News

The significant thing, which is harder to gauge, is how much return the country gets on its borrowing. If you borrow $1B for some infrastructure project, to be paid back over 25 years, but over those 25 years the infrastructure project generates $1.5B in taxes, job opportunities, time saved, etc, and then it continues to generate more money even after the debt has been paid off, then taking on the debt was a good thing in the long run. Sure, the national debt went up, and generally owing money is seen as bad, but it was profitable overall and the country's GDP maybe have increased at a higher rate than its debt over that period.

And it gets even more complex when you consider less tangible results like the happiness of the population. If the country breaks even on its borrowing but the population's happiness is increased, I think most people would consider it a success, but it's hard to measure that.

A lot of the people who get overly panicky about national debts don't tend to understand them. They treat them like household budgets, or like businesses, where you absolutely need to balance your books every year or you're in trouble. With national debts, as long as the country can keep paying back its lenders and as long as they continue to grow (economically), national debts aren't that big a deal at all.

Generally, left-wing economics tends to lean towards borrowing as an investment into the future, and isn't too concerned with the actual debt number increasing as long as things are improving at a good rate. Right-wing economics tends to lean towards being loud about the national debt increasing and lean towards austerity and other cuts in order to "balance the books", often calling the left-wing approach "irresponsible". Personally, if it's not obvious, I favour the left-wing approach.

This is because it doesn't really matter. We could just mint a few trillion dollar coins if we had to to make a payment on it. We probably would only get 1/2 the inflation we did coming out of the pandemic as a lot of that was geopolitics that's already priced in now, though corporate greed is another matter. We also could just revert a bunch of the tax cuts from the last 20 years or so, and probably make a dent in the deficit if not get to a surplus again.

My limited understanding is that economists are divided around if too high a debt percentage is what led to Japan's stagflation, but from what I've read the US had that since the 70s already in real wage terms, so would it actually be a change to most people? And it's not like Japan is some failed hellscape - it's a huge economy with a pretty decent standard of living from what I can tell.

I still maintain so much of this is driven by thinking there isn't some limit here - like we talk about "tiny" GDP growth compared to developing economies without realizing that if you start at $1, it's easy to have 500% growth in a year, but each year the absolute amount of growth needed to hit that percentage goes up. The US only managing to grow 1% on a what, 30 trillion GDP is actually 300 billion, which is a huge absolute amount. That's like an entire Merck, Costco, or Adobe each year added enmasse.

oh, sure. this just happens o be one of their favorite go-tos.