I buy Treasury products for my investment portfolio sometimes.
Also foreign governments and central banks will have holdings. Tether (the cryptocoin) is largely backed by US treasuries.
Time would be better spent talking about other issues, but national debt is a simple number politicians can complain about rather than talking about the more complex issues that really impact the rest of us.
Often politicians will try to shrink or control the debt without deeply investiagting the true causes, because the real causes may be politically inconvenient.
That's not really the case with a nation-state with sovereign control over their own monetary policy. In that case, currency works a lot more like an MMO currency like RuneScape gold. The government gets to set up sources (government spending, killing goblins), and sinks (taxes, buying stuff from in-game shops), with the risk of screwing up the balance being a shift in perception of value of the currency. Just like how I never need to worry that RuneScape will run out of gold, and the next goblin I kill won't drop any, the government can't run out of money. It can always print more. Taxes are used to induce a demand for the currency (since you need to pay your taxes in USD), creating a flow of money through the economy. Tax too much, or print too little, and you make people expect the money to gain value, and shrink the value proposition of investment compared to hoarding money. Print too much, or tax too little and you end up with money piling up in some subset of your participant's balance sheets, shifting people's expectation to the money being worth less in the future, leading to a devaluation of said currency (since the people with a bunch of money are willing to spend more of it for the same good).
The key is that whole "expectation of future value" element, which differentiates government debt from private debt. It's a much looser coupling than "I have 45 cents in my bank account, I can't buy groceries this month". A currency can be useful, valuable, and perfectly suitable even if it loses a couple percent of its value every year, forever. That would reflect as a forever increasing national debt, but it's fine, because national debt doesn't matter.
Unexpected changes to the rate of change of the national debt is the thing that matters, and even then only indirectly, by way of the public perception of the value of the currency, which leads to the inflation/deflation rate.
At the end of the day, in the world of fiat currency, taxes and spending are not intrinsically linked. They're mediated by public perception of the value of the currency, which can be sensitive to unexpected speed ups of the money printers, but is frankly unaffected by the normal rate.
- The Federal Reserve
- Intergovernmental holdings
- Mutual Funds
- state and local gov
- Pension funds
- Insurance companies
- Deposit insurance
- Foreign holdings of all types
Does this mean the FDIC's Deposit Insurance Fund?
But the largest single holder is actually the U.S. federal government itself, which holds about 20% of the total debt as “intragovernmental” debt. These are real, legally binding financial obligations to federal agencies, most famously to Social Security.
So who owns the obligations? Many individuals and foreign states.
So who's that, it doesn't give any sense of proportion.
It's complicated as one can never be sure how a bond get wrapped into another product sold in foreign, and often obscurely complex structures. But we do have some estimated data points.
Contrary to another comment pointing at China, this country accounts only for tiny fraction of the overall amount credited.
For example, the UK, Japan, individually own more U.S bonds than China.
Anyhow they each represent around 1 trillion, so where is the rest coming from?
The majority of creditors in value are U.S entities and U.S individuals.
Some may recall a bank in California that went bankrupt a year or two ago. Unveiling a financial gig certain institutions enjoy doing: accumulate bonds as it always pays.
A few references: https://www.nasdaq.com/articles/20-countries-holding-most-us...
https://www.crfb.org/papers/qa-gross-debt-versus-debt-held-p...
Edit: another comment nicely broke down list of which U.S entities own what.
(a default on the debt, any of it, would be an extinction level event for the global financial services industry and then most real US industries in the following weeks)
In theory no, but when old debt matures, it is often paid by issuing newer debt that is financed at the higher rate. So in practice inflation does increase the dollar amount owned unless the government actively reduces the debt.
Taco bell seems ridiculous but the alternative is that they eat cat food.
tldr - the reason that going after the poor is always the answer is that it's the rich who are both asking and answering the question.
The wealthy boomers who own multi-million dollar California track homes and don’t pay taxes because of prop 13, who are consuming millions on quasi-necessary medical procedures because they partied too hard in the 70s, gorged on trans fats in the 80s, smoked drank and didn’t go for walks, that’s where entitlement reform should start. But those are the base of one, maybe both parties and will vote out anyone that refuses to subsidize their ozempic and knee surgeries. They will even vote to reduce democracy by gerrymandering the state to block third party candidates and ensure nobody can come for their unnecessary health care costs and other ballooning entitlements.
Most corporations don't make extraordinary profits. They make enough to stay in business, and if you tax them too heavily they will either raise prices or just close. So higher corporate taxes will ultimately depress business and be paid for by the consumer.
A few corporations certainly do make a lot of profit, and various "windfall profit" or "excess profit" taxes have been tried, but that's more about politicians trying to earn favor than anything that makes a practical difference.
Spending is the thing that's out of control, so that's where the problem must be attacked.
Corporate taxes are levied on profit, not revenue. Raising corporate taxes would not cause any businesses to fail. And businesses can only raise prices if the market will bear those higher prices. Prices are set based on what customers will pay, not on what profit margin the company wants.
It is a little more nuanced than that. Raising corporate taxes can make it harder for businesses to succeed if it sharply reduces after-tax profits or discourages investment. OTOH, if done well, the incremental tax revenue can create a healthier business environment overall.
