Why The U.S. Won’t Pay Down Its Debt
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- Опубликовано: 8 май 2024
- The U.S. national debt is nearly $33 trillion as of early September 2023. Every year since 2001, the U.S. government has spent more money than it takes in, which means it has to borrow money to make up for the difference. The national debt is frequently discussed as a danger to future generations, but some economists say there’s no reason to get the national debt down to zero. One reason for that is without the debt, there would be no federal government securities, such as Treasury bonds, which provide investors a safe place to park their money while accruing interest. Most economist warn, however, that there’s a balancing act when it comes to the national debt. Watch the video above to learn more about why the U.S. can’t get a handle on the national debt and whether it even has to.
Correction on Sept. 12, 2023 at timecode 0:11: The voice over has been updated to reflect the national debt grew $300 billion between July and September 2023.
Chapters:
00:00 - Introduction
01:39 - The role of debt in the economy
03:28 - How debt can harm the economy
06:17 - The global economy
Produced by: Charlotte Morabito
Edited by: Amy Marino
Animation: Jason Reginato
Supervising Producer: Lindsey Jacobson
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Why The U.S. Won’t Pay Down Its Debt
The government’s debt doesn’t work like household debt because a household can’t print more money to pay its bills, lowering the value of everyone else’s money.
What if the household is in the counterfeit money business?
What about Inflation?
@@zionismisterrorism8716 then it would be about the same.
@@oas8766 that’s the typical outcome.
The government actually can’t print money. That’s why it is called debt but before around 1914 they could. Central bankers took over the money supply/printable supply after the government had no real power over their own currency and began borrowing from these bankers or banks that make up the Federal Reserve. Printing money used to never saddle us with debt but as Benjamin Franklin observed(USA had no major tax then) that inflation worked like it’s own type of tax.
I believe the retirement crisis will get even worse. Many struggle to save due to low wages, rising prices, and exorbitant rents. With homeownership becoming unattainable for middle-class Americans, they may not have a home to rely on for retirement either.
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The advisor that guides me is Sonya lee Mitchell, most likely the internet is where to find her basic info, just search her name. She's established.
I just checked her out on google and I have sent her an email. I hope she gets back to me soon.
The debt ceiling is always rising, so don't worry. If the 2008 crisis survivors had it any easier, I wonder. My income is decreasing, I lost $35,000 this month, and I'm worried about the stock market. Fearing that because I can't contribute to my savings, I won't have enough money saved for retirement.
Save at least 20% in your 401(k). Use online calculators to determine your ideal contribution based on age and income. This strategy ensures a comfortable retirement and capitalise on compound interest for growth.
I think having an investment advisor is the way to go. I've been with one because I lack the expertise for the market. I made over $490K during the recent dip, highlighting that there's more to the market than we average folks know.
How can I participate in this? I sincerely aspire to establish a secure financial future and am eager to participate. Who is the driving force behind your success?
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Since the debt crisis could unleash carnage on the stock market leading to economic downturns. We need to be prepared for potential market volatility. how can I secure my $250K stock portfolio against declining?
Everyone needs a Margin of Safety in their portfolios and just remember, It's time in the market versus timing the market.
De-risk your portfolios, shore up your core holdings, and take some profits while balancing your portfolio allocations. I’d also suggest you go with a managed portfolio, but even those don’t perform so well, so it’s best you reach out to a proper fiduciary to guide you, that’s what works for my spouse and I. We've made over 80% capital growth minus dividends.
Pls who is this coach that guides you? I’m in dire need of one, my stock portfolio is declining even in a bulll market.
Jennifer Leigh Hickman is the licensed advisor I use. Just research the name. You’d find her webpage and necessary details to work with to set up an appointment
I looked up her full name online and found her page. I emailed and made an appointment to talk with her; hopefully, she gets back to me.
“Borrowing is a way to not burden the current generation with debt”. So burden the next generation with our debt?
And our generation is not having kids
Every dollar of public debt is a dollar of private equity. National debt is nothing more than a counter of how much private equity a nation has
That's the Boomer way of life.
@@TimErwin boomers are the only loons who care about the debt lmao. Everyone else knows it isn't an issue
Implicitly they meant any current generation
"It's better to burden the future generation with debt (taxes) than to burden the current generation with taxes." Fixed that line for you CNBC.
all money is debt. if you paid off the debt, there would be no money. You need more debt to create the "new money" for future debt intrest payments... it's a brilliant system if you're a part of the inner circle, everyone else is your slave.
@@stachowithere gold and valuable stock as strategic reserve. 😂
@@stachowi I have read a lot of idiotic, clueless, and simpleton comments on RUclips today. CONGRATULATIONS You are the winner for topping them all. Yay you.
what part of what i said isn't true? have you ever looked into it? are you independently wealthy? i'd guess no to all of them@@scottpatrick8352
Bravo
Don't fret, the debt ceiling always goes up. I wonder if 2008 crisis survivors had it easier. I'm concerned about the stock market, I've lost $35,000 this month, and my income is down. Worried I won't save enough for retirement as I can't add to my savings.
Stock market always comes back. You say you are down $35k in a week, but you are way up overall since the beginning of the year.
Only a fool would invest in the stock market
Have you watched the Frontline's documentary "The Gambling of Retirement"
BS! if you really have lost $35000 in your stock market, find another manager. Stocks are doing very well.
@@gmarte12No need for manager
They failed to mention that 70% of our tax revenue would end up paying only the interest payments
Yeah this video was straight up misinformation. They also failed to mention that if we magically lowered rates to zero then nobody would buy the debt being issued because inflation is at least 3% and if you have no buyers then the debt wheel stops turning and the US government stops paying interest/principal on past debt. Ooops
Our tax revenue is about 4.9 trillion, the intrest payment would be about 1.5 trillion
They "failed to mention" a whole lot, in this little spin piece 🤢
That's not true.. we bring in 3.8 trillion a year in taxes. The interest is 300 billion we can pay it but it's not us doing this we have no control of our govt. They are just not paying it for what ever reason or plan they are destroying the country and Americans on purpose
There's a lot that wasn't mentioned...😂
If the debt doesn't matter then the US should stop taxing us. Just keep borrowing the money they spend.
