the debt
the debt
164 comments
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If you had 34 trillion in debt and a centuries-long history of making on-time payments, you’d have a perfect credit score.
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"Bankers hate him! Get an 850 credit score and dictate the terms and interest rate of your own debt using this one simple trick."
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The US govt basically has a perfect credit score. They have almost infinite payment history and almost infinite available credit.
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Don't forget being the only issuer of the currency you get indebted in. If I could get indebted in a currency I create myself, believe me I would
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Articles and posts like this really just exist for conservatives to shout that we need to stop federal spending and cut out "unimportant" things like Dept of Education, as described in Project 2025.
The problem is that debt is good. It enables us to pay for infrastructure projects and services. It doesn't work like a household budget...not on the scale of international economies...because money "in the bank" is money that's not in circulation.
When money is not in circulation, it's not being used to pay for goods and services....it's just...sitting there being hoarded.
You all complain about Musk hoarding a few hundred billions. Imagine if the debt were in the opposite direction and the government had $34T sitting in the bank doing nothing.
And anyone can buy Treasury debt. In fact, last year it was an AMAZING return on investment for anyone that bought into it and holds into the debt for a few years. One of the safest places anybody could put money to earn a return (behind a HYSA at FDIC insured banks).
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Credit rating also depends on credit to debt ratio. You want to keep it below 35%, so you would need a credit line of $100T or more to have a great rating.
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I think sovereign debt would work like an AmEx Platimum with “no fixed limit”, which makes the algorithm ignore utilization.
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Yeah, this is just people not understanding how credit scores work, part #57294, lol
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Hey remember that one time where the country’s credit rating got downgraded due to political idiocy?
Pepperidge Farm remembers.
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Are you immortal? Do you have an income vastly higher than the servicing cost of that debt? Do you owe the large a majority of that debt to yourself? Are you able to, if push came to shove, tell your external creditors to go fuck themselves and dare them to so much as try to collect on the debt you don't feel like paying? If you can't answer "yes" to all these questions, you aren't the US and have a debt situation that has absolutely nothing in common with the US debt.
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US debt is currently higher than their GDP. Even if they could leverage the entire country into only paying debt (they can't), it would take over a year to pay off. At the current average interest rate of ~3%, that's enough to pay for the entirety of NASA's budget five times over.
The last time US debt was greater than their GDP was the second world war.
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...or, since the federal reserve creates money, they could do quite literally 100 strokes on a keyboard at the FED and repay the debt. A state doesn't fund itself through taxes, taxes serve many purposes but funding a state isn't one of them.
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Ignoring, for a moment, the inherent and fundamental differences between an individual and a state...
...in my late 20s and early 30s I bought a new car.
At the time, that car cost more than I had in my accounts plus my other possessions at the time. In fairness, my annual income was more than the total cost of the car, buuuut I also was carrying tens of thousands of dollars of student loan debt as well, meaning my overall total debt was significantly higher than my annual income, or my "personal GDP" if you will.
Yet when I applied for my car loan, it came through with easy approval and I even qualified for the best possible interest rate.
Why? Because I've always paid on my debts adequately and promptly.
Nobody bats an eye when a couple buys a house that costs more than what they can cover with their combined income in one year. Why? Because that's an arbitrary and unrealistic yard stick of comparison and nobody expects them to pay off a house in a year. They're able to buy their house and live in it immediately, and pay for it incrementally, over time, as they earn over the coming years because of debt. And the bank is willing to lend the money because they'll make money in the long run through interest.
Similarly, it's unreasonable to imply that the US shouldn't carry more debt than it's GDP because the two metrics aren't directly linked in any way. And since the US has excellent credit worthiness, that debt is far safer than the bank's loan to the homebuyers. And the US gains access to borrowed funds by setting it's own interest rates through the Fed, which tells lenders exactly how much they'll make in interest if they let the US government borrow some of their money.
And since the US is a safer bet than homebuyers, that's why home interest rates are higher than the rate at the Fed: if they were equal, banks would never lend to homebuyers since they could get the same return by lending to the government. So instead, they set their own, higher rates for homebuyers, to account for the higher risk of lending to a party who has a much higher likelihood of default.