How different would the world have been if either of the two "grand bargins" that Boehner started, and then Obama torpedo'd last minute (in the first example) or the second one (which biden as VP torpedo'd) happened? No rise of the tea party, working bipartisan arrangement on spending?
Shit matters.
Even SNAP only cost 100 billion last year, and its net effect on revenue was probably positive, though these things are hard to measure in isolation: https://www.cbpp.org/blog/snap-food-assistance-is-a-sound-in...
(Because humans are bad at large numbers: 100 billion / 38 trillion is 0.2%, or alternatively 38T represents 380 years of SNAP at 2024 levels.)
Letting 70M+ Americans, many of which are children, go hungry is good for the country because it saves money. And if they don't die from malnutrition, don't worry, we're going to save even more by cutting their health coverage, and eventually social security, a program that people paid into their entire lives.
Take a step back...do you believe these 70M+ people are just lazy, inept, ...? Do they deserve to suffer, especially the children? What are we buying with their suffering? A reduction in spending? A tax break for the wealthy? Is this the only solution?
What if we were to create a real national healthcare system which cared for everyone at a vastly lower cost? That would also save money AND reduce suffering. Seems like a net win.
But that won't get us all the way there, so what else can we do? Everyone knows the answer, increase taxes on the wealthy. Top marginal tax rate used to be 90% (1950-1964), so perhaps there's some wiggle room between that and today's 37%.
Historical Tax rates: https://thesocietypages.org/socimages/files/2012/12/1.png
This country needs a big old heaping of empathy and compassion.
I'll agree that eliminating SNAP is an extreme measure that in the overall picture saves little (unlike modest cuts to SS and Medicare) but consider that 20% of Americans are to some measure dependent on SNAP. There's something wrong with that in my view.
but what interpretation leads to "therefore SNAP is the problem" ? compared to land management or anti-trust, etc
as a policy alternative, we could say, ban the exports of alfalfa until the SNAP usage is 5%, and split up cisco into 2000 different food distribution companies.
funding for social spending i think is a very strong chesterton's fence, in that the program was introduced to mitigate a problem. getting rid of the mitigation isnt going to get rid of the underlying problem
One day we'll look back and wish we had the self-control to both impose austerity measures to get the spending under control and the foresight to spend wisely on long term functions like infrastructure.
Until then it's business as usual from both political parties.
Letting people starve is a better solution than letting them drink soda and potentially develop diabetes over the long term? Preposterous. I don't understand why the common sentiment is that everyone who uses SNAP must enter into a contract with the state to lose weight and only eat heads of iceberg lettuce, lest they be labeled leeches.
But such regulations are easily subverted and ultimately may not make a lot of difference. If people want to live on Dr. Pepper and cigarettes they will find a way to do that.
people shouldnt be prevented from ever drinking doctor pepper because they are poor.
snap should reclaim their money from dr pepper if peopleare spending too much on it, or they should be pushed on making doctor pepper healthier if thats what people are spending snap money on.
Yes, the rich would whine about it and raise a fuss, but ultimately their lives would not actually change for the worse.
Whereas taking away SNAP and other entitlements would demonstrably make the lives of millions of people significantly worse.
Could this be how he stops the election, or stops the vote count?
His options are start a major war, default on the debt, ?
Hold onto your hats
Not that they started it or want it to continue, and not that I think Zelenski is anything other than a hero, but the case in point is Ukraine not holding elections since the war started.
When Zelenski told trump there have been no elections during the war trump, on camera, was delighted and said “very good”.
You castrate the media, and take control of major vehicles to tilt the balance in your favour in quasi-sham elections; accumulate power in the executive while keeping the remaining seats of power under the thumb of the branch: legislative gets installed with sycophants/acolytes, judiciary power is tamed/dimished and regime-adjacent judges installed.
If you play this well you keep getting elected when elections happen and slowly twists more the sword into all democratic institutions.
[0] https://www.journalofdemocracy.org/articles/the-new-competit...
a) update the valuation of their assets, recognizing that they are instantly insolvent, cease trading, and lock their doors;
b) continue operating "illegally" in the hope that some sort of order will materialize
Option (a) causes all the non-cash economy in the US to stop functioning. The gold and silver bugs are, briefly, ecstatic - this is their moment. Everyone else who would rely on their debit or credit cards to buy food and gasoline, less so. The legal order that is supposed to maintain things like elections theoretically remains in place, but the rapid collapse in public order forces states to step in. You have elections to some thing called the "United States", but when most of its money has been rendered worthless, does it really exist any more? Essentially this is the "prepper" fantasy.
The Federal bits of the US being strong (and indeed all institutional strength) is not a law of nature, and people who think it is a law of nature are the most likely to blindly run it into the ground while fighting each other to wield that strength.
But right now, the Federal bits are stronger than any state.
I am not saying it would be pretty or desirable, but by reading what happened to countries can give a notion.
It would eliminate the notion of the USD as the basis of foreign trade across the world, almost all of the finance system is supported by the USD being the safest investment available.
Firing Jerome Powell and pushing rates lower, in spite of reality on the ground, is effectively a form of soft default. (That, plus the laundry list of other things, which is too long to fit into a single HN comment)
The US will never stop paying its obligations. But driving away investment by breaking promises abroad and eroding political stability at home very much will cause the trust in the USD as an ongoing institution to evaporate. Sure, the US still pays its bonds on time in USD, but what is USD worth when the US cannot honor its trade obligations, cannot honor its diplomatic obligations, cannot be relied on as a stable partner?
