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* https://www.cato.org/commentary/sadly-fiscal-restraint-no-lo...
When you've lost the Cato Institute…
More recently in 2025, "The petrodollar, not GOP fiscal restraint, is what sustains our unsustainable debt":
* https://thehill.com/opinion/finance/5465671-republican-fisca...
Not that I believe the folks at the top at the GOP really cared about it, ever, going back to (at least) Reagan; it was mostly an excuse to cut taxes on the wealth and cut social programs:
* https://archive.is/https://www.nytimes.com/2003/09/14/magazi...
Though I would like to see which dates were used to calculate them. And if it was from ”first day to last day of office” it would also be interesting to calculate with a certain ”lag” to account for the fact that effect of some legislation may not show until a bit later.
Also the correct measure is % of GDP
What's funny is that this era (the 1950s) is often fetishized by people who absolutely oppose the policies that made that possible, including a top marginal tax rate of 91% and a CEO to median worker ratio of 20-25x instead of the 400x+ it is now.
So the Cato Institute finally realized something that hasn't been true for 50+ years. What we're witnessing is the looting of government coffers and transfer of wealth from the poor to the rich on a scale never seen before. And they don't care about the consequences because capital is mobile. They'll simply leave.
I can't speak to the Republican politicians if the era, but all the Republican voters I know where legitimately focused on fiscal issues and balancing a budget until Trump showed up. Most of the older Republicans in my family have since left the party and registered independent, the younger Republicans I know are just about Trump though and, similar to Trump, don't really seem to hold any principles that underlie their views on any one topic.
This a big worry. I thought Trump was for old angry people shaking their fist at sky. The ones with dementia. Why are young into him?
Complete nonsense in practice, obviously - but political gold! Voters get all the same public services, lower taxes, and to think they're being responsible with money. And if you're a 65-year-old legislator, you'll be dead and buried before the consequences start to bite.
[1] https://en.wikipedia.org/wiki/Starve_the_beast
While I agree, surely the assumption that the Democrats will be more fiscally responsible isn't true either?
This is more an issue with modern political expectations imo – compounded by challenges of aging demographics.
I can only give my view as a Brit, but I think the same applies here as in the US. Here people expect far more from the government today than at any point in history. Some of these exceptions are reasonable, but many are not.
But either way, despite huge government revenues theres just never enough money to fund all of the social programs voters ideally want. And under this pressure the only option to win elections is to borrow.
I guess to frame it another way – what spending would people want to see the politicians cut? I suspect the only way Western governments will get spending under control is to understand that government can't solve every problem, however nice it might be if they could.
See the sibling thread parallel to yours, https://news.ycombinator.com/item?id=49329791
Democrats have a track record that speaks to them being more fiscally responsible than GOP, in spite of the rhetorical narrative.
You can't assume anything about the next crew. Past performance is no guarantee of future results. But if you're predicting fiscal responsibility, past performance favours the Democrats.
The markets generally respond to US concerns by buying more US treasuries. That’s counter-intuitive but reflects the situation that if things hit the fan they feel loaning the US money is still the safest place for their money.
For better or worse there’s unlikely to be a scenario where the US becomes insolvent but it’s not far worse for those outside the US.
"The Insane US-Japan Currency Bailout" - https://youtu.be/yh18YXKMk3g
Why does the US need to prop Japan? Because they are the biggest holder of US treasuries ...and if they need to prop up their own currency, they will need to sell them. <Insert Pearl Harbor reference...>
The US sold Euros to do the propping of Japanese bonds without telling the EU. Not only did we spend a lot to save our biggest sovereign buyer, but we undermined our relationship with another. And we didn't buy the Japanese much time.
Worth mentioning that lots of buyers is jumping into Chinese bonds over the past week.
It feels like the BRICS are taking over as of this month.
How many?
> It feels like the BRICS are taking over as of this month.
Taking over what?
No, it won’t. The worst case we are looking at is paying more interest on debt. It’s not great but we aren’t in danger of becoming insolvent because of Japan.
3.1 percent. Just for context.
