The government is not a human who better pay off their debt by 65 or they're screwed. The government'll keep receiving income "forever", in a pretty predictable way. So there is no reason to ever stop borrowing; it'd be leaving money on the table (utility of a dollar now > utility of a dollar later).
That is very interesting. It sounds like we manage to magically create some unlimited resources that is creating the world's wealth and strength. It sounds magical. What's the catch? What's the limitation of creating more wealth, faster? Is today's dollar value simply based on the value that it can potentially have tomorrow? - From a non-economist point of view, it's quite hard to picture.
[1] https://en.wikipedia.org/wiki/National_debt_of_the_United_St...
[2] http://www.pewresearch.org/fact-tank/2017/08/17/5-facts-abou...
Look at it another way. Our debt is like a 2% mortgage that we can pay off in 30 years using just 18% of our revenue. Back in boom times people could get interest only mortgages with those parameters.
The misleading aspect is because 40%, and even 18%, don't sound as absurd as they really are. Even cutting spending modestly is incredibly difficult. Cutting it by 18% is arguably impossible without completely reshaping government as we know it. Cutting it by the 40% required to actually make progress on the debt is completely unrealistic at any point in the foreseeable future. And these numbers are getting worse each year, with the difficulty of getting out of debt continuing to increase. And of course this repayment pretends we will both maintain or increase income while never increasing spending beyond growth in said income - for 30 years.
No, no private company is getting a loan in these conditions. Drowning in debt with the only means of possible repayment, both short and longterm, being to hope they can find other lenders to pay off you, as a new lender? That's like a mental version of something between a ponzi and pyramid scheme.
What's the quote about "To believe you can have infinite exponential growth in a finite world means you are either crazy, or an economist."
US is too big to fail and rich people have to put their money somewhere. At least with US Treasury bonds you get a small but reliable return. So the train keeps going.
I ended up staying in tech instead of pursuing doctoral studies in Economics, but had life broken a different direction my thesis would have been (loosely speaking) related to assessing how governments could leverage MMT differently depending on whether or not they're an issuer of one of the common global reserve currencies.
I was ultimately turned onto the underlying theories after breaking from Neo-Keynesian theories in the wake of QE1 & QE2, but before QE3 was in full swing.
All money is just an agreed upon fiction by multiple counterparties, and when there's a lot invested in that fiction it becomes fairly undesirable to be the one(s) to pierce the suspension of disbelief.
Please read about Modern Money Theory. https://www.youtube.com/watch?v=TDL4c8fMODk https://www.nytimes.com/2017/10/05/opinion/deficit-tax-cuts-...
it also says that the usd is dying and that the USA's free lunch (ability to borrow endlessly without consequences) is now ending or already ended, though the politicians will deny it.
they also say that if you are russia or china, the obvious move is to hire a bunch of blockchain engineers, try to unload your usd treasury bonds (forcing a financial crisis in the USA in the 2020s when the USA politicians don't realize they can't borrow anymore), and then simply wait, and when the dollar dies you can step in and "save the world" from the dying dollar with their new cryptocurrency.
obviously, russia famously had meetings with Vitalek (ethereum founder) and there is a huge amount of blockchain investment happening in China right now.
https://www.macrovoices.com/336-anatomy-of-the-u-s-dollar-en...
I am not sure what blockchain engineers have to do with selling treasury bonds. The larger issue for China is that they have to do something with their dollars. It's not feasible just to dump them.
Unfortunately (or fortunately depending on your perspective) the USAs ability to continue to borrow does not appear to be ending. It is true that so long as others will lend to you in your own reserve currency you can basically just keep borrowing. I didn't think that the US could borrow $20T but maybe we can borrow $50T or even more. It seems for the time being the sky is the limit.
Argument is that USA borrowing is contingent on foreign superpowers buying US Treasury Bonds, which they "started to stop" doing a couple years ago
> So much of the infrastructure just operates using dollars but nothing is stopping anyone from not using dollars
Other than pissing off the USA who will manufacture some moral imperative to sanction/proxywar/depose said government
The fact that oil is settled to this day primarily in USD has everything to do with the US and Saudi Arabia. Understanding this system also helps one appreciate the relevance of very contemporary issues like China attempting to push oil producing nations to settle their contracts in yuan. It's not about the short micro level effects, which would essentially just be a currency conversion, but about the macro level effects and implications of what currency the most in demand import in the world is offered in. If China succeeds with their goal, the economic consequences for the US could not be overstated.