It will be very scary when the US stops being the dominant financial system. So much of the US political economy (and more fundamentally, our way of life) depends on it.
But no one in politics won't do that.
I understand the self-interested desire for the ultra wealthy to have lower taxes on an individual level, but yet I still don't understand how they are perpetually blind to the fact that whatever the release valve for the historic and still growing massive wealth inequality we have takes, it won't be great for them either in the long term.
Sure its nice for them to make asset grabs during economic downturns, but eventually there's always a tipping point where things go upside down chaotic and I don't feel like we are that far away from it now.
I don't. It seems like mental illness to me
I meant I understand it in the sense that to get that wealthy in the first place you have to have a special kind of self-interested sociopathy, so in that regard I understand their desire. Not that I agree with it.
It's up to policy makers (i.e. government when it comes to taxation) to structure the system to mitigate the inherent self-interest that people have. Obviously that's easier said than done when the ultra-rich buy off the politicians, but human nature just is what it is.
I don’t. They have tens of millions to billions. What more do they want? Three yachts instead of two? A higher score than some other rich douchebag destroying lives for fun?
I mean, yeah, I think this is mostly it. Its gamification.
At the top level they all have more wealth than they could ever possibly use, even accounting for many generations of offspring.
Attempting to, and might get away with it for a while.
But I suspect next time there is an inevitable "equal but opposite reaction" the guillotine plans will be optimized using LLMs with shared open sourced designs.
(And in the current political environment, I think I should clarify this isn't me threatening violence -- I don't want violence. It is me recognizing that history "rhymes" while the rhyming patterns tend to happen on a faster and faster pace)
Once you get that wealthy the money is more of a disk measuring contest. There is no productive way for one person to really use money of that magnitude, the best they can do is dump it into stocks, bonds, real-estate, etc..., but nothing that really moves the economy. It's a big failure from an economic standpoint. Lots of "dead" money not being productively used.
No, the thing is to have a yacht with a yacht for a dinghy. And that comes with a helicopter.
Agreed on the insanity and it seems to be getting worse over time.
I personally think its due to malignant narcissism bumping up into the (subconscious) midlife realization that there is no chance their theoretical singularity god will arrive in time to make them immortal.
Sorry bro(ligarch)s, you're all going to end up as worm food just like the rest of us. There isn't any amount of underground concrete bunker wall thickness that is going to change that.
The members of the billionaire class with any foresight are making a calculated bet that they will be in control of sufficient technological measures to suppress any kind of mass uprising by the populace. Look at all the resources going to Anduril and Palantir. Foucault's boomerang is on its way back towards the US populace right now.
That said, even that cadre far overestimates what technology can do. Adaptation is a fundamental pillar of the human condition.
My view with all that in mind is that spending has gone up quite a bit. Overall tax revenue has stayed remarkably consistent and the tax system is progressive (i.e. if you make more you pay more). Is it progressive enough? I don't know. What percent of the budget should that top 10% (or top 1%) be paying? 20%? 30%?
At the end of the day though getting 20% of GDP in to the Federal government as tax has historically been a heavy lift. If you get a government that's willing to vote to do that then I would be that that you will soon find new one that's willing to vote not to do that.
That said getting spending in the range has the same problem.
At some point though it seems inevitable that one (or both?) of those statements will prove to be untrue.
https://ticdata.treasury.gov/resource-center/data-chart-cent...
That should pretty much tell you everything.
The closest they ever came to actually caring about government was with Musk who went in and actually started (illegally) ripping shit out. But the things he ripped out were inconsequential things that conservatives didn't like, and he didn't even make a dent in the actual budget. All of the things that Musk got rid of were congressionally appropriated and could have easily been congressionally (i.e. legally) de-appropriated accordingly and it supposedly would be easy for them to do with majority control over the house, senate, executive, and judiciary...but they didn't do it, because they don't actually want to cut the budget.
Eh, I would say its well-known in deficit circles that all politicians (intellectually) desire to balance the budget, but it is basically impossible. Social Security, Medicare/Medicaid, and debt servicing are such large pieces of the debt pie that the entirety of discretionary spending makes basically no impact in balancing the budget. These are de-facto untouchable obligations because too many people's lives depend on them and any party that enacts austerity will be swept out of office. Neither party will increase taxes on themselves (the rich) and taxing the middle/poor guarantees you lose the next election. The only path forward in the U.S. is basically kicking the can down the road until it implodes like so many other high debt-load western nations before them.
Outside of retirees, much of the social safety net is funded at the State level. There is a wide variance in the benefits and quality of the social safety net across States.
Oof
The reason for the quotes is because that's an incomplete picture since various things can affect the debt without being noted in the annual deficit. For instance some programs are considered off-budget, there's various accounting restructuring, and so on. If you simply look at the total debt it has increased every year (again since at least 1970) with the only exception being 1999 to 2000 depending on when you measure it. If you look end of year vs end of year (as opposed to fiscal year), it decreased by a few billion dollars, and that was the only time.
https://fiscaldata.treasury.gov/americas-finance-guide/natio...
And the graph clearly shows we trend towards less spending under Democrats and then Republicans spend more again.
