Nope. Government debt has existed for a long time in the US. There is no plan to pay it off ever. Headlines will scream that the debt is too high for a long time to come.
Government debt yields on the short end are set by the Fed. Long yields are "set by the market" based on inflation fears, and mostly guessing what the Fed will set rates to over the next 10+ years.
Japan had way higher Debt-to-GDP for decades, yet the long term yields were low. Why? The central bank said "we anticipate yields to be set low for a long time" and did so for a long time. Recently they said they are going to "respond to inflation" like all other central banks and suprise, surprise the long end is creeping up. "Bond vigilantes" came into existence as soon as the central bank changed their policy.
The inflation fears are part of the vicious cycle. The typical mechanism by which a government would get rid of inconvenient amounts of debt denominated in their own currency is to monetize it and inflate it away. Bond purchasers know about this, and build inflation expectations into the interest rates they are willing to accept. This increases the amount of interest the government has to pay, which makes its financial position even more precarious, which builds in future expectations of either a default or a soft-default through inflation, which pumps interest rates even more.
It is possible to break this cycle, but it requires getting spending under control. As long as you operate in deficit, it requires finding private capital to finance future operations of the government. That private capital will require interest commensurate with the expected future devaluation of its principal to lend; otherwise they are just suckers. If you can bring spending into balance then you can hike rates and bring inflation under control and you'll be somewhat insulated from what bond purchasers are willing to accept, but if you can't then increases in rates just increase government spending as well.
Japan operated at extremely high levels of debt-to-GDP because their deflationary trap turned all major Japanese corporations into large net savers. Why would you hold debt when you have to pay it back in more valuable yen in the future? That created a very large oversupply of private capital, which crowded into government bonds as the spender of last resort.
US Defense spending is a US employment program. I really wish we would drop the pretense and just make it a full employment jobs program. Anyone that wants to work should be able to get a job.
The private sector can then get employees by paying above the minimum wage offered by the defense department job program.
Obviously the military doesn't literally do nothing. Many of the people involved work very hard; lots of hard physical work, risk of death etc etc
But the military is uniquely patient when, for example, an already-very-expensive jet fighter ends up 10 years late and 80% over budget. And uniquely able, among government departments, to buy things like Javelin missiles that cost $200,000 a shot. Or to send $12bn in cash into Iraq, as literal pallets and truckloads of banknotes, into Iraq and somehow... lose it all and not be able to account for it. Or to be unable to pass any sort of account audits, as they can't find about 63% of their assets.
What's more, from the perspective of a politician, military spending makes for a great jobs program - because you can reasonably require your suppliers manufacture in America from components sourced in America AND small government types will approve military spending AND you get to look tough and strong.
Those are all situations where a commercial entity has put private funds at risk.
Most of these defense contracts that have gone way over have left the taxpayer paying for it all. In many cases, the defense contractor ends up better off because of the slip. And even very troubled programs that would have been killed in industry ages ago continue to survive.
This is what he was referring to with "But the military is *uniquely patient* when..." It's not the failure that's the problem.
Government pay scales is public knowledge. You'd pay based on seniority and function. You'd have an outside committe audit the jobs. You'd have KPIs and fire people that weren't performing, same as you would at a business.
The government already exists and has solved these problems before, I don't know why explicitly having jobs programs would be any different. Calling for UBI is a failure of imagination. As a society we should take care of those on the lowest rungs of the ladder, but there's more than enough work and thus jobs out there to be done, the only problem is funding them. If the government paid out $100 for every tree planted, we'd do well for the environment and have a whole lot more gardeners.
1. Federal min wage would be a good place to start.
2. Uh, the same as now? Just because you work for the government doesn't mean you earn min eage. I'm pretty sure Generals make more than $15k per year.
3. People that have jobs spend money in the economy to buy things. Private sector economy benefits from this.
4. You would have to do tasks to get paid. It's a job if you want it. Not forced. The idea is to curb unemployment.
Imagine step 2 to realize the insanity. That household likely doesn't have disposable income that is greater than 25% of their unrealized cap gains, so what do they do?
1. Hope they can get a low interest loan to pay their taxes?
Or
2. Sell some assets. Think about what will happen to your 401k balance as wealthy people all over the US are forced to sell stocks. It will not be pretty.
I'm not talking about the economy failing. I'm talking prices. What do you think happens to asset prices when there are only sellers (everyone with wealth has to sell). You think poor people will have enough cash to keep prices up?
When Elon sold in his latest Tesla round the stock tanked 30% over a couple months. Repeat for Bezos, Gates, etc.
If there are only sellers and no buyers the market collapses entirely. Luckily though people buy and sell stock all the time and even if the entire OMB estimated revenue from the tax (about $500b) was funded by selling stocks, that would represent less than 1% of total market volume.
Also, a household worth $100M is not going to suddenly be starving come tax time. And, they'll know in advance how much they need to pay because they have a CPA or a private wealth manager at the bank who can just tell them and set aside the money for April.
Hahaha. You think the people in that arena don't re-invest every possible dollar for more growth as soon as it hits their pockets? Cash flow is king to be able to pay for continuing leverage.
A sudden tax bill and the end of acquiring new debt are when massive wealth unravels.
I think AMZN and TSLA dropping 10% or whatever because Bezos and Elon have to sell more shares could be feelsbadman but it is not very close to the end of the free market economy.
This has the advantage of executing all your shell mcguffins too, so PYTHON4_LC_COLOR=Europe/Orange is set for the entire desktop session, not just the shells you launch from your desktop environment.
(By the way, exec is a fundamental Unix syscall of interest in that it replaces the current process’s code with new code. Your logout call will never run. The exec is the last thing zsh does before being replaced by sway.)
In this specific article, which is all I've read on the subject, they talked about the latest YoY and post-covid. I did not see any references to 2021.
This is correct. Interest payments go into bank accounts. Some of that money gets spent into the economy, some stays and gets reinvested into more treasuries.
There's a reason real GDP growth is higher than it's usually been, money is being injected into the economy via interest payments.
Even though the annual government deficit is almost 7% of GDP, essentially injecting stimulus into the economy, wall st analysts are convinced high interest rates will cause a recession. CEOs have responded by slashing forecasts and employees to appease wall st.
Government debt yields on the short end are set by the Fed. Long yields are "set by the market" based on inflation fears, and mostly guessing what the Fed will set rates to over the next 10+ years.
Japan had way higher Debt-to-GDP for decades, yet the long term yields were low. Why? The central bank said "we anticipate yields to be set low for a long time" and did so for a long time. Recently they said they are going to "respond to inflation" like all other central banks and suprise, surprise the long end is creeping up. "Bond vigilantes" came into existence as soon as the central bank changed their policy.