$33 Trillion of Debt, Does It Matter?

The US government’s debt balance has skyrocketed since the beginning of the pandemic, surpassing 100% of GDP. The deficit is only expected to grow in coming years as the government continues to live beyond its means. But how dangerous is this to the average American household? Could this have negative economic consequences or even result in a debt crisis?

0:00 - 2:52 Intro
2:53 - 5:45 Budget Deficit
5:46 - 9:50 Debt Dynamics
9:51 Government Spending



#Wallstreetmillennial #debt

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[chris]

They can always guarantee payment of debts but they can't guarantee purchasing powers of said dollars

[codywaller]

This has to be the most wishful thinking I have ever seen. The US debt is held up by a single thing, the fact that the US dollar is the world reserve currency. If we did not have that, you would immediately have a debt crisis.

[gibfkn]

The funny thing is that the average households don't have a net worth anywhere close to $300k.

[ivayloivanov]

This analysis assumes that the Fed increasing interest rates to fight excessive government borrowing would not crash the economy or cause a financial crisis, but in reality it can and it will. The inevitable end result of excessive government spending is either hyperinflation or financial crisis. It is rather obvious which solution our "independent" central bank will take once we reach the boiling point. Hint: It is not the financial crisis. The analysis is correct though that the price tag won't be paid by "future generations". It will be paid by savers at the time hyperinflation hits. We are still years away from that point.

[jeff-hhmc]

$500b in interest annual payments alone. The loss of the value of our money. Yeah $33t matters A LOT!

[Poopoocachoo]

Will it have immediate to 5-year consequences? Probably not
Does it have long-term consequences if we keep going this way? Absolutely and it’d be insane to say otherwise.

But our politicians are only worried about the next election so we’ll just keep kicking it down the road one election cycle too long

[Fourside__]

the audacity to say you can just print infinite money and will thus never default on debt is staggering. no other country could say the same. if you look at this from an outside perspective, all that mindset does is put a huge crosshair on americans and the status quo of the dollar

[wouldntyouliketoknow]

"We can always print the money". Technically true, and so a literal default is never going to happen because we would print the money before we default. However that doesn't mean there's not going to be pain that is akin to a default. We have to pay it either with dollars taxed or dollars printed, or some combination of both. If we print $33 trillion, we will have hyperinflation and destroy the currency. We may technically avoid a default, but there wont be anything left of the economy to save at that point.

[michaelhensley]

Simple Debt Solution: 1) Have the Fed imagine/create/print $Ts. 2) Fed loans $Ts of imagined money to the banks. 3) The banks buy $Ts of T-bills with that imagined money to fund the exponential debt. 4) Fed buys those T-bills from the bank. It's a perfect circle. What could possibly go wrong???? Maybe Econ 101,

[dulio]

This is the same Fitch Ratings that gave Credit Suise CDOs a AAA rating.

[joshuapatrick]

So what are they doing with the $? I pay five figures in income tax and sales taxes every year. Essentially half my income, what the fuck are they doing with it?!?!

[jonr]

Remember last century when Germany printed money and it devalued to the point that hyperinflation rendered it worthless in weeks.

The story of the guy taking his cash home from the bank in a wheelbarrow... And someone stole the barrow, not the pile of money.

[FromBeyondTheVoid]

So the worst possible outcome, based on the trajectory of the FED's current economy policies, is a significant decline in some private industries. No hyperinflation? No economic collapse?

[FlashNorton]

~3T$ in 1944 is equivalent to ~52T$ today so the debt normalized to inflation is actually lower.

[vhateverlie]

You forget that if the currency becomes worthless it doesn't matter how much you print. You've still defaulted 😊

[shanesingh]

Printing money doesn't give any country more money, it just makes the currency less valuable.

[dutchmerchant]

Dear WSM, thank you for a balanced evaluation albeit you did leave out some things. I do not quite share your optimism on this situation; as you more or less indicate this is unknown territory; as we sail into unchartered territory we might just run into a black swan! No other economy ever has raked up this much debt, and because the dollar is the world’s reserve currency, we get a huge free ride when other countries want to use USD, which costs the Fed Reserve almost nothing to issue, because they have to give the USA something valuable to get our dollars. If this alone were to severely curtail, or stop, the US would face an inflationary spiral that would make today’s Bidennomics inflation look like a play pen.

[audacity]

What you are missing, is the decline in the purchase power of the US Dollar over a period of decades. Yes, the Fed can print endless Dollars, but each one of those Dollars will buy less & less. Compare with Gold. From 1945 to the early 1970s, $35 dollars would buy an ounce of Gold. Now you need approx $1900 Dollars to buy an ounce of Gold. Or look at house prices over the decades.

[sheikhan]

Yikes, the premise of this video is detached from reality.

[mauisstepsis]

I call the content of this video BS. It tries to split FED and government making them look like two entities combined as an infinite money printing machine. It's not, and printing such amount of money will drive inflation up like crazy no matter how hard you try to sugarcoat it.