U.S. Debt Ceiling. 31.4 Trillion!

[Pucky Freak]

The absolute dollar amount of the national debt is irrelevant because our government also controls the money supply. Well…mostly irrelevant.

Let’s say the national debt is $100 trillion. We could “print” $100 trillion tomorrow, pay off the debts, and then Uncle Sam could do his debt-free scream on Dave Ramsey’s radio show.

But $100 trillion extra dollars added to the money supply overnight would result in a host of catastrophic problems, so it will basically never happen.

Currently 8% of federal spending services debt. That’s pretty comparable to a middle class household budget. Perhaps someday the government takes on x7 times more debt, owing hundreds of trillions of dollars, and over 50% of annual spending services debt. We do eventually reach a point where entities no longer extend us any credit. This still isn’t a huge problem because we just have to trim our spending a little bit to meet all our obligations.

IMO the last worthwhile debt taken on by the federal government was during WWII. There will be future national crises definitely worth taking on debt again.

Are we screwing over our future grandkids by taking on debt today? Maybe, and then again maybe not. It’s far from a definite answer, and no one has a crystal ball.

When conservative politicians and talking heads rail on about “irresponsible debt” and threaten to refuse to raise the debt ceiling there’s a lot of disingenuous messaging layered in. It’s mostly political signaling to folks who prefer a smaller federal government footprint.

 

[more_cowbell]

Millennials are the largest group, slightly larger than the Boomers. They are entering their prime earning years- saving, having kids, buying homes, etc- but their salaries on a relative basis are less than Boomers pulled in. I think 20yrs is too short a time to kill off the Boomers as some are just approaching 60. That said, in 20years, Boomers go but the Millennials will be hitting retirement. That change in mix makes predicting 20-30yrs hard. What is a good bet in the prediction is that Millennials are not paying enough into SS and Medicare to compensate for what they will take out, so the problem doesn't go away.

Good points. Some people also note that as boomers go, there will be substantial wealth transfer to their millennial kids. Not sure how that fits in, but is an interesting thought

 

[SAJ-99]

Good points. Some people also note that as boomers go, there will be substantial wealth transfer to their millennial kids. Not sure how that fits in, but is an interesting thought

The thought is a lot of that wealth is in housing, primary and secondary. Yes it transfers to the kids. So that moves us to the question of the estate tax. The limit is very high before it gets taxed, like $10m. If you hate taxes or want use the “family farm should stay in family” argument the estate tax is bad. If you want to fix our budget problems, it is necessary to tax that wealth transfer. There are some good arguments both ways. Billionaires will continue to avoid paying taxes after they are dead using other methods (trusts, LLC, etc). Not to mention how it solidifies the wealth gap across generations. No easy fixes to paying this bill without people writing the checks.

 

[Deleted member 28227]

The thought is a lot of that wealth is in housing, primary and secondary. Yes it transfers to the kids. So that moves us to the question of the estate tax. The limit is very high before it gets taxed, like $10m. If you hate taxes or want use the “family farm should stay in family” argument the estate tax is bad. If you want to fix our budget problems, it is necessary to tax that wealth transfer. There are some good arguments both ways. Billionaires will continue to avoid paying taxes after they are dead using other methods (trusts, LLC, etc). Not to mention how it solidifies the wealth gap across generations. No easy fixes to paying this bill without people writing the checks.

$12.92M lol wildly outpacing inflation from what it was in the 80s and 90s

Definitely interesting as many boomers are choosing to stay in place rather than downsize to some sort of assisted facility.

Ostensibly lots of folks following the common wisdom and paying off their house and then not borrowing against it, and the average property value has skyrocketed.

Question in my mind is what happens when 32.1 Million homes are given to millennials in the space of a few decades. Presumably when most are in their 50s or 60s and already own homes.

$13.7 Trillion in wealth transfer

 

[SAJ-99]

house rich, cash poor? I think we all agree that all politicians have zero interest in fixing the problems. They spend their time mostly just trying to blame the other side for the mess.

57% of Americans can’t afford a $1,000 emergency expense, says new report

How to make sure you have enough saved for a rainy day.

fortune.com

 

[Big Fin]

I was going to lock this thread when it first started, as I could see it going into the political ditch. It hasn't done that. Thanks for keeping it on track.

