The US government’s willingness to run huge deficits (which increases the national debt) is what makes it so powerful and holds so much sway over the developing world in the first place.
Remember, that you cannot run large budget deficits is a neoclassical myth designed to keep the rest of the world from investing in self-sufficiency, and must therefore earn export revenues (by using their labor and resources to sell cheap goods and services to the wealthy countries) first before they can invest in their own country in order to “keep their deficits down”.
US federal debt = dollars spent by the US government that haven’t been taxed back yet. It literally is just an accounting tool to drain the extra reserves creating in the financial system every time the government spends money.
This MMT meme should clarify everything:
Leftists really need to understand that they should attack the federal government for prioritizing its spending on rich people, and not enough on the average working people, instead of regurgitating neoliberal myths that perpetuate the US hegemony.
Most comprehensible leftist meme
Leftists really need to understand that they should attack the federal government for prioritizing its spending on rich people, and not enough on the average working people, instead of regurgitating neoliberal myths that perpetuate the US hegemony.
I agree 100% but whenever I suggest that leftists should bother to learn a bit about MMT I get told that it’s all irrelevant because it doesn’t align perfectly with their own interpretation of something Marx said about money or value, or only applies to when you’re very late stages of socialism.
Funny considering that perhaps the greatest economic development that has occurred in the history of humanity, happened in the USSR under Stalin’s Five-Year Plans (1929-1955) that ran very much on the MMT principles (not exactly, but conceptually similar enough). No other socialist/Marxist economies, including China which is far more neoliberal post-reform and relied on foreign capital and cheap labor, ever comes close to achieving this.
100%. I do wish a Marxian economist who also understands MMT (and there are at least a few) would do a deep dive into the details of the Stalin’s Five Year plans, I think it’s a fertile area for understand how to run an economy in the early stages of socialist transition.
There’s a Proles Pod episode on MMT just came out that seems to do a good job. I still can’t 100% wrap my head around it but I’m getting there
Not understanding how to run a country at a deficit is why I’m no good at Victoria 3.
It depends… during the gold standard era (fixed exchange rate) you cannot run a large deficit without screwing up your own exchange rate.
I will continue my BDS America campaign and discourage purchasing of US toxic debt and weapons.
The debt are bought by banks because every time the government spends (creates new money), it also creates reserves in the banking system. The banks then use the new reserves to buy treasuries, which act to drain excess reserves in the system (because of interest rate targeting, otherwise you can just let the reserves build up in the system without doing anything, and not issuing new treasury bonds at all. It is a policy choice.).
The rest of it is bought by citizens and non-citizens alike who have accumulated dollars but don’t know where else to spend them (e.g. foreign central banks). Therefore the treasury bonds also act to drain the excess dollars the US has spent overseas (dollar recycling).
The only real way for the US to lose its financial hegemony is if there is another country (you know who) willing to step up and become the net deficit spending country to absorb all the surplus export capacities in the world.
Otherwise exporting economies will always have surplus goods to sell and the trade flow will inevitably lead the goods to be sold to the country willing to run a deficit. If not, workers will lose their jobs and hurt the local economy of the exporting country.
The real problem is that the government directing spending goes directly against neoliberal orthodoxy
instead of regurgitating neoliberal myths that perpetuate the US hegemony.
One way to do this is to point out what would happen if someone “called our debts.” Let’s say the US actually owes this money to various investors. Americans are going to have much worse problems before this happens, if it were to happen. Nobody cashes out unless they think the country is collapsing. And not in the “Oh no a recession that makes 2008 look like the 1950s!” but in the “People are being disappear’d and there’s gunfights between militia groups over water,” type of collapse.
At which point, whatever the debt is doesn’t matter because it would be the end of the US federal government. People would only call those debts because they know they aren’t going to get a return on their investment. USD will be worth fuck-all.
Regardless, it’s mostly money the US government owes itself. And decision makers are aware the debt doesn’t actually need to be paid back. The whole thing is a sham made up to justify austerity and imperialism.
better cut everything but the military that will do uhhhh nothing
SNAP $200
PBS/NPR $150
Border Patrol $800
Military $3,600,000,000,000
Medicare $150
someone who is good at the economy please help me budget this. my credit rating is dying
just use your military to shoot the credit raters, why didn’t anyone else think of this??
I have no doubt Trump is having people look into some way to tariff individual companies and people. But if that fails, there is always ICE and CECOT.
Spend less on military
No
Hmmm… have you tried spending more on the military?
you gotta run the govt budget like a household. no wait, not like that!
the US will sanction Moody’s🤣
Remember when the credit agencies were giving high ratings to all the over leveraged banks in the lead up to the Great Recession? Good times, good times.
Now it’s over leveraged private equity funds. Lookup blackstone
These systems always make me laugh.
China gets an A1 which is lower than Hong Kong and Taiwan which both get an Aa3, the implication being that these places are better equipped to pay their debts than the mainland? Fuck off are they lol.
i mean giving china a lower credit rating makes sense though since they can and will just tell foreign investors to get fucked (as they should, lol) if necessary (this is a good thing tho)
Watch the market still go up
The market is already a bit jumpy from the UNH wipeout. The crash may be closer than we think.
I fucking hope so. I’ve got a decent amount SQQQ just biding my time.
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I literally keep thinking itd be stupid not to buy United healthcare stock just because like, every other fucking time something like this has happened it just keeps increasing in value anyway, the only people who lose are the people who hear the bad news and go SHIT I GOTTA SELL
We’re gonna be winning so much you’ll beg me to make it stop!
“Hell yeah, brother!”makes the winning stop
Quick permanently another 500 billon to the defense budget!
I look forward to the NYSE hitting record highs on Monday on news of the US economy shitting the bed.
Did they also move the doomsday clock hand another second closer?
Boring!
If anyone else is confused it was Standard & Poor’s that downgraded their rating during Obummer, not Moody’s
Poor Mood
Things happening? Maybe 🤔
This doesn’t really mean anything does it
In practical terms it means that higher percentage of the budget will be allocated to paying interest leaving a smaller operational budget for productive uses.
Oh okay
If the debt’s too high, that means rich people will have to pay more taxes because they’re the ones with money right?
