Quote:
Originally Posted by Topspinmo
Most Everybody suffering under government debt especially the poor. At some point the can can’t be kicked further down road like it has been for 30 plus years. At least you have choice’s, most don’t. When I was young I had to drive my Grandpa 70 miles to VA facility. It was same problems back then.
|
well, the bold statement above is not true with international funds flow borrowing.
Global finance flows means that the US government debt is not entirely funded by US sources, which eases the percentage from domestic sources, as it was when you were driving Gramps.
The larger the international funds buying US treasuries, the less crowding out of US investment and spending. This virtuous cycle was created by a strong US Dollar, which enhanced returns with an FX gain portion
As the US dollar weakens, intl borrows lose interest and principle to FX rates, and will slowly pull back on buying US treasuries.
The moment when the US can't kick the can down the road is called a minsky moment, and that hasn't happened yet, so yes, the US can repay its debt just fine. . the corporate banking system had a minsky moment back in the GFC, when loans could not be paid off due to lax lending practices, and the borrowers could not pay their interest on the borrowing. . . all government spending issues are always
on what the money is being spent and there is no shortage of opinions of that. .
however, the current economic activities are on a collision course, as the USD weakness discourages international Treasury buying, and the BBB allows for much higher borrowing by the government for new spending plans. . that collision will force more funding from the US economy which may create a government minsky moment, when the government can't pay its interest nor principle. . .
this is a revisit of the 1930s economic policies. . read up on your economic history. . my grad school economic paper. .