It only doesn't matter if we make at least _some_ token effort at responsibility. If we just took the brakes off entirely then it would implode. That's the issue with the Republican debt ceiling shenanigans. If the US just keeps doing what we've been doing for decades, borrowing where needed and servicing that debt, then it's fine, not a problem, but if Republicans crash us into the debt ceiling then all bets are off and the economy could start to implode, because nobody would trust the US to pay back those debts anymore. Our reputation is all that matters, not he amount of debt we take on.
It's called revolving debt. They still have to raise revenue to pay the old, outstanding debt that comes to maturity.
Not a single dollar from our taxes go to national debt. That’s a fact
@@rogvarley6971 Not exactly true. The thing with the national debt is that it's a rolling debt, if we owe $32T today, then we will pay off ALL of that $32T within the next 20 years or so, everyone who loaned us that money will walk away with their promised amount. But _also_ we are likely to take out _new_ debt over that period so that we end up at or above what it is now. So in that sense, plenty of tax dollars go into paying off the debt, we just also take out new debt to pay for the _other_ important stuff.
But _also,_ we do spend the tax dollars on things so that we don't need to run up _more_ debt than we currently do. I mean, right now, last year the US brought in $4.9T, and spent $6.3T, so the debt went up by $1.4 trillion, but without those tax revenues, it would have gone up over four times FASTER.
@@timogul not a single dollar goes towards national debt. It’s a fact.
You may not agree but it’s still a fact.
Feel free to educate yourself
Imagine being so bad with money that you can steal 40% of peoples income and still end up in 33 trillion dollars of debt.
The criminals running the government aren't in debt. Just ask the big guy!
Lets go Brandon
There wouldn't be any "income" without government in the first place. Money is a government invention. It literally says that on the bills.
@@user-kp5gb2eb2y The currency (US dollar) is a government invention. Money is something every civilization has had and will have if not for US dollar it would be commodities or foreign currency would take its place.
And Biden spent; more like 'squandered' more than 100 billion dollar just for Ukraine. Madness! The US would cause troubles to the whole world although the original intention was only to hurt China and Russia. Great.
Blame the American voter. The overwhelming percentage of voters on either side make zero effort to learn basic economic concepts, e.g., printing money causes inflation.
We can't ignore the potential impact on portfolios. Bonds are often considered a safe haven, and if they crumble, investors like me might scramble. I’ve been investing for 11 yrs and my $1m portfolio has never been this depleted, how i do hedge this?
Investors embracing the idea that abruptly cooling inflation will put interest rate hikes on ice. During recessions your dividend gains or income reduces. Speaking to a certified market strategist can help with navigating this downturn.
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@@yeslahykcim impressive gains! how can I get your advisor please, if you dont mind me asking? I could really use a help as of now
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I just googled her and I'm really impressed with her credentials; I reached out to her since I need all the assistance I can get. I just scheduled a caII.
Why does it feel like this is a paid ad?
It’s complete propaganda
This is the time when a little of history and economic classes kicks in.
Still, their facial expressions betrayed them big time 😂
CNBC: “don’t trust professional economists… trust us…”
Why would it? Everyone in power knows the person after them will have to deal with it.
exactly!
That's one problem with not having age limits for politicians, they're usually buried and they and their beneficiaries past popular criticism by the time their decisions truly take effect. We already accept a mandatory retirement ceiling for bureaucrats and private sector workers, but why not elected officials too?
Meanwhile my country's (Singapore) gov't justifies politically unpopular policies by saying that it doesn't want to pass down our current problems to the person after them
"If you don't have it, you can't spend it" is grandfatherly advice no one has ever heard.
But the government can print as much money as they want to, so it is not really a question of "not having it".
@coreyham3753 or is it... Venezuela enters the chat.
@@ralphalf5897 Maybe you should ask Chump and the GOP about the 8 trillion dollar deficit they racked up over just 4 short years of gross incompetence.
@@coreyham3753 Same as stealing it, no??
@@marcob.7801 No, not really. The problem is at the Federal Reserve and them not having or being willing to have some form of "hard assets" to back up the US dollar. Similar to the old gold standard but with something more practical like a basket of assets such as oil, energy, etc. They could do that, but they are unwilling to do so apparently.
You remember in 1913 when the Federal Reserve set up our current money system. Unfortunately, our government has been spending more money than it takes in taxes for many years. Our National Debt is now more than $34 trillion dollars. Our money is not backed by anything, and it could easily crash with so much inflation now.
What I got from this video as to the why’s:
1- Everybody else is doing it.
2- Spending in the now is more important than saving for the future.
3- The US is too big to fail.
4- Nothing that bad is happening.
Felt like I watched an ad.
@@mikesvideos2944😂
Its msm. Overt propaganda
What did you expect from a news outlet with "NBC" in its name? The worst part is that the clueless masses will believe now that debt isn't such a bad thing because those are the morons that watch these channels.
If that was your takeaway. Then that's an indictment on your attention span as well as your understanding of monetary policy.
I'm going to start telling the bank that my debt isn't real... it's just an accounting record 🤣
Well if you earned a trillion dollars a year and could print money they might let you
Print some money
When you start your own universally accepted global currency that you alone control tell me how it works out for you
It is a government inspired crisis this time. The Treasury have to sell Bonds to cover the trade imbalance and the government spending imbalance. In order to sell them they have to raise interest rates and the old long-term, low risk, low interest, AAA investments (including Treasury Bonds), held by the banks (often due to government regulatory policy), become next to worthless. The next milestone should be soon when the government issue a new batch of Bonds.
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@@emmaarmando I'm happy to have stumbled upon this discussion. If you don't mind, could you tell me the name of the financial adviser who helps you with your investments and how I might contact them? It Intrigues me to keep learning
Having a counselor is essential for portfolio diversification. My advisor is *Mary Onita Wier* she covers things like investing, insurance, making sure retirement is well funded, going over tax benefits, ways to have a volatility buffer for investment risk, many things like that. She is easily searchable and has extensive knowledge of the financial markets.
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It's mind-boggling how people have the mendacity to say we don't need to pay off our debts. We are spending money we don't have on things we cannot afford.
meanwhile we give it all away to Ukraine, Israel, Iran and manipulate both sides of every conflict.
