Why The U.S. Can’t Go BrokeThe U.S. national debt is now bigger than its economy. That might sound scary, but we’ll explain how the United States can never go broke and can actually pay all of its debts whenever it wants to.
To help us, we spoke to economics professor Stephanie Kelton, author of The Deficit Myth, former chief economist on the U.S. Senate Budge Committee and a former economic advisor to Bernie Sanders.
Aamir Zaman
1 day ago
More money has been printed in the last year, than the last 100 years combined, but dont worry guys, all is good.
Mark Yablonski
1 day ago
For real people act like hyperinflation can’t happen lmao. We lost tons of jobs and tax dollars from COVID and doubled the debt at the same time. people involved in crypto and the stock market see it coming within the next few years or sooner
coolmodelguy
1 day ago
Yes, the United States printed (or key stroked into existence) $11 trillion in 2020. With a $9.8 trillion gain in financial assets and the Federal Reserve accepting corporate bonds as loan collateral, most of that money went into the stock market (massive inflation in the stock market last year). So if we just do some straight across math (not entirely accurate but close enough), only $1.2 trillion actually made it into the real economy and of that, most was paid as contracts to giant corporations (Pfizer, Moderna, 3M). The American people got squat out of all that spending, lost millions of jobs and now housing costs are going into the stratoshere.
Rank Amateur
1 day ago
The ONLY reason we need to worry about other nations is due to the trade deficit. This results in dollars pooling in foreign banks. A significant amount of that money is used to purchase Treasury Bonds. The money used to purchase that debt does not go to the Federal government, it goes back into the infinite coffers of the FED. (essentially, it is drained from the economy)
The problem with this is that without mechanisms to replace this lost liquidity, the entire supply would be smaller at the end of every cycle. Shrinking the economy constantly. the real problem there is that, so long as we're operating a deficit, and selling large numbers of bonds as a result, deficit spending isn't optional. It keeps the system from collapsing.
How might you be correct?
Obviously, as foreign banks possess more and more Treasury Bonds. Confidence in the dollar will eventually decline. There is definitely an upper limit, and nobody knows what it is.
Looking at China, and there current push for de-dollarization, this process has already started. It will not happen quickly, and it will only change the global trade dynamics. The low cost products we have grown to rely on will slowly rise in price, as China see's the dollar as worth less to them over time.
It often feels like most people are never quite 100% sure about anything when it comes to economics, some are just a little more confident in their beliefs about money and economics than others....
One thing remains certain, as Adam Smith once stated, "All money is a belief!". The only reason money has value is because enough people believe it does.