I don't find the partisan arguments interesting. Bush had a lower deficit (each and every year) invading and occupying two different countries than any president has ever achieved since then. That is not to praise Bush, but to emphasize that we're comparing horrible vs terrible and trying to argue over which is which. They're all miserable failures, and not just in regards to spending.
Running wars is a choice, a pandemic hitting not so much.
> The Paycheck Protection Program (PPP) is a $953-billion business loan program established by the United States federal government during the Trump administration in 2020
That's still not twice under George W. Bush, who became President on Jan. 20, 2001, nearly three weeks into calendar year (and nearly four months into federal fiscal year) 2001.
Neither party has any intention of repaying any of the $38 trillion, or care what it is spent on.
https://www.torched.la/why-this-convention-center-expert-is-...
What are you talking about here? Federal debt is repaid on bond schedules fixed by statute. You can look it all up. You can argue about whether the debt load is too high, too low, whatever. But you can't just pretend they ran away with the money like a thief. People loaned the government that money because they know the government is good for it.
That 38 trillion is 76 thousand dollars per person in the USA for instance. Pay that off? Really?
Federal budget argumentation is just exhausting. Fight about balancing the budget, sure. Fight about unsustainable deficits, sure.
But to claim that very manageable federal debt payments can't be made is just ridiculous. Yes, the US government is going to pay off that debt. Which is why they were able to borrow it in the first place.
There may come a time when the interest on the debt becomes so out of control that it cannot be serviced, likely in conjunction with people dumping bonds and leaving interest rates soaring. Meaning, America's credit goes up in flames. We're obviously not there yet and maybe it will never happen. That said, remember when Trump backed off extreme levels of the "Liberation Day" tariffs? Real fears of bond-dumping seem to have a lot to do with the more measured (relatively-speaking) approach to tariffs we're now seeing. If debt holders dump the 10-year bonds enough, it causes real issues for debt repayment.
No, it doesn't, it impacts future borrowing. Third time, before my blood pressure spikes: that is an argument about future debt. It being true (or not) has zero relevance to the current size of the debt. You could be right (or wrong) if we had zero outstanding debt, or if it was $70T.
Ergo, it's either an incorrect or bad faith analysis of the situation. The current debt (whatever its size happens to be in the fiction being spun) will be paid off at the bills' rates and on the statutory schedules. Period.
The issue I think most people are correctly pointing out is that our current debt is unreasonable -- that it constrains our future policies way too much. Cutting services is effectively impossible in our politics, which leaves only inflation on the table. That's pretty much the same as default. That is where we're headed.
Your blood pressure issues notwithstanding, I don't think you believe that the US can possibly default or renege in any way on its debt, so there may not be a point in going on. History has run this experiment before and sovereign nations absolutely can default and/or renege on debt obligations. I certainly hope we don't see that in the case of the US. But I'm also not irrational enough to believe it's impossible.
The government can always repay by printing currency, but that's not the same. This is sort of a default too, since inflation eats away the artificially repaid debt.
I do not understand though, why Republicans talk about cutting spending, and then blow through the ceiling when they have the power.
Then Republicans took over the House in the midterms. They passed the budget (and Clinton signed it) that actually led to surplus for the first time since Andrew Jackson.
So, yes, it happened under a Democratic president. It only happened because of a Republican House, though.
(But let the president also be a Republican, and Republicans in Congress lose all fiscal discipline.)
Or is this more similar medical debt funny money where they just use a RNG to make up a number.
Or is this some 38T$ leveraged against our future? Like how this debacle in Chicago screwed over 75 years of residents.
https://www.courthousenews.com/seventh-circuit-upholds-chica...
"We", meaning the people and organizations, is not the same entity as "we" meaning the government.
That's what I'm asking who the debt actually belongs to. If it's "us", then how was it generated, who accepted the debt risk, and why's it going up faster?
Again, I make an analogy to $10000 tylenol pills, $16000 bandaids, and other obviously absurd medical fake number pricing. This $1T per year feels just as absurd and fake. And well, it's also a great wedge in Congress to bemoan and attack/shut down congress over that made up number.
https://fredblog.stlouisfed.org/2025/03/who-holds-us-nationa...
Yes? They're sold at auction. https://www.treasurydirect.gov/auctions/upcoming/ - I make that $547bn for auction over the next couple of days.
> who accepted the debt risk
The financial services industry. It's kind of what they do. Just because it "feels fake" doesn't make it so.
It's not really $1T sold though, $1T would be the net sales, as many bonds and bills would have matured in the same period. Gross sales is much more than $1T, but I'm not going to dig through to find those numbers.
You could maybe discount some of the issuance as internal borrowing/lending/savings, but if you want to treat programs as independent, then the interactions between programs and the general budget are real enough.
13% of federal taxes go to paying interest on the debt. That is 13 cents of every tax dollar paid. It is on track to hit 20% in the next 10 years, and that is assuming the US economy and tax revenue keeps growing.
Japan, UK, China, and the Cayman Islands are the largest private holders of US federal debt. [1]
What part of this seems incredible to you? It is indeed a lot of debt spending.
https://ticdata.treasury.gov/resource-center/data-chart-cent...
Also, fun fact, $1 trillion is about the daily private transaction volume of U.S. Treasuries.
The US government is a currency issuer so it’s possible but not advisable.
"The validity of the public debt of the United States [...] shall not be questioned."