You mean when the debt is about 300 billion dollar less at the end of july, not 3 billion less. The debt is so high that the narator cant comprehend and mistaken it.
Thank you, I thought I was going crazy!
This channel isn’t the greatest at math.
@@johnyossarian9059 it's called gaslighting,
MSM is great at it.
Credibility thrown out the door within the first minute haha
@@kinpatu😂😂😂
I cannot believe how Stephanie Kelton, the proponent of this MMT insanity, still has the audacity to come and postulate that debt has no consequences after that insane bout of inflation we just had by doing exactly what she advocated. Debt has consequences, monetizing debt is even worse.
lol u mad bro? MMT ftw.
She has those crazy Theranos eyes
Charlie Mungers head would explode listening to this MMT arguments
The US did massive QE from 2009 to 2015 with no inflation observed. The inflation you're seeing now is supply driven.
@@wargodExThere are different types of inflation. The government is solely responsible for monetary inflation. Price inflation due to supply change issues is not why all your groceries are twice as much as they were two years ago.
6:20 “But mom all the other kids were doing it as well” 😂
When people start saying DEBT IS A GOOD THING that means we are near the end. If our economy does not grow, then we are done. Government treasuries are becoming junk bonds.
Didn’t that happen before
The United States as we know it is no more. All signs point to 2023 being a year of significant economic hardship for the entire nation. Put your cash to use straight away to increase its value. I was aware that I needed to invest. I had no idea how quickly a few thousand dollars a month would go up. Though it is. Since 2020, I've made about $600,000.
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Yeah, people have been saying that since the 1960's. Predicting the end of the world is a profitable industry - and now it is a self fulfilling prophecy because so many people believe it.
This comment aged like milk-April 2024
Those other countries don't have the reserves Currency. That's is why debt Matters to the United States. We need to treat the reserve currency status as a privilege that we have It allows us to live well beyond our means because of that. In my opinion.
You are 100% right in my opinion😅
Yep. The US does take advantage of that privilege. On the other side of the coin, the US provides a very safe security that the world has also an insatiable appetite for at a level no other entity can fulfill.
That's why the global south want Dedollarization
There's a good reason for dollar being the world reserve. It's backed by the strongest country on the planet that has the largest network of allies on the planet. And people who say gold is an alternative are stuck in the 1800s.
This is just financially illiterate. We're the largest financial investment platform in the world, that's why we're the reserve currency. The debt is irrelevant to our reserve status.
The video showed the recent September Debt to GDP ratio at close to 100%, showing the very worst ratio of approximately 106% to 119% by the end of the war in 1945. Today (Oct 11 2023) our total debt to GDP ratio is at 137.53% and continues to climb uncontrollably as we print money out of thin air.
Yeah, I'm really bracing for the economy to be in a total crisis like it was in the 1950s... Oh wait, after a small postwar recession (mostly caused by production shakeups as we didn't need factories to be churning out tanks and bombers anymore) the US entered a prolonged period of economic prosperity...
Its almost like your entire framework for understanding debt is total BS. Also where do you think the money comes from? You think they pick it off trees or dig it up from the ground?
@@jumpingspider7105 We're at total-war debt to gdp levels for day-to-day spending.....and the rest of the world's industrial base ins't bombed to hell....this comment was not well thought out.
@jumpingspider7105 and the US Federal government wasn't saddled with an underfunded pension and medical plan and the US used to run budget surpluses. You can't compare the 2020s and the 1950s. We had a much younger population and a smaller federal budget.
"Treasury bonds have always been considered an incredibly secure asset" they literally said the exact same thing about the housing market until it collasped under the weight of bad debt.
So basically it boils down to the powers that be saying “I don’t need to pay off my debts”. But it’s the everyday citizen that gets the shaft.
This video is wild. Its like me with a ton of credit card debt saying im fine because my neighbor is worse and they havent been thrown into prison yet.
😂😂😂
the national debt isn't really "debt" in the traditional sense. It's just our stockpile of US treasuries. US treasuries are just a different kind of dollar, they're both government instruments and they are directly convertible to one another. So when the government adds to the "debt", they just turn dollars into bonds. And when they pay off the "debt" they just turn those bonds back into dollars.
@@grimaffiliations3671 Jesus Christ we're doomed. Don't repeat this anywhere but here please 🤣
@@grimaffiliations3671Dilution of wealth is what you meant to say.
@@NightRidah777 What about it is wrong?
They say the debt is merely an accounting record like it doesn’t mean something. Your rent and credit cards are an accounting record of your debts. Once that debt gets too high see what happens.
Inflation is putting my dream vacation on hold. Every penny counts these days, so that fancy getaway abroad will have to wait until this inflation mess chills out.
Don't give up on your dream entirely! Explore closer-to-home travel options or research travel deals during off-peak seasons. You might be surprised what you can find.
Very true, you can be passively involved in the markts and still amass wealth-gains using an investment advisor. I first dabbled in stocks late 2019, just before the pandemic, and that same year gained over 150% with no prior investing experience, basically all I was doing was following directions of my asset manager. We are working on a retirement ballpark of $3m and I’m certain my goal isn’t farfetched after subsequent investments and tremendous returns so far.Read more
Mind if I ask you to recomend this particular coach you using their service?
Sonya lee Mitchell is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..
She appears to be well-educated and well-read. I ran an online search on her name and came across her website; thank you for sharing.
Debt is a way of living in the USA. Everything is financed from houses to cars, student loans, and even furniture. Everywhere you go, you see everyone seeking opportunities to nickel and dime you. These type of people also get voted into office over time. Summary: The reason why the debt is so high is because we the people let it run so high.
Corporations run on debt too (and bond offerings, VC funding, etc...), and what you describe also happens within corporations too.
Shhhhh... don't call it debt. Just say leverage!...
And yet, most innovations come from the US. The largest corporations, technology, infrastructure, military.
The US cannot erase the debt and for the Congress to pretend it can is ludicrous.
Especially now, we almost don’t have cash paper money in our walet. It is either debit or credit card. Mostly credit card i think. That is debt everytime you used it.
If we are to survive in this economy, we need assistance right away. The ETF and stock markets are still quite volatile, just like the property market. My $370,000 portfolio is crumbling, what’s the best way to take advantage of the market?
Many people are still getting fantastic returns on their investments during this time. Simply maintain a strong sense of reality or ask for professional assistance.
