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[EuchreJack]

You're both forgetting about inflation!

If I borrow $200 from you today at 6% interest, then I EARN money, because I only have to pay you $212 when the future value of that $200 is $216!

The real problem is that the debt ceiling crisis is increasing the cost of the Government borrowing money, so for once, it actually IS more expensive at least without adjusting for inflation.  But the US still wins out once its debt is adjusted to inflation.

The debt did go up fairly high during COVID, and was creeping up prior to COVID. So the budget does need to get fixed, for once.
Frankly, both the Democrats and Republicans need to both agree that they can't spend the money they have been spending, and they need to increase revenue from sources they would rather avoid taxing further.

[hector13]

You have that the wrong way round. Inflation devalues money (you either consider it the percentage of how much value your money loses over time, or how much more expensive goods are) so that $200 isn’t worth $216 in future, it means that $216 is worth the same as the $200 was in the past, or something that cost $200 then costs $216 now.

The US debt keeps going up so… inflation doesn’t really matter too much, since the old debt is either being paid off or subsidized by new debt.

[EuchreJack]

You have that the wrong way round. Inflation devalues money (you either consider it the percentage of how much value your money loses over time, or how much more expensive goods are) so that $200 isn’t worth $216 in future, it means that $216 is worth the same as the $200 was in the past, or something that cost $200 then costs $216 now.

The US debt keeps going up so… inflation doesn’t really matter too much, since the old debt is either being paid off or subsidized by new debt.

Yes, but my point is that the debt goes up slower than the money is devalued, so it doesn't matter for the US.
Although arguably, this CAUSES inflation.

[Maximum Spin]

You have that the wrong way round. Inflation devalues money (you either consider it the percentage of how much value your money loses over time, or how much more expensive goods are) so that $200 isn’t worth $216 in future, it means that $216 is worth the same as the $200 was in the past, or something that cost $200 then costs $216 now.

The US debt keeps going up so… inflation doesn’t really matter too much, since the old debt is either being paid off or subsidized by new debt.

His point was that, if you then spend that $200 on $200 worth of goods at time A, the goods are worth $216 at time B and you have paid $212 for them.

Unfortunately, this doesn't save the sovereign debt crisis for a whole lot of reasons, not least that a huge number of US bonds (I think the biggest type, but I didn't actually check) are inflation-indexed so the government guarantees it will pay more in real terms than it got.

Why are you so defeatist? If spending goes up every year by 4% but revenue goes up by 5% a year, eventually you will close the gap; sure it won’t close as fast as if spending were flat but it will still close. That’s the whole point!

Yes, this would theoretically "close the gap", but this scenario is, alas, economically impossible in the long (and even medium) term. It's not happening.
Even if those numbers somehow managed to keep up (which they can't), it would take longer to reach break-even than it would take to hit another recession and derail the plan.
You have to think in terms of capital and real production, not hypothetical numbers, in order to understand the constraints on the evolution of the economic system.

GDP is not perfect but your example makes debt to GDP too conservative - it suggests GDP is too high, which if true would mean debt is even higher relative to “meaningful” economic output, not just trading buckets of swill.

Right. Which means the debt is worse relative to the actual real ability to pay it in meaningful terms, rather than effective economic redistribution toward bondholders.

[McTraveller]

I don't share the certain doom approach - I think it is a solvable problem.

Maybe my approach wouldn't work, but I believe there are approaches that would work.  The core of the approaches are to ensure any debt is used to increase society's productivity, so that resources we spend today are used to increase the availability of resources (or improved standard of living) in the future.

In other words, you can't take two apples today and eat both of them without planting the apple seeds and expect to have three apples in the future.  But if you always take two apples today and end up with three apples in the future, you can indeed have ever-increasing total "debt" but also have increasing total apples on hand.  The thing is the ratio stays the same.  It's only when the ratio falters does the ability to keep making enough apples fall apart.

[Maximum Spin]

Maybe my approach wouldn't work, but I believe there are approaches that would work.  The core of the approaches are to ensure any debt is used to increase society's productivity, so that resources we spend today are used to increase the availability of resources (or improved standard of living) in the future.

Okay, but that's not happening now. How would you do it? What actual investments would you make, and how would you handle the looming problems of unfunded liabilities, aging population, decaying infrastructure, resource exhaustion — just to name a few? Where will the capital come from? Where will the labor come from? To say "I believe there are approaches that would work" on its own is nothing more than religious faith.

My perspective isn't "certain doom". In fact, if I were Communist dictator, I could pretty much solve all these problems on a reasonable time horizon. Idle supposition without any grounding in a serious understanding of economics is a waste of time, though.

I can spend all day begging the apple fairy to multiply my apples, but when someone in the background comes through and chops down all the apple trees, the apple economy is going to turn fast.

[McTraveller]

You do things like parts of the infrastructure bill - you pay to build infrastructure, which reduces the costs associated with failing infrastructure.  You pay for medical research. You reduce the cost of education.  You build houses and factories.  You train more doctors and engineers and plumbers and haircutters and teachers. You pay people to start more businesses.