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They said service the debt, not pay off the whole thing. For an analogy, your whole mortgage being less than your annual salary isn't a requirement; your monthly mortgage payment being a fraction of your monthly salary is.
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The government is 100k in debt on my behalf
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Two things:
- if you owe the bank $34,000, it’s your problem; if you owe the bank $34,000,000,000,000, it’s the bank’s problem.
- its a big club, and you’re not in it.
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That's a lot of zeros, when written like that
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Yes, and it is the correct number of zeros to use. I find it helps to put things into scope. “Trillion” is an abstract magnitude to most people. Writing it out numerically makes it clear how absolutely enormous the number is.
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Worth pointing out that credit scores are completely detached from the government. They are entirely private industry, that is collecting and selling your financial info without your consent or opt in. If you were born before 2004, then they have also accidentally leaked literally all your personal info to the dark web, with literally 0 consequences.
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Nah uh! We forced them to pay an hour's worth of profits to their own charity!
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-1000 social credit for questioning government
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Ugh... Here we go again with the social credit... It's been debunked so many times that it's not even funny anymore. You can ask any Chinese person about it and they don't even know what it is because it's really not a thing. Financial credit scores on the other hand...
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The US has a fantastic credit score. Being the world's reserve currency helps.
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And collateral lol
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On a serious note. Are there any countries without any national debt? Because if not then clearly capitalism is broken right?
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No, if anything it shows capitalism is working. When you can increase or tighten money supply (ie when you can print and shred money) debt isn’t what you think it is. A state with money issuance powers is not a household.
I can thoroughly recommend “The Deficit Myth” book by Stephanie Kelton, if you wish to understand modern monetary policy better.
Or watch the film Finding the Money: https://youtu.be/3HRgsYSLOYw?si=g_CgqMWtC7oBCkGn
And to answer your specific question, there are countries with very low debt, but that’s usually due to either not being able to “borrow” money (again, borrowing doesn’t always mean what we would think as borrowing when you can issue your own money), being locked to another currency (Denmark is a great example - amazing economy and locked to the euro) or having a large generation of wealth (typically oil). Larger countries can issue debt more easily.
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I'm not the biggest fan of capitalism myself but the existence of debt does not mean it is broken. Debt is a mechanism to allow for solid investments, e.g. building infrastructure or schools that will create a net positive in the (far) future.
Germany for example has enacted a Schuldenbremse (debt-break) in 2009 and forbids our states to take on new debt and limits the debt taken on the federal level to a minisule percentage of the GDP. Our infrastructure is currently slowly but noticeably crumbling away, bridges are getting closed for heavy traffic and experts say many of them have become irreparable due to missing maintenance and need to be fully rebuild in a few years. The local military barracks are in such a desolate condition that the soldiers need to drive two towns over to shower. We might not take on financial debt, but an infrastructure debt that will demand an even bigger toll on us.-
If 90% of the countries in the world are in debt and corporations have more money than god, then clearly the system isn’t ideal.
$34T is insane for one single country.
As for infrastructure, proper taxation of corporations would raise more revenue to fix such things. If Amazon is contributing to the breakdown of roads due to all the couriers then they should be paying more tax.
Look at the water companies in the UK. Paid out their shareholders for decades and did nothing to improve the infrastructure which is now likely to end up with them being nationalised after they’ve looted what they could.
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Well, that's a misleading title. All the countries in their list have some debt, just less than most.
All countries carry some debt, because they need to show a history of reliably making payments on that debt in case they need to borrow money in the future for whatever reason. Not all countries, however, run massive deficits every year.
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Well, since the billionaire class doesn't pay it's fair share of the tax burden, that money has to come from somewhere.
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This is a popular thought, but even if we take 100% from the billionaires it pays for almost one year for the US.
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While I understand what assumption you're running under no one said for only billionaires to pay. The idea is progressive tax brackets the less you make the less you pay percentage wise. We also need less loopholes for the people that can buy lawyers and manipulate their funds to get out of paying what they should. There is no reason companies and the extremely wealthy should be paying an effectively less tax percentage than the diminishing lower middle class.
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Credit scores are just some fake shit that boomers made up. It's so dumb.
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...except that it used to be that your ability to secure a loan was based on where you went to school, how firm your handshake was, and if you happened to have the right skin color and sex organs.
