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Comment by skilled | Hacker News Reader

I honestly wonder are people that delusional that they overlook the ridiculous debt that the country is in? Don't get me wrong, I am not from America myself but I have a lot of friends from there, and I generally don't hear anything good about the 'American dream'.

If you take a hard step back, like way back. And take a moment to look at the "situation" with an outside perspective, don't you think it's a little ridiculous that the debt keeps growing, and somehow the numbers get adjusted, and more loans are given.

And it makes me wonder, if this is not being actively resolved now, then when? In a 1,000 years? I have a hard time believing that society is going to survive that long with all the idiocracy that's going on.

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Government debt denominated in one's own currency is not really a serious issue because governments can print their own currency to pay it off. Yes this can result in inflation, but the inflationary effects are vastly overstated. Most of the inflation happens at the point of spending.

I recommend reading up on Modern Monetary Theory (MMT)

http://neweconomicperspectives.org/2014/01/diagrams-dollars-...

MMT says that printing money has no effect if you give it to certain people. I’ve yet to hear of a real-world example where a major economy doubles or triples their monetary supply with no negative effect, which is what MMT will have you believe (“don’t give it to the banks - give it to poor people in Idaho!”).

If it sounds too good to be true then it is.

The US M1 Money Supply has tripled since 2000 according to the St. Louis Fed: https://fred.stlouisfed.org/series/M1SL

There have not been issues with high inflation.

The problem is that once the debt is repaid you have to provide something in exchange for that money. If it's good and services, fine, we can produce a lot of these. But if that's land and factories, the country will be owned by foreign investors pretty soon.

Not sure if it's a good thing.

MMT is economics for morons

What is the less moronic theory that I should read up on instead?

The Fed increased the monetary base by 5x during the Great Recession. Where's the hyperinflation?

Is it really not serious? Is there a possible chance that countries that we get our debt resolved from can just start buying US land and US businesses? Isn't there a reason more and more US companies are re-incorporating in the bahamas or other locations? The net effect of the last 20 years of economic policy will likely be felt... suddenly - when a decision is made by the new owner.

The national debt problem is somewhat overblown in popular opinion. Sovereign debt, in a country that pays it in its own currency, is bounded by inflation, not tax receipts. In practice this means that the US can reduce its debt to more manageable levels by permitting mild inflation (something I can see the Fed doing) and instituting greater fiscal responsibility at the federal level (perhaps less likely).

Also, it's important to note that strictly speaking, growing debt doesn't matter as long as the GDP grows by the same amount. Of course, that's not happening, so there is a problem. But as long as there is some leeway for inflation to increase (which there currently is), the debt is ultimately manageable.

From an outside perspective the problem of household debt to household disposable income is not a uniquely American problem, nor is it even most acute in America.

Total household debt as a % of net disposable income is 109% in US. European countries with higher levels (in increasing order) are Greece, Spain, Belgium, France, Portugal, Finland, United Kingdom, Ireland, Luxembourg, Sweden, Switzerland, Iceland, Norway, Netherlands, and Denmark.

In Denmark, household debt is 280% of net disposable income. https://data.oecd.org/hha/household-debt.htm

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