If I'm not mistaken, $1.2T is roughly the year-to-date trading volume of the treasuries market [1].
[1] https://www.sifma.org/research/statistics/us-treasury-securi...
So no matter how much the US fucks up, they just print more and more dollars and ensure the entire world collectively pays up for their fuck-ups. But if the US doesn't fuck up and does something good, then the benefits of that? Oh, that's a different story. No excessive benefit printing, no sir.
All hail exorbitant privilege.
Investors know the US is going to lose this status if the current momentum continues and there are some possible alternatives.
Investors won't sit by and tolerate MONEY PRINTER GO BRRRRR if they have ANY alternatives and they have LOTS of incentives to find any.
I thought that dynamic broke down with the liberation day tariffs, where both stocks and bonds dropped at the same time?
I think the market is buying more gold from US than ever -- this is trading US dollar for gold
US gold export is at its all-time high.
Trumpanomics is trying to weaken the dollar to make us more competitive as an exporter (along with tariffs which make imports into the US less competitive with domestic goods) and he is Trump's Congress is blowing away previous deficits, so investors are wise to reevaluate their previous risk mitigation strategies.
The Yen Carry Trade is now fully in reverse and both JP and US are going to see higher interest rates, causing both of their debt service to take up an increasing slice of the budget pie.
Investors are jumping into CN bonds now and are likely to look to the rest of the BRICS nations as the IS looks increasingly unable to manage a responsible budget, an economy that doesn't seem to be growing much, and sovereign bonds which have fewer buyers today than a month ago.
How can any organization that issues its own fiat currency become insolvent? Being solvent is simply an issue of adding digits to the borrowers' account in an electronic database.
The only thing that happens (and is happening) is the increase in the supply of currency outpaces the increase in the economic value of goods and services that can be exported, hence the currency loses purchasing power.
The US also used to have the distinction of being the most stable large organization, allowing it to earn a "trust" premium on its currency. But we are voluntarily giving that up.
There will never be a real default, but it is likely that the USD will lose reserve currency status. The U.S. Government has $114+ Trillion in total debt. (Something like $325,000 per person in the US) We are never paying that off. The only way we can do anything about it is to grow the economy and devalue the debt via inflation.
To what though? Even if we accept the US and USD have issues, there is no other currency even close to be able to step in.
Think sht would get very real for everyone fast both inside and outside the US.
Global economy can’t even deal with a ship stuck in the suez without wobbling…
Iraq started taking Euros for oil. Shortly after that, they were invaded. Venezuela started selling oil for Yuan. Shortly after that, their president was kidnapped by American troops. Iran is selling oil in Yuan. Shortly after that, American bombs started falling on them.
There is a very strong incentive for oil producing nations to only accept USD.
In short, if the US becomes insolvent, the rest of the world will largely ignore what happens in the (at that point) 8th economy in the world, and mostly try to untie their economy from it.
I believe this is wrong? USA is the largest oil producer in the world, and also one of the 5 largest oil exporters.
That is already happening.
The rest of the world is finding the likes of China to be more stable and predictable trading partners than the USA.
Just consult Google. All a country has to do to find itself on the receiving end of punishing Chinese trade actions is being mildly critical of China in the wrong way, and next thing they know their exporters to China report being held up for months. The EU has taken offense at how China kicks around smaller EU members, Australia has been on the receiving end of it more than once.
If you'd said the EU might be seen as a relatively more stable trading partner, that may be true, the EU does seem to be fairly happy deindustrializing itself. Though it's fueling a rise in the fractured politics there too.
Given their track record and interest in other forms of currency, I could see them going too far.
It’s scaremongering nonsense.
All treasuries will be swapped back into dollars on maturity and interest settled
/s
There are so many other issues to worry about at the moment more immediate than solvency.
The U.S. government spends about one-third! (roughly 33% to 39%) of individual income tax revenue strictly to pay the interest on the national debt and that is not even paying off the principal balance itself:
https://budget.house.gov/imo/media/doc/cbo_baseline_february...
A raise in interest rates for treasuries, can bring this into 50% to 60% within days.
