Re:US public debt projected to reach 181% of economic activi...
by mindvirus on Wednesday June 28, 2023 @07:07PM
(#36513931)
So then is the public debt in a large part just a complex accounting system the government uses to manage its business? At least in the case of the US where most of it is held by the US? Genuinely curious, every time I think about this it feels like turtles all the way down.
Re:US public debt projected to reach 181% of economic activi...
by seanmcdirmid on Wednesday June 28, 2023 @07:11PM
(#36513967)
You think of US as a monolithic entity and that really isn't true. There are lots of agencies with lots of employees and future obligations; they all have their own budgets and "books"; congress doesn't like bailing out an agency due to them thinking they have the whole US budget to spend. Maybe if we bothered to just force all public employees into 401Ks, we could summarize it as mostly SSI and Medicare future needs (though we are increasingly hitting pay as you go).
Another way of thinking about it is the US deficit is high because savings needs are also high. It isn't just a "we need to spend more money", it is also a "we need to borrow more money" (due to lots of savings demand). The problem is that we aren't using those savings needs productively enough, so we are still going to get hit in the future.
China also has a similar problem, but one could argue that they are leveraging savings needs effectively through lots of infrastructure and other capital projects. BUT Japan went that route as well, and it didn't work out too well for them.