Everyone is in denial about the whole situation. The sensible solution is probably the FED targeting a higher inflation rate than the 2% they would prefer and work it out slowly. Nobody is sensible at the moment, so we risk having either out of control inflation for a shorter time, or a lot of people lose money. If you have too much debt, people are going to lose money. The question is the amount of pain (and the collateral pain from secondary effects) that goes with it.
The part that is internal is mostly owed to social programs like social security.
The US federal government absolutely has the ability to forgive, restructure, or write off debt in its capacity as lender. It has frequently done so.
Where do you see limitations on seeking default or forgiveness in its capacity as borrower?
The US did a pseudo default when it left the gold standard and paid gold denominated debts with paper worth significantly less, telling lenders to put their complaints were the sun doesnt shine.
so if you have any investments even in your 401k, or hold any ETFs, much of it is invested in those
holders are individuals domestic and worldwide, retirement plans, foreign governments, banks, central banks like the Federal Reserve
the US government slowly pays people back with revenue and other people's money via newly issued bonds, over time, and does it very reliably, so people keep buying. The US government's revenue comes mostly from tax collection, followed and a few other sources, some private sector ownership in recent decades, and it pays the interest on all of the active bonds.
> I don't believe the .. is not a ...
Instead, just tell us what you do believe. It's generally clearer to use "positive" language rather than stacking negations.
No they don't. If we're talking about federal income tax, the vast majority of is paid by the wealthy.
The tax was used to rile up the mobs by merchants/smugglers, because the monopoly tea was actually cheaper than what they could ship from Holland.
When all is accounted for ... The rich still pay a far larger share than the income they earn. It's why OECD rates the US as the most progressive tax system among member nations.
There is no effective taxation when avoidance is easy and risk-free.
It’s the same no matter if you want to use effective vs nominal. The numbers change, but relatively speaking they are roughly the same.
Yes, the top 20% pay the vast majority of taxes and are taxed at the highest rate until you get into the ownership classes where income goes down and capital gains goes up. Plus that’s when all the tax deferral strategies come into play.
And yes, by all reasonable definitions if you are in the top 20% either income or wealth you are categorically wealthy.
The year that the US gained the ability to start 'printing' arbitrary amounts of money is 1971, prior to that we were externally constrained by Bretton Woods. This [1] site is nothing but a bunch of various graphs of all sorts of data. That point is a massive inflection point in just about everything awful that's happened to the country.
Banning everyone domestically from owning gold and then Bretton Woods massively propping up the US monetary system helped. But eventually West Europeans caught up with it and what happened was hardly avoidable.
Then we give the government the ability to print money at their discretion and money just starts inflating endlessly to the point of having no real meaning all the while wealth inequality grows to unimaginably high levels, to the point that the richest American now has personal wealth greater than the entire GDP of America in the 50s.
So you clearly don't just inevitably end up with deflation. Before 1971 the overall economic system was quite stable. Obviously there booms and busts, but it's not like the current system has changed that. Instead we now just have constant busts which are stabilized only by the government dumping obscene amounts of money into the economy which results makes all the economic and related problems we have even worse. And it's all obviously building up to a completely catastrophic bust that'll likely make the Great Depression look like the 'good ole days.'
[1] - https://www.minneapolisfed.org/about-us/monetary-policy/infl...
Yes and there were extreme swings in between. Predictable 2% inflation is better for the economy than unpredictable up and down jumps in prices of 10-20% over a decade or two.
> Keep in mind all the incredible events that 1800 to 1950 covers
You haven’t actually looked at actual charts or yearly figures have you? It was a roller coaster.
I certainly agree about your points on inequality etc. but Fiat money is not the cause of that itself. Monetary and fiscal policy failures are.
> Before 1971 the overall economic system was quite stable
Yes, for several decades. After the roller coaster of ~1770 to ~1950.
Then in 1971 things went insane and we went from a base index of 121 to 942! And yes this does directly cause inequality in a wide array of different ways! The most obvious is the 'gush up' effect as already mentioned. Another way is that it makes it much easier to undermine labor. So for instance many people would be relatively happy to be earning 25% more than they were 5 years ago. In reality? They've been given a paycut because that's not even enough to keep up with inflation, and there's 0 chance of it going any direction but up from here. So they've gotten poorer with a smile on their face. Hence why real wages are practically flat since 1971.
It also turns money itself into a somewhat toxic asset and motivates the hoarding of things. For instance Bill Gates is the largest private owner of farmland. By contrast lower income types often think starting a saving accounts, or (ugh...) a cd savings account is a fiscally responsible thing to do. And before 1971 this would have been 100% true. But now a days it's basically a scam, because you're never going to get interest rates that beat inflation, because nobody wants your rapidly devaluing money.
They'd be far better off putting their money into precious metals, land, or basically anything to try to escape the inflation trap. But lower income types often need more access to their funds on demand in case e.g. their car breaks down. So it's a system that very much punishes lower income types.
As opposed to hoarding money which is both bad for the economy and made you richer for doing absolutely nothing?
e.g. prices halved between 1865 and ~1900. The rich got richer, lack of freely available capital limited growth and anyone who had loans got screwed (imagine being a farmer who mortgaged his farm and is seeing agricultural prices go down every year). Constant technological progress bailed everyone out but it wasn’t a pretty time.
