Comment by FlownScepter | Hacker News Reader

Comment by FlownScepter | Hacker News Reader

Parent Full thread

> If you have a mortgage or a car loan or a credit card, you’re part of that number. And you certainly owe real money to real lenders.

Yes and on an individual scale like that, it makes complete sense. It's borrowed against my future income, and that I will someday pay off (I mean probably not I'll buy a different house but you know what I mean.)

I'm saying, on a scale of Nations and megacorporations, it's fucking bananas nonsense. According to the Goog, US national debt is 27 trillion. Who do we owe? How did we qualify to borrow that, apart from being if not the center, at least a good chunk of the center, of the world economy? Is anyone in a position to say we can't borrow it? Is there a credit check? Who fails that check, if there is one, because we haven't despite the last several decades of absolutely racking it up.

At this point to analogize the US to a single person (which is reductive and useless but bear with me, I'm making a point), we'd be someone with hundreds of thousands in credit card debt, making a lot of money to be sure, but also carrying four mortgages and making interest only payments, and the bank in question is just still handing us money. And like, I don't think that's great, but also, it's been chugging along more or less fine for as long as I've been around. So... why don't we just stop pretending it means anything? We "owe" some foreign banks... do we? Says who? Who's gonna enforce that? Are they gonna foreclose America? The only time I've ever seen countries actually brought to their knees by banking is when a tiny one gets too uppity about getting screwed on the global economy scale, at which point we send in Marines to remind them who's in charge. Who's gonna do that to us?

Government debt is literally sold. You can go buy it and invest in America, and you will receive your interest payments right on time like clockwork.

Likewise, when you pay your taxes, some of that goes to servicing that debt. You can look up how much of your federal tax bill went to paying debt holders.

The system only works as long as its trusted. If we just stopped paying interest on our debt, that trust would vanish overnight. As a result, the price of borrowing would skyrocket because who would invest in something that has demonstrated it doesn’t care about paying you back?

Likewise, if we do too silly monetary policy stuff, the trust will also disappear. Despite what the memes say, we can’t literally print infinite money and call it good. Fiscal policy isn’t a secret, it’s done in the open. The buyers of our debt know what they’re buying.

>Who do we owe?

You can look this up. 21T is owned by the public (think retirement funds, pensions, etc., a lot of which own treasuries). Simply blowing off paying them would wreck the US economy and destroy lots of people. So it's real money owed to real people.

Foreign govts own around a third of the debt - same thing - they invested in US treasuries and those assets are intertwined in their economies, just like ours. Of this Japan has 1.3T and China 1T.

State and local US govts own around 1T for their pension funds.

So we owe it to any actor that has purchased US Treasuries, and that's a lot of people, big and small.

>it's fucking bananas nonsense

No it's not. It's simply big, but then again, so is the US and world economy. There is no goofy, ill-conceived, wholesale ignorant corruption going on.

> Is there a credit check?

Yes, it's the rate at which buyers willingly buy Treasuries on the open market. If enough people/institutions lower their trust, rates go up. It's as simple as that.

The main question is not how much debt the US carries, but can it afford to service the debt, and so far, that is a yes. Servicing the debt is around 10% of federal receipts, which is a decent chunk, but by no means debilitating.

American assets can be repossessed abroad if a judgement is served - look at what happened to Argentina in NY. Plus you want Americans to be free from money but everyone else use our currency at gunpoint?

> American assets can be repossessed abroad if a judgement is served - look at what happened to Argentina in NY.

Yeah, that happened to Argentina, who is not America. I'm saying if that's the consequence, which you seem to agree it is for nonpayment, then America is immune from that consequence. If someone tried that shit on a US Naval ship, they would be bombed out of existence.

Mind you, this is brutally unfair to the Global South. That's my point. Global capitalism just exploits countries to small too play the game like we do, and the countries that do play said game, do so largely with stolen wealth from those same exploited countries.

If America owes money but the mechanisms to enforce that don't exist, then why do we owe it? We owe it exactly as long as we agree we owe it. And this is not to say America should just move on, this is to say the world should move on.

> Plus you want Americans to be free from money but everyone else use our currency at gunpoint?

Fuck no, I want no one to use money.

"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."

https://news.ycombinator.com/newsguidelines.html

Reply on news.ycombinator.com