There's no foreseeable future where the US government has issues servicing her debt. We deficit spend because our tax revenue as a percentage of GDP is anywhere between 5-15 percentage points below other advanced nations, because congress continues to be fixated on tax breaks for the wealthy and throwing money at pork barrel projects. There's plenty of room to raise revenue and reduce spending, the unfortunate problem is the timing of such moves - we had a whole decade to get things under control in a booming economy, now we may be forced to do so in a downturn if it comes to that.
America is blessed as far as this crisis goes. Virtually everyone else will hit it first. That creates a policy testbed. It also means others must violently re-gear for the necessary automation (or reduction in lifestyle expectations for the bulging generation).
> heard worries that the government will run into budgetary issues if bond rates climb too high
To the extent the future U.S. budget is constrained, it's by inflation. (More pointedly: the politics of inflation.) If the Congress wants to spend, it can spend. Rates be damned.
This doesn't pass the smell test. Human productivity hasn't been a function of food calories and muscle mass (i.e. healthy 15-35yos) for at least a century.
While America might have a marginally younger population than China or Germany, it is not even close to competitive in terms of actual productivity. Among the younger generations there is a lot of confusion and feeling lost. Anecdotally, almost everyone from my high school graduating class -- young people! -- are floating aimlessly through university, dead-end service jobs, or unemployment. They are not "productive" in any real sense of the word. Unless there is a revolution in public policy and culture within this decade, America will face a genuine economic crisis long before Germany or China. Many parts of America (Rust Belt) have been feeling it for over a decade.
Looking solely at the two-dimensional demographic chart is a fatal error in the 21st century.
The statistics I’m reading from WB, Oced, CB, don’t seem to backup what you’re saying, at all.
New business open soared to a historical record high in 2021. Right now, it’s difficult for many, but this time of uncertainty is not any worse than crisis’ in the past.
“Confusion & feeling lost”…pretty anecdotal, don’t you think? My generation felt the same way too in the early 2000’s. My parents as well in the 70’s. How does that statement hold any weight at all? I will agree though that this generation is undergoing a mental health crisis. They are also the first generation to really be immersed by and grow up with social media.
Were have you been? Lol. The rust belt has been the ‘rust belt’ since the 1980s.
The rust belt, namely Detroit, Ohio , Pittsburg, Cleveland, have received quite a bit of development over the last decade. I honestly believe these areas will see even more investment and growth given the climate crisis, growing investment and population.
I don’t know why people paint the US as all doom and gloom. Out of my friend group, 2/5 are doing better, 2/5 are doing about the same, 1/5 is doing worse.
With all do respect, I feel like you pulled much of what you said out of thin air.
OCED data on productivity: https://data.oecd.org/lprdty/gdp-per-hour-worked.htm FDI trends in the rust belt: https://www.fdiintelligence.com/article/77298 Business opens: https://www.npr.org/2022/01/12/1072057249/new-business-appli...
Despite being the #1 GDP, America has an unbelievably huge trade deficit, unlike Germany and China which have substantial surpluses. This is because American GDP is massively inflated by unproductive/destructive sectors like FIRE and military. For example, how does "imputed rent" have anything to do with economic productivity?
Also, every legitimate economist states that measuring trade policy by the size of the goods deficit is probably not a passing grade in a basic economics class. Do you have any clue what you’re talking about?
“Deficit” in the term “trade deficit” is not analogous to a deficit in personal or business finance. Trade deficits are always offset by capital inflows. A trade deficit with a financial account surplus does not necessarily mean that the U.S. is over-consuming in the present and under-investing for the future. When a trade deficit’s offsetting inflow of foreign capital goes toward government debt, it increases U.S. productivity by freeing capital for private investment.
A country like the U.S. runs an annual trade deficit with a partner country when Americans buy more goods and services from the partner than they sell to it. As a result, money flows out of the U.S. to the country, which sounds bad.
But that’s not the end of the story. Those foreigners with the trade surplus – let’s say in China – now have extra saving that needs to be put to work. A lack of productive investment opportunities at home means they look to other countries – like the U.S. – to profitably use their money.
In other words, money flowing out to pay for imports flows back in to help pay for productive investment in new capital.
The neoclassical/neoliberal economists deemed "legitimate" in USA over the past 50 years are worse than useless. The Summerses and Krugmans helped architect, or at least apologize for, the ongoing American Nightmare. This is the problem!
> In other words, money flowing out to pay for imports flows back in to help pay for productive investment in new capital.
What is one example of "productive investment", emphasis on productive (i.e. not just FIRE speculation/rent-seeking), that the Chinese are making in America, and at what scale?
Good luck, friend.
We're heading towards a demographic crisis as boomers retire and need more service workers. I think this is inflationary, perhaps stagflationary.
I've heard worries that the government will run into budgetary issues if bond rates climb too high. On the other hand, any profits the fed makes on lending flow back to the Treasury, so maybe that's not an issue. Does anyone know the deal with that?