I made more than $320K during this slump, demonstrating that there are more aspects of the market than the average individual is aware of. Having a Financial consultant is now the best line of action, especially for those who are close to retiring.
I think this is something I should do, but I've been stalling for a long time now. I don't really know which firm to work with; I feel they are all the same.
*SHARON LOUISE COUNT* a Financial consultant I watched on Bloomberg Business News. These days, the best approach to enter the market is through reading, researching, being patient, and getting advice when necessary. After that, everything went smoothly.
Found her webpage by looking up her name online. She seems very proficient, scheduled a call.
Oh cool! Looks like we need 0 taxes! Just print and borrow from other printers! Sweet!
One reason it is rising is higher interest rates, and more people are retiring over 2002 to 2035 than new workers over the same period
As a CPA, I'll just say that running a deficit like we do just means we don't tax enough for the amount of spending we have. We either need to raise taxes or cut spending, or some combination of both. Otherwise, we have to run a deficit by issuing more debt which kicks the can down the road to future generations. And as the debt grows the cost of servicing the debt (making payments on it) will continue to take up larger and larger portions of government spending, and with that, will require higher taxes for future generations.
Let’s just say it’s a perfect world and US cut its debt by half in combination of raising taxes and cutting spending.
Where do all the money sloshing around in the world go if the US issues only half its normal bonds?
Absolutely correct. It's a combination of more taxes and less spending, but no one wants to face the pain....just kick it down the road for others to deal with. Pathetic leadership.
@@chowsquidgoes away and increases the value of the remaining dollar. Stronger dollar means your wages go further.
@@gordyscherer3112i mean its a democracy. As the video touches on at the end, politicians kick the can down the road because its politically infeasible, the people get what they want
What about the US Total Debt and US Unfunded Liabilities...?
We will never pay it off🤣
Forget Japan or Singapore, any economist worth their salt agree that both of these countries are pretty much exceptions in terms of public debt and it's still not clear how they manage to survive while having such a high burden.
But wait, who's next on that list? Ah yes, Greece, Eritrea, Sudan, Italy, Zambia, Suriname... upstanding examples of nations with well managed public finances.
'Forget the outliers' is a great economic framework to have when looking at the US, the outlier of all outliers.
The US is even more privileged in this regard than Japan, so your point is moot.
@@josephlynch7655 Says who? It's got nothing to do with privilege, whatever that means. Japan survived almost three decades with no growth and high debt. Whatever that reason may be, it can't be applied to the US to justify the insane amount of debt.
@@jacobjones630 A great economic framework is comparing two country, US and Japan, that have very little in common.
Japan and Singapore has things the world want. Those other countries has little to offer the world.
Interesting presentation. That one woman who says that the national debt is nothing to worry about comes off more like a PR person than a professor. The cost of debt service is seriously impacting us today, not just future generations. It's easy to say the govt. is just balancing printing money (=inflation) and taxation (=taking money from us). Every dollar of debt service comes out of our pockets either as taxes or inflated prices.
Never trust in women speaking about money.
Big problem US Economy... High cost interest rate... High cost food... income decrease.. Stores are closing.. What is next ?
Kelton literally inplied that we can just print money to pay debt. 😂😂😂😂 Staright psyops
Because it's true. It's just inflationary
@@MomopilotCool 'just inflationary'.. miscalculations and hyperinflation are possible
It's true. The US treasury Department could mint trillion dollar platinum coins and use them to pay off the debt. Not saying it would be a good idea, but it is legal and possible.
@@juandenz2008It is impossible to produce enough tangible assets at the rate of amortization.
No she didn’t. Nice try 👌
TLDR: If you take a loan to buy a house, that is fine. If you take a loan to buy groceries, you are in trouble.
America is taking a loan to buy groceries, every single day.
the national debt isn't really "debt" in the traditional sense. It's just our stockpile of US treasuries. US treasuries are just a different kind of dollar, they're both government instruments and they are directly convertible to one another. So when the government adds to the "debt", they just turn dollars into bonds. And when they pay off the "debt" they just turn those bonds back into dollars.
That debt is what is filling yout retirement account in many cases.
@@paxundpeace9970you just lost twenty percent of your savings in 18 months due to our money printing lol?
@@grimaffiliations3671 you have a gross misunderstanding of what our national debt means my friend.
@@ivnb92care to actually contribute something to the discussion? how am i wrong?
Debt isn’t problem as long as energy is cheap.
Energy is resource of everything.
The US dollar has lost 97% of its original purchasing power. 20% in just the past 5 years. Very little in those video addresses the loss of purchasing power (inflation) caused by the endless borrowing and money printing
Common sense has truly become less common…
A normal interest rate is around 5-8%. The 2000s and what happened to interest rates since 2000 is a gross, extreme, abnormality.
They had to keep interest rate near 0% under Obama because the regulations kept growth under 3% for 31 of 32 quarters. The only quarter growth got bigger was when his candidate lost.
Yes. The Fed really made a bonehead move keeping rates near zero for so long.
This is a fair point. The unwinding of the Age of Easy Money, as it has been called, is actually just a return to the long-run course of history.
How did you determine that? It's probably much higher without the Fed.
@@zuzanazuscinova5209 I'm basing it off what it was in the 90s/oughties
Don't worry, they'll just re-boot the money printer next year... rinse repeat. What can possibly go wrong? 🤣
This is a great commercial for interest groups and Congress complacency towards budgeting. The economy was great in the 1990s when the public debt was decreasing. Public debt/national debt usurp from citizens via taxes.
My dad used to tell me the same thing about his debt and not repaying it when i was a kid, he used to tell me there are no consequences to it. And now the banks took everything that was a memory of our family and relatives. Even those property that my grandparents had are also gone. He also took debt in my name when i turned 18, now the banks won't believe me, i had to pay it for something I never enjoyed. Never trust debt kings.
Don't blame the banks for your Dad's mistakes. Nobody forced him to take out loans.
It's just plain ridiculous to say that US national debt don't matter! When debt grows faster than the economy, interest payment will eat an increasingly large portion of national budget, necessitating either more taxes or more cut backs in other govt services. And part of this debt is owed to foreign govts & investors. US dollar being the world reserve currency allows US to cover up the perennial trade & balance of payment deficit. How long will this pyramid scheme last? Does U.S. have to be constantly at war to maintain this status quo?
