How do you guys see this ending? I don't see this ending well but I can't imagine what happens. Seems unsustainable but nobody wants to deal with it.
> Under current policy, the United States has about 20 years for corrective action after which no amount of future tax increases or spending cuts could avoid the government defaulting on its debt whether explicitly or implicitly (i.e., debt monetization producing significant inflation). Unlike technical defaults where payments are merely delayed, this default would be much larger and would reverberate across the U.S. and world economies.
My prediction is that the deficit will continue to increase, and so the default will come by then or sooner.
[0]: https://budgetmodel.wharton.upenn.edu/issues/2023/10/6/when-...
Don't think of the US (or any monetarily sovereign Government) as having the constraints of a household or business... It's fundamentally different and we make major errors (like the crazy idea the US would default) when we think of it in the wrong way...
> defaulting on its debt whether explicitly or implicitly (i.e., debt monetization producing significant inflation).
The real constraint isn’t solvency, it’s inflation and currency value. If deficits are monetized well beyond the economy’s capacity, inflation will rise and long term yields will climb, unless the central bank caps them, which then shifts the pressure to prices and the currency.
I am not an economist or finance guy, but I have noticed a lot of debt hysteria from people who don't seem to understand basic accounting. That is, one party's asset is another party's liability. You cannot have buying without selling, and so on. Your mortgage is a liability for you, but an asset for your bank. Your checking account is an asset for you, but a liability for your bank.
I'm not saying the debt can grow infinitely, but clearly if some of that debt is held as assets by the non-government (most of the world including you and me) then paying off that debt means a wealth transfer from the non-government back to the government.
This isn't necessarily in my interests. If the government has to claw those dollars back from somewhere, I'd rather them start with the richest people. But that doesn't happen for obvious reasons.
AI is propping up the US economy - https://news.ycombinator.com/item?id=44802916 - August 2025 (439 comments)
The people who don't understand accounting actually seem to be pretty consistent on that point, because one of their other major complaints is inequality, ie, the people doing the lending have too many assets.
> I have noticed a lot of debt hysteria from people who don't seem to understand basic accounting. That is, one party's asset is another party's liability.
This is correct, but... let me ask you, would it concern you, if my asset is your liability? I mean, would it concern you if you had to pay for my house? How about everything it is I do? How would this not be a concern? If it is not, then why don't you publicly disclose your credit card?
In the coming decades the USA will end up just like every other failed state.
Women will have their reproductive rights taken away so they can be men’s property and fulfil their traditional roles and responsibilities.
Intellectual institutions will be defunded or outright abolished, because they oppose the regime’s messaging.
The minority in charge will scapegoat some already powerless minority to distract the general populace. In the end, their own propaganda will force their hand and they’ll have to enact some sort of dire measure, a “final solution” like concentration camps.
Despite the dire state of the economy, military spending will paradoxically increase and the armed forces will be increasingly used against citizens.
…oh.
Too late, I guess.
In the mean time the impossible, unsustainable, terrifying national debt will be used to justify benefit cuts (like the upcoming privatization/cut of social security when the trust fund runs out in 7 years)
If the wealthy donors and corporate interests were smart they'd take a haircut on their wealth to try and stave off this issue but it seems we're mostly in a loot-and-raze craze. Realistically I would sooner expect an American-style French Revolution before we see the rich grow a sense of self-preservation.
A massive return to conservatism that manages to create a capitalist first theocracy loosely following American Calvinist principles (you have money because you are gods chosen, you are poor because you deserve it, for the poor here is this underclass to blame your problems on so that you dont aim your murder at the rich).
They've already been trying to sell some of the Calvanist dogma by trying to soften the blow of tariffs which by all indicators has been a massive failure of a messaging avenue, which is why they've moved towards trying to just ignore it instead.
Many of them will get really mad at whoever the person to blame points the finger at, regardless how plausible. But what good does getting really, really mad do, against a government with a functioning panopticon and an effective monopoly on force?
Until now, there has never been a time in human history when an oppressive government had the technical means to effectively surveil and control the population en masse in an automated fashion. It doesn't help that they have a monopoly on advanced weapons, lethal drones, and armed goons. As George Orwell put it: "If you want a picture of the future, imagine a boot stamping on a human face — forever".
If we genuinely can't sell treasury bonds, even at elevated payouts, we're probably at a point where we will either have to default in the near future. Or maybe intentionally inflating our currency until the debt is serviceable; no idea which is preferable, but would be curious to hear which and why.
So weve lost a bunch of shit and gained... let me check here... oh, -2 trillion dollars. Okay.
But at least some poor sick people will lose Medicaid. Glad to see we're burning our money and then spending more on running the AC full blast so we don't boil.
Incidentally, Chinese government stopped buying US Treasury instruments 2015.
All these to say that arguments that depend on freedom of choice ( like this is a free market, or for every seller is a buyer, or US treasury holders want this and that) do not apply to this situation. Which makes this situation so hard to predict.
In the shorter term I predict that next summer Trump will replace Jerome Powell with someone else who will bring short term interest rates to close to 0%. This will allow the US admin to decrease the interest expense on its debt, and use these savings to further increase the deficit. The problem thus magnified will then be dumped onto the next US admin-which will be mocked by MAGA as incompetent (something along the lines of “we gave these guys a perfect economy and they wrecked it”)
As long as the US maintains the western worlds largest military, I don't see the government being pressured to do much of anything remotely close to dealing with the problem in a long term (and likely painful) way.
If that power ever gets displaced, it'll tank the US quickly. As soon as the US loses its privileged status (something Trump is rapidly deteriorating) this becomes a serious burden that will require some serious policy decisions, of which most will be unpopular. It'll likely be cuts before tax increases, because even when facing the worst economic situation, neither party wants to pass meaningful tax increases.
I think we have at least a few more decades, but if we aren't the western worlds de facto military there's significantly less reason to let this house of cards go on.
We'd be better off dealing with it while we are still in a relatively privileged position, but no economic class wants the tax increases it will take just to get the debt into a manageable state.
As for no party wanting to deal with it, that is partly true. I think some Democrats actually want to deal with it, because they're much more comfortable proposing tax increases, but they don't have sway in the current leadership of the party.