American Economics Thread

[chgough34]

As of April 30 average interest on the debt is 3.23% which on the current 34.76 trillion debt gives an annualized interest expense of about 1123 billion which is 3.9% of the current GDP.

Alas, the 34.76 trillion debt includes debt the government owes to itself - such as with the Social Security Trust Fund. Debt held by the public (which includes debt held by the federal reserve) is $27 trillion and US nominal GDP is $28 trillion. Assuming it all gets refinanced over 30 years at 4%-5% and rates never fall again, that would be an interest expense of 4%-5% which is sustainable - federal spending has hovered between 25-33% of GDP for decades. Assuming 3% inflation and 2% real growth, US GDP grows ~1.45 trillion every year (which expands borrowing capacity) and given rate cuts in the future, that expands US borrowing capacity even more

finding buyers for all this debt will become harder and harder.

Treasury auctions are 3-5x oversubscribed.

The U.S is basically paying of it's credit card by opening another one, i would not call that a sustainable situation..

No. Its not. Borrowing money to fund cash-flow generating capital projects means you’ll have more money in the future - infrastructure, education, research & development, etc - all these things on borrowed money increase the future taxable base and government revenues in the future. It is not a “credit card” as much as a company issuing a bond is borrowing on a “credit card”.

 

[chgough34]

US households assets value are due to the printing of $US and US treasuries. Both of these are just paper assets supported by further printing of those assets.

$60 trillion of Us household assets were non financial assets - primarily residential real estate, small business real estate & assets owned by small businesses, and cars. So even if you ignore other financial assets that are not cash or treasuries - such as corporate bonds and common equity as well as mutual funds and mineral rights - you still end up with households that on net, have $40 trillion in net worth. $40 trillion is far cry from being “broke”

 

[chgough34]

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Wow: this must be the struggling US consumer living paycheck to paycheck

 

[manqiangrexue]

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Wow: this must be the struggling US consumer living paycheck to paycheck

Yup, that'd be them, poor fools conditioned to keep spending even though financially, they shouldn't be. Living paycheck-to-paycheck means living paycheck-to-paycheck. Traveling doesn't mean living or not living paycheck-to-paycheck. Warning; I'm about to post an article with a couple of tables and graphs. I know that's your weakness. (By the way, did you ever manage to figure out from our last convo whether your claimed 3% savings is the lowest on record according to the graph that you provided??? hmmmm?)

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"A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year. In other words, more than three-quarters of Americans struggle to save or invest after paying for their monthly expenses.

Similarly, a 2023 Forbes Advisor survey revealed that nearly 70% of respondents either identified as living paycheck to paycheck (40%) or—even more concerning—reported that their income doesn’t even cover their standard expenses (29%)."

Aaand cue the snake biting its own tail arguments again.
You: Americans keep spending and not saving because that shows strong confidence in the US economy! People want to turn all money into instant fun! Saving is when you think you'll be in trouble!
Also you: No, saving shows a really strong financial situation and that's reflected by how few Americans are living paycheck-to-paycheck because they have strong savings so they can afford to travel!
Circus is in town again!

 

[tygyg1111]

Yup, that'd be them, poor fools conditioned to keep spending even though financially, they shouldn't be. Living paycheck-to-paycheck means living paycheck-to-paycheck. Traveling doesn't mean living or not living paycheck-to-paycheck. Warning; I'm about to post an article with a couple of tables and graphs. I know that's your weakness. (By the way, did you ever manage to figure out from our last convo whether your claimed 3% savings is the lowest on record according to the graph that you provided??? hmmmm?)

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"A 2023 survey conducted by Payroll.org highlighted that 78% of Americans live paycheck to paycheck, a 6% increase from the previous year. In other words, more than three-quarters of Americans struggle to save or invest after paying for their monthly expenses.

Similarly, a 2023 Forbes Advisor survey revealed that nearly 70% of respondents either identified as living paycheck to paycheck (40%) or—even more concerning—reported that their income doesn’t even cover their standard expenses (29%)."

Aaand cue the snake biting its own tail arguments again.
You: Americans keep spending and not saving because that shows strong confidence in the US economy! People want to turn all money into instant fun! Saving is when you think you'll be in trouble!
Also you: No, saving shows a really strong financial situation and that's reflected by how few Americans are living paycheck-to-paycheck because they have strong savings so they can afford to travel!
Circus is in town again!

I had a read of the article you linked. I suspect the main reasons can be boiled down the two highlighted below: Lack of financial literacy (read: financial retardation) and social pressures (muh clout).

The other reasons are effectively downstream symptoms of incompetent budgeting and planning.

 

[chgough34]

I had a read of the article you linked. I suspect the main reasons can be boiled down the two highlighted below: Lack of financial literacy (read: financial retardation) and social pressures (muh clout).

The other reasons are effectively downstream symptoms of incompetent budgeting and planning.

I mean, the “paycheck-to-paycheck” comment was mainly tongue-in-cheek on people that try to make it seem like American households are financially distressed instead of voluntarily having low savings rates and spending on items such as travel. Living “paycheck to paycheck” has no consistent meaning whatsoever - especially since many individuals count mortgage payments and retirement accounts as expenses - despite both having savings components - building home equity and retirement savings are well, obviously, savings.

would simulatously be inconsistent with the median household having a few thousand dollars in transaction accounts -

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[chgough34]

Meme remains undefeated

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[manqiangrexue]

instead of voluntarily having low savings rates and spending on items such as travel.

"voluntarily" having low savings in the same sense as drug addicts "voluntarily" ruining their own lives LOL

Meme remains undefeated

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Ohhhh snap! You like memes??? I like memes! Here; all "undefeated," whatever dafuq you think that means LOL

 

[FriedRiceNSpice]

I mean, the “paycheck-to-paycheck” comment was mainly tongue-in-cheek on people that try to make it seem like American households are financially distressed instead of voluntarily having low savings rates and spending on items such as travel. Living “paycheck to paycheck” has no consistent meaning whatsoever - especially since many individuals count mortgage payments and retirement accounts as expenses - despite both having savings components - building home equity and retirement savings are well, obviously, savings

Many Europeans have more vacation time, more workers protections, better medical coverage with more affordable healthcare (though worse healthcare, but not going to matter 95% of time), have to work less hours, better social safety net/pensions, enjoy more public services, all the while saving more money. Yet median/average incomes are much lower than the US and Euorpean nations extract much less rent from the global financial system. So argument that living paycheck to paycheck as a sign of financial security doesn't hold up.

 

[chgough34]

"voluntarily" having low savings in the same sense as drug addicts "voluntarily" ruining their own lives LOL

Indeed “voluntarily”. Individuals have no need to go on constant vacations, Taylor Swift concerns, other entertainment, constant meals out, buy expensive processed foods, new cars, etc, etc; but they do. The high amounts of discretionary consumer spending, is indeed voluntary.