Hate to be the devil’s advocate here, but politicians have been saying that forever! “Taxes will go up” “services will get cut”. Guess what? None of that happened or will happen. I’m not saying the debt doesn’t matter, but please stop with the hyperbole. No normal human being lives their lives day to day worrying about our national debt..
@@rayjou742you don't have to worry about it to suffer or at least see the consequences
@@rayjou742If you don't see it, doesn't mean it's not happening. Taxes have, de-facto, gone up for majority of Americans when the inflation significantly move up their tax bracket even though their purchasing power remain the same or actually decreased. Money printing has papered over and postponed much of what could have been the negative consequences, but it's already coming to roost.
@@rayjou742If govt debt has no negative consequences, why don't all countries' which needed money have their central banks print more to lend to their govts? Reserve currency of US dollar is simply postponing the negative consequences for US.
For the U.S., just declare bankruptcy
The federal debt from 09/29/23 to 03/22/24 increased $1,414.79 Billion, over 175 days. That is $8.08 Billion each day and it is an annualized rate of $2.95 Trillion a year, or about 10.56% of GDP.
For any dummy who thinks the debt isn't a big deal, we spend 475 BILLION just on the interest alone every year. If we paid off the debt and therefore eliminated that interest, just imagine what 475 billion could pay for in the US. New schools, infrastructure, high speed rail, renewable energy, etc. But no, we keep deluding ourselves that the debt isn't a big deal because, "Bro we'll just print more money!"
the interest comes back to us though, most of it... the FED gives us the majority of it back every year...
I think it's safe to say there are many reasons an economy could come crashing down and while debt may not be the biggest concern for the US economy, there are plenty of other bigger concerns (some we aren't even aware of like the 2008 mortgage-backed securities fiasco)
Capitalism will never be sustainable economic system every empire that practiced capitalism has fallen… us is no exception if anything its going to fall even quicker…
. You are so right. Look at national debts around the globe. Look at corporate debt, look at student loan debt, look at the housing bubble, automation is taking more jobs every year, wars, etc, etc..
Me: owes $50,000 in student loan debt that the US Government demands be repaid, or my entire life is ruined financially.
US Government: owes $33 *TRILLION* and doesn't have to repay any of it.
I love this country. There are 2 sets of rules. And the US government gets to play by the other set of rules.
See if you your student loan debt can be forgiven. Biden had a plan for that.
US debt is money owed to Itself, Your money is owed to someone else.
Sovereign debt IS the payment. The debt is where it belongs, and so are the assets the debt creates. What would motivate a currency issuer to annihilate the assets the economy is based on? The sovereign debt is a record of the financial assets provided that have not been taxed back. The question is not whether the government could tax all the saving back. The question is what possible reason could exist to do it. It would be insane IMV.
democracy, capitalism, freedom, you wanted it, take it 😄😄😄😄😄😄
@aimxdy8680 except crucially, the US government gets to create money out of thin air via the federal reserve. I don't get that privilege. It's not apples to apples.
I'm sure the ones who say we can afford more debt are the same "financial advisors" who doesn't have two pennies to rub against each other because they are up to their eyeballs in debt.
It's the biggest PONZY scam in history. Borrowing more money to pay off the interests and maturing loans. The cycle continue on forever. Sometimes, i wondered why we need to even pay taxes.
People who have already been holding US treasuries will not see a huge windfall, and the bonds they are holding will depreciate when interest rates rise, so it is actually harmful to them. People who buy treasuries, especially long term treasuries, right now, however, have the chance to have a quick profit if the Fed cuts rate in the near future.
Right…journalism is dead. Clowns run the media.
Correct I have lost money because most people invest through bond ETFs not bonds themseleves but either way they are down masove
So you can make money but only if you have money in the first place... that's how the rich get richer and the poor get poorer. If I'm disabled with no income or assistance from my government, how do I participate in this financial racket that works to consolidate wealth with those that already have it? This is furthering corporate capitalism and wealth disparity and does nothing to actually help the average US citizen.
We are on the pathway to economic doom, there will be no cutting the rates.
@@lolalalia4119 The math is simple. Increase your income, decrease your expenses, and invest the rest.
This is why there needs to be an age limit within congress/presidencies
Age is not the only criterion for assessing a person's skills and qualifications.
@@Tricia-Tricia that’s besides the point isn’t it? The president cant seem to finish a press conference without leaving early (or mid question) which is obviously due to his age. Have you ever seen a President do that? It’s the same deal with Mitch McConnell. He has to have an aid rush to his side when his mind goes blank, mid sentence, on air in front of millions of watchers. The proof is right in front of you, you just need to look.
IT IS A GIANT POZZI SCAM,AND WE ARE THE ONES GETTING SCAMMED..
"The government's budget doesn't work anything like a household budget." Crazy that it did for every other country from Greece to Venezuela.
"Has debt been inflationary the last 3 decades of fiscal deficits? No... "
Uhhh, yeah, yeah it has lol. We got productivity gains like no other time in history from computers, internet, mass marketing and data analytics during that time and the real spending power of the bottom half of the income ladder got poorer while being priced out of education and real estate. We had 2 decades of stimulus in the form of QE and 0% interest and still, people can't afford healthcare, homes, and now food too.
Inflation is lagging indicator, and it doesn't point out mitigating factors like one-time productivity boosts like the advent of smartphones. The gap in between wealth and poverty and the volume of hours worked while travelling and on call out of the office should have been making those workers richer all else being equal - but it's not "all else equal", though, because the national debt is money spent lining certain people's war chests and offshore accounts. National debt is fine when the benefits are spent on the people collectively, because then benefits and costs break even (usually with more upside due to economies of scale), but when Musk, Bezos, Gates, Zuck, etc "earn" more money than most countries, it kind of makes you wonder how if a country's debt is supposedly good for it then why aren't billionaires operating on personal annual deficits too?
Answer: because overspending and undercollecting is a childishly stupid way to manage a growing pool of money.
