April 21, 2021


Daily Global New Media

US National Debt, Part 3: Consequences

1 min read

50 thoughts on “US National Debt, Part 3: Consequences

  1. Why not just cut the damn military spending already? It's big enough as it us, shouldn't it be enough even after some small cuts? Some amount of cuts to at least mitigate the strain on social security.

  2. Or a pandemic might appear crippling the economy, reverse economic growth, reducing revenue and increase expenditure. And America might be unlucky enough to have delusional and ineffective leadership which resulting in poor management and a slow response which exacerbates the problems.

  3. I have one question, every debt is paid after 30 years. so can't US pay today's 22 trillion and may be after 2060 there will 100 trillion debt but by 2090 they will pay back and so on …. can it do ?

  4. I would say, that if today, all intellectual property generated at USA Army or other investigation departments is not tagged with a market price or a %of a market price, then put a price and it could become a revenue to specifically pay debt and interests. I am sure economists can find new streams of income.

  5. The best way it seems to tackle the debt it seems is to hammer at spending and possibly redirect some of the budget to stimulate the economy via infrastructure spending. But we all know the people in D.C are too scared to do what needs to be done and the people who voted in their lousy asses will punish the ones who try and address this issue

  6. The US population has almost doubled since 1960[1]. The number of OASDI/Medicare beneficiaries has more than doubled[2] since 1970. The civilian work force[3] has more than doubled since 1960 and the civilian work force participation rate[4] has increased from around 58%, now hovering around 63%. Unemployment[5] is leveling off, but median household incomes[6] are relatively stagnant. The lack of wage growth to keep up with inflation in housing costs[7,8], college cost of attendance[9] and transportation[10] are major drivers of consumer debt for the current working generation. Global competition in productivity for real goods & services is one likely cause for slowing wage growth and increasing debt/gdp[11]. The necessity for increased automation[12] in the US to increase productivity may likely drive down demand for lower skilled jobs in the not so distant future. As emerging markets grow the global economic pie, the dollar wanes as the world reserve currency, as well as growing adoption of alternative energy solutions that weaken reliance on the petrodollar. This may increase the flow of emerging market currencies into global markets.

    [1] Population, Total for United States | FRED

    [2] 1970-2018 Social Security Beneficiaries | SSA

    [3] Civilian Labor Force | FRED

    [4] Civilian Labor Force Participation Rate | FRED

    [5] U6 Unemployment Rate | Macrotrends

    [6] Real Median Household Income in the United States | FRED

    [7] Median Sales Price for New Houses Sold in the United States | FRED

    [8] Rent price history from 2000 through 2019 | Inflation Calculator

    [9] Tuition and Fees and Room and Board over Time | College Board

    [10] Consumer Price Index for All Urban Consumers: New vehicles | FRED

    [11] Total Public Debt as Percent of Gross Domestic Product | FRED

    [12] Why Play Leap Frog? (1949) | Youtube

    The financialization of our economy* is a problem for savers. To lower debt/gdp, consider transitioning to a decentralized form of Edgar Feige's 0.3% APT tax[1,2] on dollar liquidity flows[3,4], where tax proceeds are apportioned to local governments and bubble up to State and Federal levels after local fiscal issues are addressed (including price inflation). Besides saving $800 billion/year, it raises net profits, raises net wages, lowers prices and unilaterally addresses tax havens[5,6]. It may be viewed as an economic check against excessive State and Federal spending, i.e. the financial sector would raise lending rates for Federal government funding to avoid the risk of APT tax rate hikes on dollar liquidity flows that may result from lower Federal tax revenues (due to excessive price inflation in communities across the country). Higher interest rates would boost ROI for risk-free portfolios in pension funds, 401K's and the entire SS Trust Fund**, as well as bring down housing prices for conscientious savers. This tax reform would allow local governments to lower property and education taxes. An overall effect of lowering tax rates is a fiscal incentive to increase CapEx and increase productive business and job creation in our local communities, i.e. 20, 000 municipalities[7]. This tax reform may unilaterally be adopted by any country for their particular currency.

    * Other People's Money by John Kay (2016)

    ** 1951-2017 Historical FICA Tax Information – Milefoot

    [1] Alternative Proposals Reform, May 11 2005 | Video | C-SPAN

    [2] Taxation for the 21ST Century: Automated Payment Transaction (APT) Tax | SSRN

    [3] Intraday Liquidity Flows | FRBNY

    [4] Worldwide Currency Usage & Trends | SWIFT

    [5] The Spider's Web – Britain's Second Empire | Youtube

    [6] [PDF] The Treasure Islands | Nicholas Shaxson

    [7] Number of Municipal Governments & Population Distribution | NLC | 2007

  7. This is a great channel. It would be interesting to see such an analysis of the competitors of the USA. Please observe that the USA does not yet have a VAT. Increased use of Robotics, AI and trade will force reevaluation of how the USA raises taxes. Some form of basic income may be needed. It needs to be funded. The reliance on income tax may be not sustainable. Property tax has limits. Gasoline tax will be questioned as EV becomes more popular. Etc, etc. The USA has a lot of room to move.

