @Chris-pq3wp  They're not engaging in much quantitative easing at the moment, and buying back your own bonds isn't inflationary anyway. It's an asset swap. Japan are the kings of quantitative easy, and they've been dealing with deflation. As for the inflation since 2020's, that's almost entirely due to covid and it's affect on both supply chains and demand patterns
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  83.  @liulaolao7269  first thing we've got to do is get rid of this right wing supreme court that thinks bribery is a form of speech
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  84. Other countries are not the US. Find me a country that has suffered hyperinflation while having all their debt in their own fiat currency. I'll wait.
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  85.  @wmercer7234  We don't have to do either. Just stop sleling bonds and adding to the debt,
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  86. the government has full control of interest rates, so the debt is perfectly sustainable. Also, bond sales are not necessary to finance spending. They could stop selling bonds and adding to the debt tomorrow
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  87. how is it the same?
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  88. we already do
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  89.  @peekaboopeekaboo1165  so?
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  90. you read the deficit myth by stephanie kelton?
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  91.  @laurateaho-white9654  or they could just make sure interest rates fall below the growth rate of the economy since the fed has full control of interest rates. They could even stop selling bonds. Check out a book called the deficit myth
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