Hacker News Reader

Comment by dmillar | Hacker News Reader

The first link here is more aptly Japan and China. And, to make this really circular, Ireland also is one of the largest holders of US debt.

View on HN

Of $23+ trillion of US government debt, the largest foreign government debtors are {Japan with $1.27 trillion, China with $1.09 trillion, UK with $0.40 trillion}.[1]

Ireland owns about 0.1% of US securities debt ($0.28 trillion)[1]. That's a _very_ low circular factor.

[1] https://www.thebalance.com/who-owns-the-u-s-national-debt-33...

Note that most government debt is owned by taxpayers in one form or another though. China and Japan are very large foreign owners though.

Japan is actually the largest, fwiw. These Fed programs are being financed by debt spending, not tax increases. So even if some of this debt is held by US tax payers, it's not at their expense. They're getting paid interest.

Debt spending tends to turn into tax increases if you actually plan on paying the money back

Not necessarily. If the economy grows faster than recent history, a constant tax rate brings in more revenue.

Also worth looking at the last time the USA completely paid off its government debt.

> On January 8, 1835, president Andrew Jackson paid off the entire national debt, the only time in U.S. history that has been accomplished. [1]

[1] https://en.wikipedia.org/wiki/History_of_the_United_States_p...

Yes, well actually if the economy grows at all, a constant tax rate brings in more revenue, while we tend to spend more too. But I agree it is theoretically possible.

In Andrew Jackson's case they also raised taxes:

https://en.wikipedia.org/wiki/Tariff_of_Abominations

The end game here is inflation.

Which, in the long run, will also make the stock market, and their options increase, as revenue and profit inflate.

But not in the short term.

Except that the Fed is buying bonds that pay a higher rate that they borrow at (U.S. Treasury rate). So unless there is a lot of defaulting, they should be fine.

It's like they are mortgaging the White House at 0.25% and buying bonds that pay 4%.

So it's US corporations moving their international earnings to Ireland and using the cash they keep there to buy US Treasurys, because they don't have that many things to invest in and they can't pay out dividends because they don't want to repatriate and pay taxes?

The largest holder of US debt is the US federal government. The debt is owed by us to ourselves. It is just numbers in accounts.

The conception of federal debt as some giant anvil hanging over our heads is not correct. Foreign holdings only account for about a third of all obligations, which the US could—but will never, for obvious reasons—unilaterally take off its books and ask anyone who has an issue with it to take it up with the DoD.

This is utter nonsense. Just because American national debt is held by American citizens and corporations doesn't mean its not real or that it could just be canceled out on paper and it wouldn't matter. Those debts are projected future incomes for those other people\companies and if they magically disappear some parties would end up very badly screwed.

This narrative, while often repeated, is nonsense.

Reply on news.ycombinator.com