My point is that consistent and mostly predictable inflation (i.e. that was the case only during a fraction of of the last ~50 years) is much preferable than constant boom and bust cycles and volatile price swings that were frequent under the gold standard.
Of course it’s very easy to mismanage monetary and fiscal policy when you can print an unlimited amount of money and put incompetent/corrupt people in charge.
For some contrast to this point, I'll pick my date of 1971. Over just 9 years prices more than doubled. If we do the same timeline of 35 years, prices increased by more than 500%. And during this time, wages didn't come even remotely close to keeping up. So people were paying more and earning less. And obviously indebtedness also skyrocketed during this era, which is indeed nice for inflation (at least if wages keep up, which again they often don't), but that's only because people could no longer afford anything! Like in modern times the median home costs 7 years of median salary, which means basically nobody, outside of the very wealthy, can afford a home without going into decades of debt. By contrast in the past there were homes available for less than a year's salary - which is rather necessary when you can't just go get endless funny money to buy something.
And you're arguing that this new system is better for workers. Now of course it's possible I'm straw-manning you, though I assure you it's not intentional if so! But if not, then what am I missing here? Because I think surely, if you put yourself in my shoes, you can see that your argument isn't the most compelling.
[1] - https://www.mba.org/docs/default-source/research---riha-repo... (page 32)
Of the $2.7T of not-mandatory spending, $0.9T was servicing existing debt. Of the remaining $1.8T of actual spending, defense accounted for $0.85T. The final remaining $0.96T is what's actually voted on in any budget, which is about 15% of all government spending (https://www.cbo.gov/publication/61184).
In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
Sure, Medicare or Social Security can be cut, but see how that flies in the polls.
Certainly, it might fly with the uneducated and unsophisticated, but not someone who knows better.
Unfortunately, it's unlikely that the government will collect tax revenues necessary to even keep up with some of these mandatory programs, such as social security. The reality is there is a very serious chance many people do not receive the fully stated benefit value.
It’s simply a general tax dressed up in marketing fluff. It’s a pay as you go defined benefits program. Current workers are paying for current retirees.
There is very little difference between it and any other means tested welfare program - it’s just the means testing works in a different manner but can be changed at any time.
It’s no more “your money” than any federal income tax you’ve paid in over the years.
Even if they wanted to do something extremely simple like hold TIPS (inflation linked bonds) and hedge some of the inflation risk internally, buying TIPS from the US government would simply be a circular transaction that would be canceled out by the bond component of the TIPS. Pointless. If SS went out into the global financial market, they would quite literally absorb a big chunk of the global capacity for that risk, and more importantly, on a global level it all feeds back to the US/dollar, especially in times of stress (which having a Gorilla sucking up endless amounts of inflation risk would actually amplify). Again - it would cancel out on net. A program that big is almost too large for traditional financialization. It would need to be buying networks of ports and such like China does with their surpluses, but even here, the US already carries a large amount of geopolitical risk in their financial system (look at the Tariff scare where the bond market almost blew up because the large amount of financial assets held by foreigners were pulled from the country). It's actually fairly interesting to follow these lines and feedback loops and see how everything is connected.
You have separate Medicare and social security taxes that fund those programs.
If you cut social security and Medicare, at the very least you will need to change the laws so that taxes intended specifically for social security and Medicare can be used for general expenses.
Debating changing mandatory spending laws in order to hopefully reduce mandatory spending is totally allowed, it's just very hard to know exactly how much you'd save with any change. The CBO will make estimates for you, but those are going to be based on assumptions which may or may not turn out to reflect reality in the future.
> In an overspending crisis of such magnitude I wish there was more urgency in the culture to cut spending across every budget segment regardless of whether it's "mandatory" or not.
I'm betting it includes stuff like Social Security payments, Medicare, etc. So it's fundamentally mandatory as real people's lives were planned around its availability.
If you have ever seen the phrase “act of God” in a contract, this is similar. In contract law, “act of God” means something and it doesn’t require either party to subscribe to any religious beliefs.
New debt + interest (2024) = 6.2% of GDP
S&P 500 index (2024) = +23%
Good luck.
Investors in bonds look for a percentage growth, year over year. That's an exponential. A linear growth would be non-investable in the longer run.
From the other side, the US debt is quite linear on a log scale, so also exponential. That suddenly looks scary. But that is really to be expected? Exponential is the natural curve. If it wasn't exponential it would disappear, year over year.
Put another way, there is no number of children per couple C such that a population initially composed of N individuals will always add X>1 number of children per year in perpetuity.
If every person has one kid (or alternately, every couple two), then the growth rate is zero and the population constant. Constant population is exponential (exponent = 0).
If the number per couple is below two, then population declines exponentially. Fewer and fewer people die each year but also fewer are added. Eventually the population hits zero
If the number is more than two, then more and more are added each year
Until our healthcare markets become more free market, this growth in spending will accelerate as boomers age.
This is straight propaganda. Both parties increase spending. One party cuts taxes for the rich, the other increases taxes on the rich.
Conservatives haven't been "small government" and haven't cut taxes for folks other than the rich in a long, long time. Even calling them "small government" is a misnomer, because that propaganda is about privatization, not reducing costs (private services are less efficient and more costly than the government service they replace!)