Yeah...worry about other things...
You’re not wrong. But it’s not as simple as 33-39% disappearing into a black hoe.
https://fiscaldata.treasury.gov/americas-finance-guide/feder...
To your point, I don’t think anyone has to be worried about American solvency, but a looming debt crisis doesn’t seem like a stretch of imagination at all.
Wait...
It seems to be more of a subjective topic to me. Otherwise we would all have a perfect plan and never any monetary concerns. Highlighting weak links in the system is I believe a perfectly healthy thing to do. A sanity check would go a long way these days.
Anyone not taking that seriously is in for the most hilarious of surprises.
Considering the US has one of the lower overall tax rates of developed economies, I’m not sure we’ve reached any sort of crisis level
There is less and less demand for US treasuries, and Trump’s tariff war has only accelerated it.
The GENIUS act gets US a set of entitites that are forced by law to buy US treasuries - stablecoin issuers. It helps the digital dollar be used around the world, and treasuries to still have some demand. That is probably why it is called “genius”. This is the last step before the demand shock.
The US will have to stop borrowing and eventually print money to service its sovereign debt.
And when they do, they could either send it to banks, corporations, fatcats and pork projects — or they can send it to every American equally. The latter would be a UBI that would trickle up into the economy, with people spending it on their actual needs. It would increase most health outcomes, emotional health as well, raise average effective IQ by 13 points. And then they could tax the corporations and robots, and pay down the debt.
As it is, there are literally not enough dollars in existence to pay down that debt. The US will have to print them, or default.
“Are we the baddies”? Well, our empire might be. If we are really a democracy, we should try to reform it.
Why exactly would UBI help the average person? It gives them pennies and only worsens US spending.
How would it help the average person? Because it lets people have better health outcomes, including mental health, including for kids and elderly, makes everyone have 13 points higher IQ and productivity. Helps them renegotiate with their employer, without minimum wage laws. Helps them be more entrepreneurial and start their own businesses. That $1000 a month can pay for a ton of AI spend for example, and will soon be able to pay for timeshared robots.
The average person will be paid less and less or even be laid off soon. We dint have a mechanism to supplement their income. At least we have medicaid, I guess.
Elon Musk is more extreme than me — he says money won’t even matter in 10 years. Meanwhile the guy is worth $1 trillion on paper. I don’t want to tax him. I want to tax his corporations as they lay off workers.
MMT isn't inevitable. You're describing a path to where Argentina was before Milei. A path to amplifying all the social issues that started in the US with the creation of the welfare state. The alternative would simply be fiscal restraint.
The only real problem or question is if democracy is capable of restraint. The answer is unclear, seems like it may be 'no'.
You need to increase taxes on corporations and automation if you want to prevent inflation, otherwise you aren’t removing money from the economy.
Printing money on the one hand can be counterbalanced by taxing the money on the other hand — if you actually burn the money collected by the taxes in a giant hole.
But instead the money from the taxes can be used to pay the treasury holders, and make them whole. This is in fact what the Grace commission found in the 80s under Reagan:
With two thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the federal debt and by federal government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services that taxpayers expect from their government. https://en.wikipedia.org/wiki/Grace_Commission
with a UBI gradually given directly to the People, and raising taxes on corporations?
The former led to a 1993 constitutional crisis where the parliament wanted to oust Yeltsin (“our man in the white house”) and Yeltsin had troops fire on the parliament and arrest the congress, which represented the people fed up with the wage repression and looting
Yeltsin had a 6% approval rating and we helped him win re-election by meddling in Russian elections. We bragged about in 1996 with movies like “Spinning Boris” and “Yanks to the Rescue” Time Magazine cover.
The latter led to - amazing health, business and productivity outcomes under MINCOME in Canada, and the lowest gini index in America under Alaska’s Permanent Fund
https://www.youtube.com/watch?v=cUiyQ-yrk7k
https://en.wikipedia.org/wiki/1993_Russian_constitutional_cr...
https://en.wikipedia.org/wiki/Alaska_Permanent_Fund
https://en.wikipedia.org/wiki/Mincome