What this piece's author fails to grasp is just because a bubble hasn't burst does not infer there is no bubble. Some things take decades to unravel, like consequences of national policy. Plenty of military strategists told Putin the war in Ukraine would be days, someone told Hitler he could take over the world, and USA believe Iraq would be an in-and-out kind of affair. The consequences are felt long after we even realized how badly we goofed.
Here's the thing, we engineer inflation so we can borrow today and repay it for cheaper later. That's the whole theory behind debt being stimulative in a nutshell, but that also means the person buying that debt will demand a premium to compensate for that future value because they're not stupid either, they don't want to break even on purchasing power for the risk they're taking, that's not how debt is bought either. Debt is bought to make the lender money so if the borrower is depreciating value in the currency in order to make servicing their debt cheaper then there will only be a buyer of debt if the real value of the loan revenues is anticipated to outpace depreciation for both parties - the debtor wants something now rather than later because the time they'd otherwise wait is more costly and the lendor wants an ROI which exceeds forecast future value. The price of debt is the balance.
TLDR :: when a puff piece tells you not to worry about national debt they're either lying or incompetent.
Very well said. I want to believe CNBC is incompetent because this is a huge amount of misinformation being that is being spread.
I'm glad you pointed out that inflation is a lagging indicator because most people blame inflation on Bidenomics. The truth is inflation that is being felt is actually from the Trump era from 4 trillion dollars in Covid bills that were signed in 2020. We have yet to feel the effects of Biden's own Covid bill, Build Back Better, Chips act, and Inflation reduction Act.
I hope more people read your comment because this is exactly what is happening.
Thank you for posting what I wanted to say. If today’s teenagers were to be paid the minimum wage IN GOLD that kids were paid in 1970 they would be making 77$ an hour. Minimum wage used to be a dollar or 60 cents in lots of areas. Good was ~35$. These productivity gains have 100% been captured by inflation, any improvement in technology was moved overseas, and the wealth generating effect of having industry local to your country for the poor was lost before the year 2000 in favour of technology speculation.
Impressively written, and helpful. That last paragraph though:
When you write, "Debt is bought to make the lender money so if the borrower is depreciating value in the currency in order to make servicing their debt cheaper then there will only be a buyer of debt if the real value of the loan revenues is anticipated to outpace depreciation for both parties - the debtor wants something now rather than later because the time they'd otherwise wait is more costly and the lendor wants an ROI which exceeds forecast future value," are you saying/implying that the current system depends on massive U.S economic growth?
And that last sentence, "The price of debt is the balance." I don't understand that. At least, I don't understand that in the context of everything else. It seems you're saying the price US citizens pay for the debt is the debt itself. As in the economic loss the American people suffered and the "certain people's war chests and offshore accounts" benefited is reflected in the balance of the debt. But that doesn't seem to take into consideration the interest and the inflation costs, so I could be off the mark.
@@Nolsieyour comment on the wage of the 70s to now doesnt really make sense
@@lordofthepies the gold price in 1970 was $35.96 an ounce. In 1970, young people were paid in gold as the USA’s dollar was the reserve currency and could be exchanged for gold at any time. The minimum wage the in USA was 1.60$ in 1970.
Now the gold price today swings around 1900$, in my country it is 2600$. If we paid the poor in gold today, the same way they were paid in gold back then; minimum wage would be something like ~1/35th of an ounce an hour or 55$ USD or 77$ CAD.
Do a similar exercise with housing. The consumer price index and the minimum wage are deeply misleading metrics. They leave out the goods that are accurately measuring inflation like land and gold.
I have to hand it to this Stephanie lady. She can make a piece of swamp sound like prime real estate. She said…’national debt is nothing more than an accounting method.’😂😂😂 Well lady, you need to convince all these countries that are dumping US dollar because they no longer believe in it.
She is the main proponent of the Modern Monetary theory, which says QE is good.
@@owenphl1652 Did you mentioned Modern Train Wreck Theory? Evidently, many countries worldwide are not drinking her Kool-Aid.
the national debt isn't really "debt" in the traditional sense. It's just our stockpile of US treasuries. US treasuries are just a different kind of dollar, they're both government instruments and they are directly convertible to one another. So when the government adds to the "debt", they just turn dollars into bonds. And when they pay off the "debt" they just turn those bonds back into dollars.
@@grimaffiliations3671 So when the US treasury bonds that China, Japan and all these other countries hold become mature, the US government is just going to tell them that they are not ‘real debt’? And when the pension funds that hold these bonds come collecting, you are just going to tell them that they are not ‘real debt’?
@@gj8550 No, when those countries bonds mature, the US will simply reduce the money in their bond accounts and increase the money in their reserve accounts. It is very easy. When the debt is in your own currency, you never have to miss a payment. Bonds and dollars come from the same printer, and they are easily convertible to one another
I recall Greece was in a bad way several years ago over their debt and other countries were trying to bail them out... and aside from Japan, the rest of the countries on the list above the US are not exactly booming. When you have to borrow money to make payments on borrowed money you've failed, it's like paying a credit card with a credit card.
I love how they didn't say the us government owed the federal reserve, who is not part of the government 33 trillion, and we couldn't ever pay that back
The government’s ability to spend is not bound by tax collection or debt issuance, other than by its own laws. Those laws merely serve as guardrails to keep the money supply from rapidly inflating (and instead, just moderately inflating). In that sense, the government creates an amount of money by spending it into the economy, and separately destroys an amount of money by taxing it and issuing bonds to the private sector or foreign sector. This serves to keep confidence to sell bonds and to de-incentivise wanton spending.
This issue is that they don't pay it back. When government debt as a percentage of GDP gets very high but is denominated in its own currency, rather than default in nominal terms (bond become worthless and bond holders are left holding an empty bag) they “default” with inflation and financial repression.
They hold interest rates low, have their central bank create new money to buy the bonds, and let inflation run high. Bondholders get paid back, but in weakened currency. As a result, bondholders lose purchasing power on their assets. Inflation confiscates the value from them and from the consumers who's wages lag behind.
What’s the solution?
@@Azx499a revolution
While printing money _can_ cause inflation, the US printing money is not a _significant_ factor in inflation. I mean, for all the inflation we've had recently, it was _lower_ than in most of the world, which would not have been the case if the cause were "printing money." It's just an unfortunate side effect of various supply chain problems, both accidental and intentional, coming out of the pandemic and the Russian genocide in Ukraine.