Let's stop calling the problem "both-sides". One side is considerably worse for the economy, and you and I know it's the conservatives.
The same underlying service is being done. It hasn't been cut. It's been shifted from a government service, to a private industry. The government pays roughly the same amount they were previously paying (or in a lot of cases slightly more, with the promise of paying less in the future), the private company provides the service as cheaply as they can, and takes a cut of the cost for profit, benefiting a small number of people, while providing a worse service level for tax payers.
This isn't a capitalism vs socialism thing. My issue with it is that privatization is blatant corruption sold as "capitalism". There's no capitalism here, because there's no competition, outside of the bidding on the contract. Competing on who can provide the cheapest service doesn't improve the service; in fact, it reduces the service quality to maximize profit. Reducing service quality to maximize profit would be fine, from a capitalism point of view, if others were offering the same service to the customer.
Capitalism would be to provide multiple options to the users of the service, and have the providers compete against each other in a proper market.
I used to work for the government (Naval Oceanographic Office), and I worked with the contracting agencies on areas that had been privatized and it was a nightmare. Every few years you'd have multiple companies bid to run the service, but for the most part the same contractor would win the bid because they wrote the software in such a way that only they could run. It had relatively no documentation, had piss poor processes wrapping it, and the subject matter experts worked for the contracting agency. When the contract did change, everything would grind to a halt. For sure, that was more expensive than the original government provided service, but once something is privatized, it can never go back.
I agree we need to have more nuance here. You for some reason think I'm suggesting that "things such as requisitions of commodity items" shouldn't be private, which is not at all what I'm saying. I'm saying that existing government provided services, like the post office, for example, are run cheaper and more effectively by the government, and turning services like these private is for the sake of corruption.
This is a lie:
https://www.nytimes.com/2019/04/14/business/economy/income-t...
> private services are less efficient and more costly than the government service they replace!
Yes, this is why capitalism famously collapsed in the 90s, and all of the formerly capitalist countries socialized their economies!
> The top 20 percent of earners received more than 60 percent of the total tax savings, according to the Tax Policy Center; the top 1 percent received nearly 17 percent of the total benefit, and got an average tax cut of more than $30,000. And that’s not even factoring in the law’s huge cut to corporate taxes, which disproportionately benefit the wealthy households that own the most stock.
Don’t be part of the problem Marcus. The reality is cutting taxes for the poor by $2/day, for the rich by $80/day, and telling everyone they got a tax break with a straight face… while you simultaneously cut services, issue policies that cause inflation, and levy taxes domestically on the poor through tariffs is the republican way!
> The tax savings were relatively small for many families, however. The middle fifth of earners got about a $780 tax cut last year on average, according to the Tax Policy Center.
If you take someone who pays a small amount of taxes (the middle fifth paid $2170 in taxes in 2017), and give them a big tax cut ($780 in savings would mean they got a ~30% cut), the number is still small. Pretending that this is insignificant is just goofy.
> The top 20 percent of earners received more than 60 percent of the total tax savings.
People who pay the most taxes get the most out of tax cuts? Scandalous! Income taxes paid by quintile:
Lowest: $-476
Fourth: $-677
Third: $2170
Second: $6952
First : $31,132
https://fred.stlouisfed.org/series/CXUFEDTAXESLB0102M
https://fred.stlouisfed.org/series/CXUFEDTAXESLB0103M
https://fred.stlouisfed.org/series/CXUFEDTAXESLB0104M
$780 is insignificant.
Tax policy is written by humans, and they can do what they like with it. If you want to cut taxes for the poor, you do. If you want to cut taxes for the ultra wealthy, but make sure the statistics say poor people got a tax cut, you can do that too.
If you paid 1M in taxes, a 30% cut is 300k, and if you paid 1k it’s $300. One person will buy some bitcoin or a Porsche, the other will be lucky to buy some gas and groceries.
Both got a 30% tax cut, but it would be goofy to claim they have equivalent value.
If you wanted to be an honest person, maybe you correct the poster that there were tax cuts for the poor, but also point out that the cuts heavily favored the wealthy. Which by the way, was their argument.
Yeah, just stating your opinion isn't an argument.
> Tax policy is written by humans, and they can do what they like with it.
Insightful!
> If you want to cut taxes for the poor, you do.
What taxes? The poor pay negative income taxes. Did you read the post you're responding to?
> If you want to cut taxes for the ultra wealthy, but make sure the statistics say poor people got a tax cut, you can do that too.
I would love for the poor to pay zero taxes. It would be an improvement over the amount they "pay" now!
> If you paid 1M in taxes, a 30% cut is 300k, and if you paid 1k it’s $300. One person will buy some bitcoin or a Porsche, the other will be lucky to buy some gas and groceries.
Okay.
> If you wanted to be an honest person
You don't have to seethe, you know. You can be wrong without letting everyone know that you're miserable and angry about an internet post.
> ... maybe you correct the poster that there were tax cuts for the poor, but also point out that the cuts heavily favored the wealthy. Which by the way, was their argument.
You're almost caught up! Now that argument was I making in response? If you tried to understand instead of trying to misunderstand (or worse, just vomiting angry words without any substance to them), you might learn something!
The EITC was initially signed into law by Ford (R) and expanded by Reagan (R). Regan apparently called it "the best anti-poverty, the best pro-family, the best job creation measure to come out of Congress".