What you *don't* do is just give every person $3000, because that doesn't increase investment, especially when you are basically paying those people not to work.  What should have been done is give people vouchers for specific goods and services, to cover them when they can't work; this way, although the proverbial grain silos would be depleted, it wouldn't be followed by inflation.  By giving people cash, this both depleted the silos and added money to the system - since inflation is exactly "too much money chasing too few goods", why are people surprised in the inevitable result?

You *don't* just mandate people get insurance so they have money to pay for (artificially) scarce medical treatments.

Basically to get out of a debt hole you have to provide goods and services or have the debt forgiven; there's not really any other way.

I am curious to what a "communist dictator" would do to solve "the problem" besides creating more goods and providing more services?

[MrRoboto75]

"But but how do we pay for it"

I dunno, be the most powerful country and economy in the world or something.  Maybe that helps.

[McTraveller]

What do you mean? In the short term you can only pay for things with labor and/or opportunity cost (using a resource for one thing instead of another).

For example: You don’t need money to build a house: you need land, materials, tools, workers, and know-how.

You don’t need money to grow food: you need land, seeds, soil, an appropriate climate, labor, tools, and know-how.

So if people have resources needed to build things, your options are to ask them to donate it, take it by force, or give something in exchange, including a promise for something else in the future (which is all money is at its core). The trick with giving money is there needs to be enough confidence that it can indeed be redeemed in the future.

[MrRoboto75]

The country has the power/resources/money to do basically anything if it actually wanted to.

Like we can drop a literal infinite amount of bombs in fucking Laos but god forbid we spend anything domestically.

The only reason "the budget" and "debt" is a problem is because we made it up to be a problem.  The debt is literally an incomprehensibly large number and it being arbitrarily larger will probably never effect either of us on any real level, and if it ever did we have far larger problems.  The country largely gets away with it by being the most powerful country on earth.  If we really want to be #1 so badly why don't we ever actually display it outside of hot air and bombing the middle east.

[McTraveller]

So you're espousing the "take resources from people by force" approach?  That's one type of power, sure.  But bombing people out of existence doesn't produce goods or services - it's generally a very poor investment and results in high inefficiencies later even if you do suddenly get many spoils of war: you have to keep spending on "security" because you've encouraged "might makes right."

There are non-violent ways to get access to under-utilized resources.

[Maximum Spin]

The country has the power/resources/money to do basically anything if it actually wanted to.

It does not.

"But but how do we pay for it"

I dunno, be the most powerful country and economy in the world or something.  Maybe that helps.

Well, we're not, so that could pose a problem.

You do things like parts of the infrastructure bill - you pay to build infrastructure, which reduces the costs associated with failing infrastructure.  You pay for medical research. You reduce the cost of education.  You build houses and factories.  You train more doctors and engineers and plumbers and haircutters and teachers. You pay people to start more businesses.

What you *don't* do is just give every person $3000, because that doesn't increase investment, especially when you are basically paying those people not to work.  What should have been done is give people vouchers for specific goods and services, to cover them when they can't work; this way, although the proverbial grain silos would be depleted, it wouldn't be followed by inflation.  By giving people cash, this both depleted the silos and added money to the system - since inflation is exactly "too much money chasing too few goods", why are people surprised in the inevitable result?

You *don't* just mandate people get insurance so they have money to pay for (artificially) scarce medical treatments.

The last two paragraphs are true, yes. Neither of those things will help. The first paragraph won't actually work, and I could get into the details of why, but I'm busy right now. Remind me later.

Basically to get out of a debt hole you have to provide goods and services or have the debt forgiven; there's not really any other way.

Yes. The problem is that we don't actually have the goods and services.

I am curious to what a "communist dictator" would do to solve "the problem" besides creating more goods and providing more services?

Mobilize labor. If you can force people to work, you can get enough value added to make the debt serviceable.

I want to stress, because it seems like it might not have been obvious, that I am not a Communist and not a fan of slavery. I'm just saying that if everyone agreed to elect me dictator, I could do it.

[Telgin]

So you're espousing the "take resources from people by force" approach?  That's one type of power, sure.  But bombing people out of existence doesn't produce goods or services - it's generally a very poor investment and results in high inefficiencies later even if you do suddenly get many spoils of war: you have to keep spending on "security" because you've encouraged "might makes right."

There are non-violent ways to get access to under-utilized resources.

I think the point was that we spend a stupid amount of money on our military that could be spent on other things.

[Micro102]

We should at the very least start with the obvious changes. Convert to a single payer universal healthcare, cut the military budget by A LOT, and tax the rich more. Then we can see where we stand and adjust from there.

[EuchreJack]

We should at the very least start with the obvious changes. Convert to a single payer universal healthcare, cut the military budget by A LOT, and tax the rich more. Then we can see where we stand and adjust from there.

Sorry, but you were supposed to do that when the Democrats had a majority in the House. Not my fault they missed that train.  Could it be...they actually work for the Rich?