$22 Trillion and accelerating . . . .

[dmlfarmer]

What wire service is quoting that?

Have not heard extension has happened but Bloomberg and Reuters both reported overnight that he is considering doing so.

https://www.reuters.com/article/us-usa-trade-china-deadline/trump-considers-60-day-extension-for-china-tariffs-deadline-bloomberg-idUSKCN1Q30DE https://www.reuters.com/article/us-usa-trade-china-deadline/trump-considers-60-day-extension-for-china-tariffs-deadline-bloomberg-idUSKCN1Q30DE

[westernvicki]

Taxes go to government, interest on debt goes where?

It just redirection of public money.

Go figure.

[dmlfarmer]

Taxes go to government, interest on debt goes where?

It just redirection of public money.

Go figure.

That all depends on who owns the debt. Your right if debt is government held. But if debt is held by foreign interests, the money flows out of the country. If debt is held by private parties through treasury bills/bonds, then public paid interest is flowing to private investors. Interest charges could simply be adding onto unfunded liability in pension plans if not actually paid. Or it may simply be adding to the deficiet/debt if the budget is not balanced.

[farming101]

That all depends on who owns the debt. Your right if debt is government held. But if debt is held by foreign interests, the money flows out of the country. If debt is held by private parties through treasury bills/bonds, then public paid interest is flowing to private investors. Interest charges could simply be adding onto unfunded liability in pension plans if not actually paid. Or it may simply be adding to the deficiet/debt if the budget is not balanced.

So, is the present amount of debt and interest payments too high? How is it decided when is no longer affordable?
Should government backed pension plans be fully funded? What would that mean to the national economy?

[dmlfarmer]

So, is the present amount of debt and interest payments too high? How is it decided when is no longer affordable?
Should government backed pension plans be fully funded? What would that mean to the national economy?

Great questions and I wish I had an answer. But in reality, economics is more an art than a science. There is no natural law that prevails, but outcomes are largely dependent on human emotion no matter if you follow Keynesian or Austrian theory. Growth and recession can occur under both economic theories

I can only answer with my personal opinion. For the US to add two trillion dollars in debt over last two years when economy is good and employment is low is a huge mistake. Debt was needed in 2008-09 to spur the economy. I agree with Errol that by borrowing more, the US will never be able to grow its economy enough to get out of debt or in my opinion, the deficit. Nor can underfunded social nets ever be fully funded now. So tomorrow's generation will be stuck with todays bills that are continuing to be rung up.

And I don't think economists, politicians, or the public will know when debt and interest is too high until **** happens. Human nature refuses to accept risks that are not quantifiable. So until we are actually in another global recession, or a deflationary spiral like Japan has endured for years, or hyper inflation, or currency default, or even a replacement of the US dollar as the global reserve currency politicians will continue to buy votes and not face the music. And IMHO, if we don't see a major economic correction soon in one form or another as outlined, the most probable outcome is another world war as the instrument to reset the global economy.

[farming101]

Why is it desirable to have a government treasury accumulating it's own money and "getting out of debt"?
To be sure there is no excuse for wasting money and in most instances no good reason for increasing govt spending just to try and spur the economy without a plan.
Why did the debt and deficit increase? What does the balance sheet say?
What would trigger a currency default or loss of reserve currency status? I cannot envision what that would be.

[Tucker]

There are a lot of people who don't really care about government debt and for good reason. When you're the worlds reserve currency why not trade fiat money for hard goods or commodities? It's basically monopoly money to print and you can get real stuff for it. Print more and inflate your way out of debt in the future. I took a $100k debt on a quarter of land. Who cares when now it's worth three times that? Shit might hit the fan if the US ever lost reserve currency status. Why do you think Saddam was such a threat that he had to swing by his neck? WMD? Lol.

[errolanderson]

Trump meeting with China key trade official today. Clock is ticking . . . .

Trump appears willing to budge on March 1st tariff hike deadline, but U.S. negotiations must be presented as a win to markets. Time likely more in China's favour (IMO).

[ajl]

What is amazing here is that while the debt is growing, the 10 year treasury rate has been falling even while China and Japan reduce their treasury holdings. Now that the market has reflated, there looks like there will be more room to raise short term rates yet this year. With new tariff revenue rolling in, the US still has the ability to service this debt so QE4 is still a ways off yet. Given that these imports have no other market to go, the producer ends up absorbing the tariff for the most part. Add in economic growth from reduced domestic taxation and being an energy super power the US can manage high debt levels for a long time yet. This is why all the predictions of its demise has been consistently wrong so far.

[tmyrfield]

Problem solved, for a little while...


https://moneyordebt.com/2013/01/13/trillion-dollar-coin/ https://moneyordebt.com/2013/01/13/trillion-dollar-coin/

[errolanderson]

Trump 2020 budget proposal, a record $4.75 trillion. Military receives 5 percent increase, cuts to education, health care, USDA . . . .

[agstar77]

Debt is usually solved by a depression and a world war. Trump is just the guy to do it. His son will have inherited heel spurs so he will get a deferment.