 

[BigHornRam]

Well I don't have any heirs to give my fortune to when I croak. Should I will it to uncle sam, or a worthwhile charity/ngo? Who will use it more wisely? Decisions, decisions.

 

[Wildabeest]

Well I don't have any heirs to give my fortune to when I croak. Should I will it to uncle sam, or a worthwhile charity/ngo? Who will use it more wisely? Decisions, decisions.

I’m up for adoption.

 

[TOGIE]

Question in my mind is what happens when 32.1 Million homes are given to millennials in the space of a few decades. Presumably when most are in their 50s or 60s and already own homes.

my in laws house is worth like 2-2.5 mill now and fully paid off (paid like 650 for it ). they flat out told the kids that no one will inherit that house. rather, they'll use it to pay for their dying days of assisted living.

i suspect a lot of boomers carry that mentality.

 

[Deleted member 28227]

I’m up for adoption.

Clearly he’s going to give it to his favorite fossil fuel spreadsheet guy

 

[jt13]

Well I don't have any heirs to give my fortune to when I croak. Should I will it to uncle sam, or a worthwhile charity/ngo? Who will use it more wisely? Decisions, decisions.

my in laws house is worth like 2-2.5 mill now and fully paid off (paid like 650 for it ). they flat out told the kids that no one will inherit that house. rather, they'll use it to pay for their dying days of assisted living.

i suspect a lot of boomers carry that mentality.

Slightly different but in the same vein.

There are way more people out there that donate large tracts of land to the state to be used as public land than I ever imagined there was. I'm always curious if they hated their kids, if it was done for estate tax planning purposes, or if solely for the noble cause of making it public. I suspect the reasons vary wildly and are on a case by case basis

 

[Dave N]

Well I don't have any heirs to give my fortune to when I croak. Should I will it to uncle sam, or a worthwhile charity/ngo? Who will use it more wisely? Decisions, decisions.

Good morning, Uncle B!

 

[Buffs35]

my in laws house is worth like 2-2.5 mill now and fully paid off (paid like 650 for it ). they flat out told the kids that no one will inherit that house. rather, they'll use it to pay for their dying days of assisted living.

i suspect a lot of boomers carry that mentality.

I hope so

 

[Treeshark]

Question in my mind is what happens when 32.1 Million homes are given to millennials in the space of a few decades. Presumably when most are in their 50s or 60s and already own homes.

It’s possible that while most of that wealth will be transferred, some may actually disappear in the form of declining home/property pricing (mass supply entering the market at roughly the same time).

I’ve been waiting for that shoe to drop for years though, and it just doesn’t. Who knows?

 

[VikingsGuy]

Wild! Each year, push it down the road and now the question stands, "What road?".

"The clock is ticking for a divided U.S. Congress to raise the federal government's debt ceiling, which currently stands at $31.4T, but risks running out of cash as soon as June 1. Razor-thin margins in Congress are complicating the matter, as only a handful of rejections could derail any deal, and concessions are a lot harder to come by, with extreme flanks enveloping both sides of the debt limit debate. While President Biden has invited House Speaker Kevin McCarthy to a meeting on Tuesday, things can quickly spiral in the danger zone, and is one of three make-or-break crises now impacting the U.S., according to SA contributor ING.

Quote: "It's simply unacceptable for Congress to threaten economic calamity for American households and the global financial system as the cost of raising the debt ceiling and getting agreement on budget priorities," Treasury Secretary Janet Yellen told ABC's This Week. "Even as we get very close to this date, if Congress doesn't act, we're likely to see financial market consequences. There is no way to protect our financial system and our economy other than Congress doing its job and raising the debt ceiling and enabling us to pay our bills."

As the U.S. gets closer to the brink of a default, talk has even circulated about possible emergency options that could be used to circumvent a disaster. Some ideas that have surfaced include invoking the 14th Amendment, as well as the trillion-dollar coin and issuing debt with coupons above current yields. While President Biden on Friday said he's "not gotten there yet" regarding using an option like the 14th Amendment, Janet Yellen was slightly more forthcoming about what would happen if an agreement failed to materialize on Capitol Hill.

