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In Reply to: RE: Article on the potential of a major weakening of the dollar posted by tweaker456 on June 09, 2021 at 10:50:27
When you borrow that much money the currency is bound to devalue. When Moody's gets around to it they are going to degrade our credit, which is significant. It is only that important because of the sheer volume we owe. We are already paying interest on the interest for the national debt.
Follow Ups:
Once again the evidence points to you being incorrect and overly simplistic on this, jurb. What matters most, IMO and other's is the cost of the debt service in relation to GDP. About 1.6% of GDP in 2000 and .5% in 2020. The sky is not falling at this time, based on debt anyhow. As it stands now the debt does not have to be paid off, just the interest on it. This is way in manageable territory. Once again, our debt service is less than 1/3 of what it cost in 2020 in relation to GDP.
Speak out, you got to speak out against
The madness, you got to speak your mind,
If you dare. - David Crosby
In 2000, we had $5.7 trillion in debt, at 1.6%, that's $91 billion.
Now, the debt is at $28.4 trillion, at 0.5%, that's $142 billion.
What's worse is that when interest rates go back to normal levels, those numbers escalate quickly. Just a 1% increase amounts to an extra $284 billion. At just 3%, it's $852 billion.
And they haven't stopped spending!
-Rod
Total US Federal government revenue in 2000- 2.03 Trillion dollars.
Total US Federal government revenue in 2020- 3.42 Trillion dollars.
142/3420= .0415 So it's 4.15% of revenue. For debt service. I can live with that.
2000 is 4.48% of government revenue
Neither is driving the government into bankruptcy. There are other issues of course.
"Reagan proved deficits don't matter. " Dick Cheney
Speak out, you got to speak out against
The madness, you got to speak your mind,
If you dare. - David Crosby
Rod, you are leaving out the approximate 2 fold increase in GDP. I do agree that this situation is somewhat dependent on these historically low interests though.
Speak out, you got to speak out against
The madness, you got to speak your mind,
If you dare. - David Crosby
The deflator is used to calculate inflation in GDP longitudinally.
"Horse sense is the thing a horse has which keeps it from betting on people. "
― W.C. Fields
Interest on money borrowed now at today's rates does not increase when rates go up. The economy has grown substantially since 2000 and should continue to grow.
The GDP has about doubled since 2000; however, this chart show it in todays dollars, so you get 2% inflation and about 2% growth. Considering just real growth of 2%, GDP grew from $10.3T to $15.6T over 20 years.
I realize that T-Bills mature at different times. Some mature tomorrow and the latest in 10 years though a lot of people are buying shorter term bonds. In any case, new debt will pay the new rate and likely, around 5 years out, most bonds will get adjusted to new rates. At some point, historical interest rates will come back at typically 4%. Since 2010, the debt gone from $13,562 to to 28,234, more than double. At 4%, it's $1.13 trillion if we stop borrowing. If we double the debt again in 10 years, that total is $2.26T per year. Our current budget was about $4.7T.
If we do 2% a year, GDP would be maybe $26T in ten years with the debt at $56T if the current pattern continues. Do the math and pray we don't see 70s inflation.
-Rod
That's why we need to tax the rich WAY more, just like war hero, patriot, and 8 year POTUS, my main man Dwight D. Eisenhower. Not to mention ending or drastically curtailing the military-industrial complex. RIP IKE
Speak out, you got to speak out against
The madness, you got to speak your mind,
If you dare. - David Crosby
Edits: 06/09/21
If you want to go to Fantasy Land, go to Disney Land.
Do you really think the politicians will do what they should? They haven't for last 60 or more years. How many times have they balanced a budget?
Seriously, you be hard pressed to tax the rich enough. You have to broaden the base, AKA, the middle class. Given our consumer economy, GDP would also suffer.
How many entitlements would need to be cut to pay for the debt?
-Rod
Well I'm glad to see you agree with IKE. There in no need in general to balance the budget, it just should not get out of hand. My guess is if and when it really gets out of hand I won't be around to pick up the pieces. There's a lot of moving parts to what is going on in the US and many don't look to good to either of us.
Speak out, you got to speak out against
The madness, you got to speak your mind,
If you dare. - David Crosby
nt
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