The current system certainly isn't perfect; and if you're denied a loan you have a legal right (in the US) to know the reason.
There are systemic issues, to be sure. But the nominal goal is absolutely better than what we used to have.
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We can’t ignore that there are other ways of doing it besides credit scores or overt racism. Some countries have no credit scores at all and just base loan eligibility on your salary and employment history.
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Only people who are bad credit risks ever come up with this take, lmao.
The sole function of credit scores is to benefit people who are reliably 'good for it' when they borrow money. Without them, everyone is treated as just as high a risk as the worst borrowers who are least likely to pay back their debts, and you gain no benefit from reliably paying back your debts. But with them, your good borrowing is kept track of, and good reputation means lenders trust you more to pay your debts back, so they're willing to lend more, and they are willing to charge less interest.
Removing credit scores changes nothing for bad borrowers, and hurts good borrowers.
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The thing is you're forgetting who are good borrowers and who are bad borrowers. A person with a low income with a precarious job will be a very bad borrower, and imposing a higher interest rate on them on top of that is just the final nail in the coffin. We generally believe universal healthcare is good, and we don't want to discriminate "good health" and "bad health" people and make unhealthy people pay more, do we?
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Countries can print money. If the debt is denominated in your own currency you will never not be able to pay them.
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This.
More people need to understand that the debt of a sovereign nation isn't analogous to that of a household.
Public sector debt is private sector surplus.
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The current American debt is more than the current GDP. That would be fine, if we were paying it down, but it's growing faster than ever.
It would also be fine if it was healthy debt. Debt taken to improve infrastructure in meaningful ways, improve education, shit, even a war debt to create an old school tributary state (economically speaking).
And it would all be fine if everyone in the room were adults, and there wasn't a significant portion of America actively and willfully trying to cause governmental collapse.
The American citizen, on average, will spend $37,000 in the next decade to pay the interest on that debt, $12.4 trillion in total.
All without universal healthcare mind you. Or, on average, a reasonable retirement age.
You need to start asking yourself whether the people who keep assuring you not to worry your pretty little head about the APR on your loans, and they are ultimately partly your loans as a citizen, are actually acting in your interest.
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But you do have to pay that shit back … forever. And printing money leads to currency devaluation, makes everything else more expensive
Even if you don’t think the debt itself is unmanageable, you start having problems like
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The economist ewww. The limits to how much money you can print is defined by the productive capacity of your country. If you print more money to increase productive capacity then it’s generally not a problem. The debt is simply an accounting fiction at that point.
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I get your point, but they cant just "print" currency so we could actually not be able to pay when people/countries stop buying the bonds or lose faith in the system.
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Tell me you don’t understand how credit score works without telling me you don’t understand how credit score works
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Credit scores require you to get some kind of debt. This is because it's not a score of your financial health. It's a score of how reliably you repay your debt.
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Terry Pratchett's "Making Money" taught me enough economics to know that individual debt and national debt are two different things.
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I wonder how many debt collector calls the Whitehouse gets a day
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How much does the USA have in assets? I'm willing to bet more than $34,000,000,000,000.00.
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They could sell Wyoming to Canada, that'd be alright with me.
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Canada couldn't afford it, their monopoly money is worth almost nothing.
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I heard that the us still has good credit because although it owes trillions, it is worth quadrillions (all lands and assets), so not really a concern
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Whats really neat is that modern credit score systems are only 40-50 years old
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And what's sad are the number of people that act like credit scores are a force of nature we just have to accept
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putting people in debt is how people with already too much money make even more money from people who never had enough
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The US also has a credit score but with other countries they do business.
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And it's rising at $1 trillion per 100 days in interest.
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International associations managing countries credit scores are all located in the usa. Therefore the incentive to valorize debt.
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I'm not even one trillion in debt
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Hey bud, guess what? The gov don’t hand out a credit score, the banks do.
This entire meme is just OP admitting they don’t know how finance works in the US.
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It’s a meme not a dissertation on finance.
From one pedant to another, you’ve gone to far this time.
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At least someone has it right
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Where did they say the government handed out credit scores? The meme was pointing out a double standard, not saying the government hands out credit scores.
This entire comment is just you admitting you have below average reading comprehension.
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164 comments