Go deeper: "We should not get to the point that we would need to consider whether the President can go on issuing debt - this would be a constitutional crisis," she declared. "If they fail to do it, we will have an economic and financial catastrophe that will be of our own making, and there is no action that President Biden and the U.S. Treasury can take to prevent that catastrophe." When pressed to answer whether there is a "break glass" alternative, Yellen didn't appear to rule anything out, but said she didn't want to consider emergency procedures as there were "simply no good options.""

Credit:

Stock Picks, Stock Market Investing

seekingalpha.com

If our politicians were serious about rational government and not incessant grandstanding and brinkmanship every passed budget would include language to authorize debt ceiling adjustments necessary to fund it.

I want us to spend less, but this month’s game of chicken is not a serious effort at a balanced budget but rather simple gamesmanship - and before one side puffs and the other cries, they both do it.

 

[Deleted member 28227]

It’s possible that while most of that wealth will be transferred, some may actually disappear in the form of declining home/property pricing (mass supply entering the market at roughly the same time).

I’ve been waiting for that shoe to drop for years though, and it just doesn’t. Who knows?

I'm pretty skeptical it ever will, even though the demographics of the country are likely to change I don't think the total population is going to decline, so I think demand will outstrip supply.

Also depends on the area, low end houses in areas that aren't desirable definitely a possibility.

But most of a really expensive properties value is location and you can't make more of that.

My thinking has always been don't so much worry about the house, you can fix/remodel/ etc. but make sure it's in a location that is desirable and will go up in value.

 

[Sytes]

But most of a really expensive properties value is location and you can't make more of that.

The definition of "valued locations" is a forever evolving desire. Generation upon generation, lifestyles adapt / change. Aside from the current trend as mass civilization expands into the West's open territory, civilization has exhausted the country. (Speaking of U.S.)
70% of Earth is covered by water, the moon, mars, and beyond is constantly evolving.
Humans will expand, supported by AI R&D will continue it's reach. Using the Matrix term, we are parasitic. We will expand. Partisan politics play into the scoffs of "Space Force" however, AI has unleashed a new age in human expansion. "Rights" are owned by strength. The universe is on the verge of human exploration - Unless people read up on ethical discussions and the current power of AI, their heads will remain in the sand. AI learns upon itself! Though this is for another thread. Point being, AI is accelerating at a pace ethics review experts declare they're mostly left in the dust and this will hit the pedal to the metal in the foreseeable future. A new Age is on the horizon.

New planet minerals, other valued items, and "property" may play a factor that shapes the world's owed debt. Beyond my time though, IMO, circling back to the comment, valued locations evolve.

 

[Deleted member 28227]

The definition of "valued locations" is a forever evolving desire. Generation upon generation, lifestyles adapt / change. Aside from the current trend as mass civilization expands into the West's open territory, civilization has exhausted the country. (Speaking of U.S.)
70% of Earth is covered by water, the moon, mars, and beyond is constantly evolving.
Humans will expand, supported by AI R&D will continue it's reach. Using the Matrix term, we are parasitic. We will expand. Partisan politics play into the scoffs of "Space Force" however, AI has unleashed a new age in human expansion. "Rights" are owned by strength. The universe is on the verge of human exploration - Unless people read up on ethical discussions and the current power of AI, their heads will remain in the sand. AI learns upon itself! Though this is for another thread. Point being, AI is accelerating at a pace ethics review experts declare they're mostly left in the dust and this will hit the pedal to the metal in the foreseeable future. A new Age is on the horizon.

New planet minerals, other valued items, and "property" may play a factor that shapes the world's owed debt. Beyond my time though, IMO, circling back to the comment, valued locations evolve.

To some degree maybe…

A brownstone in NYC will never be worth less than a 3000sqft house in South Dakota.

Certainly that is the extreme and the rust belt has lost value, so there are examples to your point.

 

[SAJ-99]

It’s possible that while most of that wealth will be transferred, some may actually disappear in the form of declining home/property pricing (mass supply entering the market at roughly the same time).

I’ve been waiting for that shoe to drop for years though, and it just doesn’t. Who knows?

Your example is sort of like waiting for Boomers to die so draw odds get better.

 

[Deleted member 28227]

Your example is sort of like waiting for Boomers to die so draw odds get better.

Well we tried the whole first horseman of the apocalypse route and that in an insane turn of events made odds worse.