Great post, really clarifies why owning assets (stocks/ETFs, RE, art, etc.) Beats holding bonds or cash for the long term. Sure there's volatility, but that's the price you pay.
@@timogul this is primarily because we can export our inflation to the rest of the world. We are starting to see treasuries come back. When we stop being the last ship for the rats to run to we will see the consequences of our decisions.
Did not mention needless wars and money being given away either contributing towards increased debt.😊
the reason its not as much of a problem in Japan is because Japan does not have a huge trade deficit like the USA.
Certainly do not burden the current citizens...
Put it on the backs of our children ...bravo .
This administration has putting so many families into difficult situations, I pray for our country, we need compassion for the American people,
It's important to conduct thorough research and exercise caution when trading or investing. Always verify the credibility and track record of individuals before making financial decisions. Investing during periods of volatility can be a smart way to build wealth.
Nope. We got exactly what we voted for. Soon we will have to pay the price.
And previous administration contribute zero account for the situation according to you
And previous administrations account zero to the situation you're referring to
The Japanese economy has an entire lost generation of Gen X/millennials that can’t find work or can’t earn up to their potential.
There have been costs to Japan, they just aren’t blatantly obvious.
It's insane given how productive their economy is.
Do all those homeless camps in the us represent a lost generation? Where's Japan's camps then?
@@Hossak most of the Japanese are living with family.
Japan unemployment rate: 2% oh yeah...
That is due to their really high consumption taxes, not their debt.
6:57 Now, japan is in a recession 😂
I started investing in the stock market because of dividends. What matters, in my opinion, is that if you invest and earn more money in addition to dividends, you will be able to live off of dividends without selling. It implies that you can pass that on to your children, giving them a head start in life. I've invested over $600k in dividend stocks over the years; I continue to buy more today and will continue to do so until the price lowers even further.
It's always inspiring to hear from a professional trader who has weathered the storm and come out on top. When your portfolio turns from green to red, it might be unsettling, but if you have invested in great companies, you should just keep adding to them and stick with your plan...
Would you mind telling me how to contact this specific coach using their service? You seem to have the solution, as opposed to the rest of us.
the problem is that we have to pay interest. The problem we think we have a lot of money and become wasteful.
But it's better to have to pay that interest than it is to not spend the money on useful stuff. It's only an issue if we spend the money on stupid stuff, like border walls.
@@timogul more waste and abuse than spending on things we need.
@@hunterphung3638 While no system is perfect, the overwhelming majority of spending is on things that we need, and waste or abuse only account for a tiny fraction of the overall spending. Of course, it was higher than usual during the previous administration, but the Biden administration brought that under control. Even in cases where a program is "wasteful," it is often still better to take that risk than it is to not do it at all. For example the PPP had a lot of people abusing it, but at the same time, failing to do it at all would have devastated the economy. It was better to allow that some people would try to cheat than to not provide the benefit at all.
That is not true. every agency, department spend on things that they don't need to secure the budget because they are afraid that if they don't waste the money they will lose the budget the next year. The way we spend the money is out of politics not necessity.@@timogul
It felt to me Ms Kelton was flat out lying in her portrayal. Implying government debt is an 'accounting issue' because it is held by the 'public' (implying a closed-loop) completely ignores who owns bonds (largely the wealthiest 1% - both domestic and global).
If deficits and interest rates continue to grow, interest payments to these bond holders not only infringe on social programs now, they ensure the public stays on the hook to continue distributing wealth upwards; unless heavy wealth taxes are introduced to mitigate this burden.
Sure but if the deficits that created those bonds go towards programs that help the less well off, everyone is happy
Pay your debts people. Do not let this piece keep you off the ball of handling debt. Debt is a curse, it is a burden, it is the taker of freedom.
The scare of debt isn't the inability to pay bills. It is what has to be done to pay the bills, turning into Zimbabwe and Venezuela.
Comparing US with the other countries where the Debt to GDP ratio is higher, it worths to mention that almost all the countries besides Japan has significant problems in their economies because of debt. And many of them has high inflation rate.
All of the countries with problems have debt in foreign currencies. That's the problem. The US and Japan have debt in their own currencies
@@grimaffiliations3671What about the UK? Their debt is issued in their own currency and they need unbelievably high taxes to deal with it. They have a 20% sales tax in addition income tax, property tax, a "TV license" tax.
@@shawn576 Those taxes are optional
@@grimaffiliations3671 Not paying the 20% sales tax is punishable up to 7 years in prison.
@@shawn576 i mean levying those taxes are optional. They're not there because of the debt
With all the technology we have, you'd figure the public would have more say in what the money is spent on. More transparency. Crazy how a handful of people decide on what tax money is spent on.
$ 642 billion in interest last yr on the debt. Only recklessness would continue to allow it.
This is outrageous. We’re way beyond good debt. Fast forward to May 2024 and we’re now at 34.7 trillion. It’s beginning to go parabolic.
This is horrific. No one wants our horrible debt.
There is a difference between using debt to invest in the country vs simply spending more money than we have.
If we had public health care, better road and education, then I’d be fine with debt. But we don’t. The government simply SPENDS too much.
A huge part of the US' spending problem comes from the literally unbounded obligations that are Medicare and Social Security. They account for a huge chunk of the budget and will account for trillions of dollars a year in the not terribly distant future. Those programs need a radical redesign. The worker to beneficiary ratios that made them work 100 years ago are long gone.
You realize government spending money on healthcare is the second largest cause of our debt
@@BTrain-is8ch yes. One reason I am for Medicare being able to negotiate prices.
@@benjaminlehman3221 Social Security and Medicare are the budgetary equivalent of strapping concrete bricks to our ankles and diving into the ocean. They're going to drown us. The solution is removing the bricks not rounding off their corners.
Mandatory spending (e.g. healthcare and retirement security) is killing the budget and contrary to what some politicians say it's not because rich people aren't paying their share. It's because no one is.
"If we had public health care, better road[s] and education..."
We could have those things, but usually someone votes against them. The so-called "fiscal hawks" say 'no', but you never hear a plan from them to address the debt because no one wants to be responsible for harsh, economy-crippling, austerity measures. If we're going to continue managing the debt as-is, we might as well invest in those things, but we just can't have nice things, according to some people.