  8. u painted the rosiest, most optimistic version of this scenario. u assume that there will not be a major economic or military crisis and confidence in the american dollar will hold. there are already calls around the world for gold backed currencies, when the dollar is no longer world reserve currency, all that debt is going to suddenly matter

  9. Maybe the US has a realistic option in decreasing military spending as the EU builds up their own army and/or as nationalism rises again and more countries recover up to a point where they can take care of their own backyards again, we could have national polices instead of one world police that resembles an empire.

  10. But only interests owed to private foreign investors is the actual cost of debt, right? Interest owed to private domestic citizens and institutions is recirculated in the economy and will re-appear as taxes while interests owed to other countries is part of the debtee-debtor power swap and most international financial institutions either link their value to the dollar or are intertwined.

  11. What a croc !!!
    The US wants to be the reserve currency of the world but here is this fool saying that the US govt should reduce debt.
    For people to have money then the govt has to have debt.

  12. With the current top tax rate of 26% for the wealthiest America generates about $600 billion in revenue from just 1% of its population. If this top tax rate (of just the 1%) were simply doubled to 52% the United Sates would have another $600 billion without impacting the middle or upper middle classes. It also would not harm investments since this would not be rasing taxes of corporations or small business. Just the personal income of the wealthiest 1% of amercians. Seems like the most rational choice.

  13. Holy shit that's true. The expense called "Interest Expense" is an expense that gets exponentially higher as years go by. It's the greatest threat and Trump has to balance the budget now! 5:33 he talks about it.

  14. The easiest way to fix the debt it to completely shut down Social Security and Medicare, throw the baby boomers out of the street to beg as they deserve, and teach the next generation of Americans a very hard lesson about how they need to save for their own retirement instead of passing the cost on to their children like the piece of shit baby boomers.

  15. To which point that currency holds no value, values hold no value now . The pursuit of profit ,stock and next sale or dirty deed done , conflict , are destroying our nations . This chain of effects is an unstoppable disaster we our all being taxed on , over priced inflated loans and homes an borrowing . The States are in some state , a financial catastrophe….
    Euro is no better either

  16. There has never been a super power or empire like the USA 🇺🇸 but like all empires the sun will set upon it one day and it will collapse and disintegrate either through internal or external factors or both

  17. USA is screwed. This is the end consquence of greed and selfishness- not caring what effect this will have on the future. That is the problem with demorcracy and it's short 4 year terms. There's no long term plan. Just make everyone happy now who cares about later. That's why China will take you down. They have a clear 50 year plan, and they're making it happen.

  18. There‘s only three ways out of national debt: default, hyperinflation or redistribution (- taxation). The capitalist solution would have been default, but that was not allowed to happen. Inflation currently only happens in asset bubbles: which makes the participants absurdly even feel wealthier (!). Redistribution (- if done in a controlled way) would be the way to go, to avoid unrest and revolution, but the rich ain‘t having it and so the government isn‘t even trying. – The central banks are monetizing debt – trying to avoid a deflationary spiral via creating inflation by buying government debts, but since that money does not end up in the hands of the poor (- who would spend it), it mainly drives asset bubbles, which is redistribution in the wrong direction (towards the rich). 10 years after the banking crisis, the only thing they did was upping the stakes – all the hot money in the cryptocurrencies is trying to find a way to survive the next bank meltdown, by looking for storage of wealth that looks as if it had less counter-party risk. (Money in the bank is part of a banks balance sheet and will vanish when the bank goes under; 90%+ of all money is created as credit, and would get wiped out, once about five to ten percent of all the debt is unretrievable: but of course the central bank then will step in even more, trying to hold the stampede / bank-runs.)

  19. 5:58
    What is your reasoning behind the interest payment possibly being spent elsewhere? The US wouldn't have that money to spend in the first place if they didn't take the loans for which they are paying for, which in themsleves are way bigger than the interest payments??

  20. The Us really needs to get their act together in the coming years. And no, I'm not anti American, it's just a reality that most American's already know. First and foremost, is getting a hold on the corruption in their campaign finance system. That's the real crux of the problem within their government. But that will be an extremely tough thing to accomplish in the current state of politics in the US.
    What really should be happening is both sides of the political divide should be putting huge pressure on both sides of the government. And putting their differences aside for now. But the polarization is just too much right now. They will basically disagree on everything, just for the sake of disagreement. When tribalism becomes that bad, facts do not matter anymore, it's all about which side wins.
    Bad thing is that neither side will win, they will both lose eventually. And the corporations that are basically buying off the politicians and their policies will gladly leave them too it, as the sit back and enrich themselves. Yes, it's a highly nuanced situation, and no I'm not an anti capitalist. But I really believe this is the fundamental problem in the US right now. And the biggest threat to every American out there.

  21. Good. The US has abused its military capacity ever since WW2, overthrowing neutral governments and raiding sovereign lands for its own, offensive interests. The military budget MUST decrease if the US wants other countries to remotely respect it (and, of course, to reduce strain for the discretionary budget).

  22. Those interest payments do not go into a void though. It is paid to the bond holders. In other words it pumps up the global economy. Best ponzi scheme ever.

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