FedEx Founder Fred Smith: U.S. record debt 'unsustainable' | Hacker News Reader

FedEx Founder Fred Smith: U.S. record debt 'unsustainable'

foxbusiness.com

12 pointshammock12 comments

Why do articles like this always talk about the magnitude of the debt, but not of how much the interest is. 34 trillion dollars of debt seems fine if there is 0 interest on it. The interests payments take a portion of the budget the government has to spend so that seems to me more relevant to talk about.

Interest on national debt as % of GDP: https://fred.stlouisfed.org/series/FYOIGDA188S

I think this is precisely why this topic is coming up now, the interest on the debt has spiked recently due to higher interest rates. It was bad in the past decade, but not too bad due to a low-interest rate environment, but unsustainable with a higher interest rate environment.

Great, so where do you propose cutting? It is hard to find anyone that would say continuing on this path is unsustainable but then as soon as you start looking to make cuts, no one agrees. Hence, the path sustains.

FedEx has spent the last year cutting $4,000,000,000 from their own costs. No one can say they aren’t leading by example

Source: https://www.reuters.com/markets/us/fedex-outline-plans-fisca...

Cutting costs in a company is very different from cutting costs in a democracy.

People reading these kinds of articles need to ask themselves, does NFL run out of points to give to players during games? Our federal government is the NFL of the game called the economy.

Remember, all money is debt. The money in your bank account came from one of two places. Either it was money the government spent, or a bank loan someone took out. That means when the government to spends less, you will get less in your bank account. So either you also have to cut back or take on more debt.

A high national debt means a high national savings. How about instead of talking about the total money being created, we need to talk about how it's being distributed? Should we distribute it all to the military industrial complex? Or should we spend it on things like NASA, education, health? These are the questions we need to be discussing.

And due to regulation on big banks, they have to hold a high percentage of 'safe' debt, ie top10 economies debt. If US debt start to shrink because of shortsighted men like the man from FedEx, we're in for a long term recession.

Isn't it ironic when the exact people who advocate spending more than the rest of the world combined on the military, then turn around and scream about how the debt is "unsustainable"?

Doubly ironic when you consider that they are the exact same people who gleefully shipped all us manufacturing to china, and then started screaming that china is a threat because... they make everything!

The "obvious" solution is that "the government" needs to give them billions of $ to build the same factories that used to exist in the us (before making anything in the us was "unsustainable"). But its DEFINITELY NOT socialism, because rich people will get the money... not those nutty woke "solar" communist...

Assuming the US legislature hasn't been almost completely broken since 2010, there are really just 3 solutions to the country's ballooning debt:

1. Increase taxes (a no-go for Republicans) 2. Default (a no-go for everyone) 3. Reduce spending, probably entitlements and not military (Republicans would love this; Democrats would whinge)

Option 3 is the most likely to occur if the legislature was able to get its act together.

None of this would stop the decline of the USD as world's reserve currency. With the ongoing political chaos in the US, countries are wise to diversify.

Or option 4, which is the Federal Reserve buying government debt with printed money. This raises the price of government bonds, which is the same as reducing interest rates, helping make the debt service more affordable. Also, when the Federal Reserve buys these bonds, the Federal Reserve collects the interest payments on the bonds, which they then give to the Treasury, further making the budget more balanced.

This also has the effect of creating inflation, potentially a lot of it, but in my opinion it's one of the more likely medium-term scenarios simply because Congress doesn't have to agree on anything in order for it to be implemented.

You forgot option 4. Reduce spending including military.

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