Stephanie Kelton scares the crap out of me. The fact that she is influencing Congress scares me even more. We need more economists like Milton Friedman, Thomas Sowell, Friedrich Hayek…….
"A government's budget doesn't work anything like a household budget" If households ran their budget the way the government does, then everyone would be in prison for fraud. 😂
I don't think that Japan is a good example to follow for America's debt to gdp ratio. They have not seen economic growth for decades. And what about other high national debt countries such as Greece and Italy? They have been having their economic struggles too.
Why do we need growth? We need degrowth
Japan only need to change fiscal policy to the same as all other coutries use to manage the cash/debt rate and the whole world is then in a recession. More stock market keep the ponzi's going garbage.
Evergrande collapses in China weeks ago but no shockwave. HAHA.
@@smallpeople172
No we need more LGBT_VIP!
@@smallpeople172 Tech needs growth in order to live with low carbon tech.
Exactly! Japan is an export-oriented and it is also one of the world largest creditor.
Meanwhile The U.S is consumer-oriented and the world most in-debted country on Earth.
Don't look at Japan for example.
Lebanon would be a better example.
80% of Lebanon's economy was in service sector, it was considered the "Switzerland of middle-east" because of their banking policies.
The U.S too also have 80% of their economy in service sector...
This is very dangerous.
"Money is debt"
-Robert Kiyosaki
A gun is money
-Uncle Sam.
Debt is not bad itself, it is an indicator... If you have to borrow money means that your living is higher than it should actually be. It is not sustainable in the long term. Means there is something wrong in your earnings/expenditures ratio. You cannot borrow money forever - more you borrow harder is to get more debt. Creditors don't want to expose themselves too much to one debtor. It is too risky. Debt means move the burden solving the issues to someone's else shoulders. Debt is the indication that something is really wrong...
We spend more on our debt interest than the defense budget . Almost at 35 trillion
The danger of government debt lies in the risk of inflation. Everybody with a high debt benefits from inflation, because inflation makes the debt smaller. So the government might be interested in keeping the inflation high.
They also understate the inflation to get out of paying obligations. They'll adjust social security payments by 2% when actual inflation is like 10%. Employers do this too. It means every part of the economy has built in yearly pay cuts, so you need to constantly jump from job to job just to tread water.
I love how they use Japan as an example but ignore Venezuela and Greece. They also leave out Japan’s dramatic underperformance in economic growth (which improves people’s lives).
A lot of the people interviewed are committed to a narrative that fiscal responsibility doesn’t matter but do not have much evidence to support that view.
It's too bad we don't have any historical examples of countries borrowing beyond their means and devaluing their currency to understand what happens next.
The UK used to be in the same situation as the US, it ran up its debt because it didn't matter as it was the reserve currency then suddenly it wasn't, then came decades of high taxation and stagnantion. Something that the US has got to look forward to.
Money equals debt. As long as the domestic and foreign investors have confidence over US dollar, the economists will keep saying that national debt is nothing more than an accounting record. If that confidence is lost, there will be run on the bank. In US dollar, we trust is the name of the game!
It would be great to return to a form of money that isn’t just based on trust.
@@davidj6755except that it doesn’t exist.
it will still be an accounting record even if everyone dumps the dollar. the value of the dollar comes from taxes not bond sales
@@davidj6755 Not it wouldn't, the gold standard era was a time of constant depressions and poverty. Only fiat can support the economy adequately
@@grimaffiliations3671 The bond market is much larger than the tax amount. Fiat currency is essentially a promissory note.
When the world moves away from the US dollar as a trade and reserve currency, it's gonna be interesting to see how that effects the US debt and economic situation. More and more countries are joining the BRICS and will eventually stop using the dollar for trade. Countries and institutions might even start demanding the US pay down its debt in other currencies. If I was an American, I'd make sure I diversified in crypto and physical gold to be safe from the giant house of cards collapse. Printing money isn't going to help when the dollar is worthless.
Good joke. America was the biggest economy since the civil war, almost 100 years before its currency became the world's reserve.
America is the second most industrialized country and the largest oil, food and gas producer. Largest gold reserves. It will dominate the post dollar world.
@@millevenon5853 Dream on. Nothing lasts forever. The Roman Empire had their day in the spot light as well.
What will you get when you sell your crypto?
@@xiule1211 I'll trade it with someone else that has gold or silver that they want to get rid of.
@@millevenon5853Of only the people telling you that were not the same people making sure you fail to realize the US has nothing.. produces nothing yet it consumes at a pace 1200% higher that equivalent populations.
personal debt is a temporary thing that you pay back until you are debt-free.
government debt must not be a burden on future investments.
don't use much more than you get in revenue.
They knew when they created the debt system and making the dollar the world currency .. they were creating a bs game no matter how it ends 😂
It is a long term ponzi scheme. It may last about 200 years.
It is good to have manageable debt to fuel economic growth but run away debt will destroy the economy in the long run.
Yes, moderate debt can help fuel economic growth, but uncontrolled debt can hurt the economy in the long run.
Japan's population is a rapidly aging demographic, when people enter retirement they spend way less, which causes less demand, which means less inflation. And because less people are of working age to pay the deficit, you want to keep interest rates low to encourage foreign money to come into Japan. On the flip side, the thing that Japan has going for it is that it is incredibly advanced, therefore it can build and sell wanted products internationally, that brings profits back to Japan, which keeps the yen afloat. I'm no professor but I think the US and Japan face different problems and making the comparison between the two may make people over look the issues the US is facing specifically.
Agree...but their Japan economy is also slowing down and they have to sell US bond to defend their Yen..too.. with high debt to GDP that does not give them much room to manoeuvre.....
Well according to the mainstream narrative they should have still suffered hyperinflation as a result of losing control of their interest rates
Why is it that the more I attentively listen to experts on government debt, the LESS I understand? 😶🌫️
I hope our debt isn’t handled like our schools, prisons and borders… 🙄
Finally interviews with people who understand this. People often perceive government debt and interest as a future burden and compare it to personal or corporate debt. However, this view is limited. Government debt is better understood as an investment in time. What matters is not the debt itself, but the efficiency and value generated per unit of time. In this context, the magnitude of the US debt is less critical if the value derived from it is substantial.