I'm sure you knew all this, so thanks for being honest in this post about the fact that you would like to dismantle this particular social safety net.
Seething comment sounds like projection btw, I'm not mad. The whole point of HN is to have the discussion expand in detail. Seems like it's working:
- Someone generalized - You called them a liar - We found out the generalization wasn't strictly correct, but basically true in spirit: the wealthy received the majority of the benefit, the poor got a small token for the sake of statistics / sound bytes.
They're called refundable tax credits. They result in people being net recipients of the income tax after refunds are paid out. This is a negative income tax.
> Someone generalized - You called them a liar
They didn't "generalize", they made a claim which is literally and undeniably untrue. That is a lie.
> We found out the generalization wasn't strictly correct, but basically true in spirit.
We found that the people he claimed didn't get a tax cut actually got a 30% tax cut. That's an obvious, blatant lie.
Look at the plot you shared "Personal Taxes: Federal Income Taxes by Quintiles of Income Before Taxes: Third 20 Percent (41st to 60th Percentile)"
2015: 1854
2016: 1954 (+100)
2017: 2170 (+216)
2018: 2676 (+506)
2019: 2519 (-157)
What about these numbers makes you think that the third quintile on average got a 30% tax cut?
It's also worth noting that the cut in question also had temporary provisions that expired, causing a tax increase for nearly all brackets except the upper class.
There has also been a massive cut in social services, which primarily affect the lowest/fourth brackets, which means they're paying more taxes for fewer services.
It's hard to interpret that "tax cut" in a way that doesn't scream "we're increasing taxes on most, and cutting services, to give the wealthy a tax cut".
Now America is exceptional for many reasons, but if we don't fix our debt we will meet the same unexceptional fate as many empires before us.
Think the dollar may soon find itself as not only game in town for trade sooner than initially thought
Everything else, when talking about debt, is talking about rearranging chairs on the Titanic.
Impossible to imagine this in any other country.
Compare to voting where 50% of Brits voted to destroy their economy.
Fixing healthcare is essentially PBM reform, price transparency, drug negotiation, deregulation to increase supply, and subsidized GLP-1s since metabolic illness/chronic disease is like 90%+ of costs.
If we increase revenue and decrease healthcare costs, we could get to within 3% of GDP.
Something doesn't sit right, if Clinton got the deficit under control while maintaining a strong economy it should be easier with modern technology. Lots of fraud going on I guess.
health&pharma, oil&gas, defense have seen major year on year profit increases since then when at best improvements should be very marginal due to the nature of the businesses. They are also large portions of the budget. In general any industry that has exploded in profits that can't be explained by increased market share should be looked into very closely.
So yeah, where is the money going? When you combine state, local, and federal, the US spend nearly a trillion dollars a year on education (more than our military!) but where does it go? We regularly churn out illiterate graduates and teachers have to commute from another state away in order to find somewhere affordable to live. We spend more money per capita on healthcare than anyone else in the world for worse coverage and worse outcomes.
I hypothesize that the dollar's status as the world reserve currency is actually a bad thing. It makes it cheap for us to borrow money and as a result encourages all kinds of social pathologies associated with ZIRP
Their talents would be better used if we cut out the middle layer.
The infographics version is here: https://www.cbo.gov/publication/61181
The TLDR is: Social Security, Interest payments, Medicare, Defense, Medicaid, Income Security Programs, and then a whole hodgepodge of Other. Politicians can try to cut a bit in Other or maybe Income Security, but the other big blocks are nearly untouchable Third Rails.
toomuchtodo•3mo ago
rhetocj23•3mo ago
supportengineer•3mo ago
2Gkashmiri•3mo ago
rtaylorgarlock•3mo ago
louthy•3mo ago
All your base are belong to US
But still, bravo
ta9000•3mo ago
all2•3mo ago
jrs235•3mo ago
jrs235•3mo ago
danans•3mo ago
Probably, but for sobering reasons, maybe less so than in the past, because because 50% of US consumer spending is by the top 10%, and the top 10% is far less dependent on credit for their spending.
A society where there is a more balanced distribution of spending power would be more affected by a consumer credit collapse, but the treasuries of such a society might be more desirable anyways.
BoredPositron•3mo ago
danans•3mo ago
The top decile of the wealth distribution is around $1M net worth.
The people doing the borrow-for-spending-against-non-housing-assets-as-collateral are beyond the top .01%. While they are also spending whales, they are able to negotiate far more favorable rates than the rest of the top 10%, whose spending is mostly income-driven.
pjc50•3mo ago
snowwrestler•3mo ago
toomuchtodo•3mo ago
Day gig is at a firm that extends consumer credit, so I keep an eye on cost of capital tracking, monitoring the spread, etc. Any debt packaged and sold into debt markets (asset backed securities) competes against treasuries from a yield (and risk premium pricing) spread perspective. Mortgages, auto loans, some credit card books, etc.
When the Fed cuts rates, your deposit account provider is going to start cutting your interest rate paid right away, but they’re going to maintain their credit rate pricing as long as possible (considering competition from other lenders) to maintain their spread and profit as long as possible. You see this with credit card interest rates, for example.
TLDR 10Y treasury sets the rate floor, broadly speaking.
toomuchtodo•3mo ago
https://www.marketplace.org/story/2025/10/23/why-you-should-...