The US Politics Thread

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Post by BarrileteCosmico Thu Dec 23, 2021 7:07 pm

@sportsczy wrote:The issue is that we have to increase interest rates to curb inflation.  That's how you control it.  This has three impacts:

-  Economy tanks because the cost of capital goes up.
-  Stock markets typically retract because there's less money in the economy so growth projections are negatively impacted
-  Rise in interest rates = T-bill rates go up = government needs to pay a higher interest rate to holders


Ok with you so far

@sportsczy wrote:Since 106.7% of our GDP needs to be spent on servicing our debt even without the rate hikes, imagine having to pay a higher interest rate on new debt.  By definition, we'll need to borrow to cover the interest... it's a vicious circle.  


You present this like a problem but it's not really. This is already happening all the time, even when rates are lower. Typically the US govt will never pay off the debt, they will just roll it over into the next issuance, so the principal never really matters. And even if rates do go up not all debt is expiring in the short term, there's a mix of maturities so it would only have a limited impact.

@sportsczy wrote:Now, if our debt as a % of revenue wasn't so high, no problem. Also, if the economy was cranking and revenue projections allowed for additional spending, again, no problem. You have wiggle room.

What you CANNOT do is ignore the problem, continue to borrow money despite the fact that you're way underwater... and then have a larger disaster on your hands if inflation is still running rampant and the economy slows (which very well might happen with Covid). And you cannot expect the rest of the world to keep doing as bad or worse than the US so that, comparatively speaking, the value of the USD isn't eroding. Imagine the world turning it around and the US economy staying flat... it could happen.


I think this is where you go wrong. Yes, debt to GDP is historically high, but so what? As discussed earlier the only thing that really matters is the interest paid, and that's less than 2% of GDP. It's hardly an insurmountable amount, even if it were to double (which it won't). This is the same reason for why countries like Japan are able to have such high debt/gdp numbers and continue to be trustworthy investments.

Also growth is strong right now (6%, highest in a very long time), unemployment is back to pre-covid levels, wages are rising, the economy is booming. So the wiggle room is definitely there.

Could omicron stop that? Seems unlikely, people are covid fatigued and unlikely to change their habits much more.

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Post by BarcaLearning Thu Dec 23, 2021 7:41 pm

Pretty obvious Sport is talking about the over economy in general as a whole while McLewis is able the everyday average Joe, two completely different animals now in todays world especially, n its the same worldwide pretty much Razz

Everything in theory points to US with a big chance of collapsing, but in practice today seems unlikely since the consequences would be so great... US have been in similar positions in the past a few times right but never died and while this time its huge but prolly wont still... I hope not anyway, dont want China to become the new no.1 Razz
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Post by El Gunner Thu Dec 23, 2021 8:22 pm

the consumer-slaves talk economics 101 and think it means something while the elites stay laughing Laughing

United States of Corporations
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Post by FennecFox7 Fri Dec 24, 2021 8:54 am

BC, when you say growth, you mean inflation right?
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Post by BarrileteCosmico Fri Dec 24, 2021 2:45 pm

No real gdp growth

https://fred.stlouisfed.org/series/GDPC1#0

The US is essentially back at the same trendline as pre covid, with current growth at 5% and expected to improve a bit once this quarter's numbers are up. I'm fact some economists are already fearing the economy is growing too fast and should be reined in or inflation could become a bigger problem.
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Post by sportsczy Fri Dec 24, 2021 3:19 pm

The assumption you're making BC is that US treasuries will maintain the same level of attractiveness (demand keeping up with supply) so that there is no fiscal impact by refinancing it into perpetuity.

That is a very risky premise.

One of the big reasons that the US debt is supported by the global community is that the US consumer market dwarfed the rest of the world.  The world was dependent on US economic health.  That's shifting.  Specifically, China will actually catch up in terms of consumer spending in a few years... something that was unthinkable literally a couple of years ago.  Also, the consumer market in Asia, Africa, etc. is growing at an incredible pace.

Once that dependence goes away, then the question of whether to invest in the US via treasuries becomes more of a typical investment risk/reward equation.  That's where you're going to run into major major problems. The US is not offering attractive returns on it T bills especially considering high inflation.

There are considerable macro economic shifts occurring and the US is over-exposed.  Your premise isn't sustainable imo.
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Post by BarrileteCosmico Sat Dec 25, 2021 4:43 pm

Sports this is a short term problem. In 2 years all the supply chain issues will be resolved and inflation will be back to normal (or lower even, since the fed allegedly has a price level target).

The things youre talking about will take decades to pan out.

In the short term, the uk and Europe will struggle far more than the US, China will struggle to contain omicron in their zero covid policy, etc. There is no viable alternative. And since most of the inflation issues are due to supply chain problems that will impact all developed economies similarly
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Post by sportsczy Sun Dec 26, 2021 12:10 am

I disagree. It's not decades away. it's 2-4 years away from what I see.

And the supply chain issues aren't as transitory as people are trying to make them out to be either.
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Post by FennecFox7 Sun Dec 26, 2021 12:36 am

China is definitely catching steam. This is not just something conservatives have alluded too. Bernie himself has been for protectionism for the very reason (a very un libertarian POV for me to take but it’s the truth). We cannot let them overtake the western world, especially with their unfair trade practices
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Post by Harmonica Fri Dec 31, 2021 5:10 pm

The truck driver who was sentenced to 110 years after fatal mistake, has his sentence reduced to 10 years by the governor. The original sentence was disapproved by even the deceased's families. https://www.yahoo.com/gma/truck-drivers-sentence-lowered-10-231212889.html

Thumbs up

Although another mark against Murica's justice system. And it's sad news, when social media has this kind of power.
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Post by McLewis Thu Jan 13, 2022 10:02 pm





Double blow for everyone, but Republicans and COVID.
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Post by BarrileteCosmico Thu Jan 13, 2022 11:53 pm

If the dems can't even come together on making sure everyone has access to voting then what are they good for Laughing

That said, I think the fillibuster will be quite useful when dems inevitably lose both chambers again
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Post by El Gunner Fri Jan 14, 2022 7:06 am

@McLewis wrote:


Double blow for everyone, but Republicans and COVID.


holy shit :bow: justice prevails
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Post by FennecFox7 Fri Jan 14, 2022 5:34 pm

El gunner Proud 🤍
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