[Deutschmania]

Well , if one were to go along with idea of modern monetary theory , then public debt doesn't matter . I mean I am not entirely convinced by this , within the context of capitalism , I am more so inclined to support a more strictly Keynesian approach . However MMT has appealed to certain politicians , such as notably AOC .

https://www.businessinsider.com/alexandria-ocasio-cortez-ommt-modern-monetary-theory-how-pay-for-policies-2019-1

https://www.businessinsider.com/economist-survey-alexandria-ocasio-cortez-modern-monetary-theory-2019-3

At the end of the day , I think that the United States is like an immature adolescent , who wants to have her cake and be allowed to eat it too , without consequence , as these two political satirical comedy sketches help to illustrate .

[Hakeer]

Not really. China is around 120% for its government if you take national debt + local governments together. And China is way, way, way less underdeveloper on per capita basis which is important here. They are okay and its only a problem if the interest gets out of hand and the growth stops or slows down severely.

As mentioned, there are countries with far larger debts like Luxembourg with a wooping 3800% total debt to gdp ratio or something. Once again, debt size is irrelevant. What is relevant is how fast you grow and how well you manage the interest.

Luxembourg was 22% as of July 31, 2024.

[JohnRawls]

Luxembourg was 21.6% as of July, 2024.

Hmmm I must have been wrong on this one but I swear I saw that total Luxembourg debt was like 3800% of gdp (private and public) which is the highest in the world. Basically around 5.7 trillion and 38 times their GDP. But I can't find it now.

[Hakeer]

Hmmm I must have been wrong on this one but I swear I saw that total Luxembourg debt was like 3800% of gdp (private and public) which is the highest in the world. Basically around 5.7 trillion and 38 times their GDP. But I can't find it now.

Those numbers are way off. It is only $18 billion.

[SpecialOlympian]

The national debt is needed to give unearned income to rich, greedy, privileged parasites who want to be paid for being rich, but prefer to avoid the risks associated with productive investment.

Short term treasury notes are used to measure the risk free rate of return because they produce the least return for the least risk.

The largest holders are, in the following order: Foreigners (usually governments), mutual funds, state level governments, and banks.

I’m sure the ultra wealthy have exposure to them through these institutions, but they are not counting on them as a means to grow their wealth. The ultra wealthy have enough money and assets to weather downturns. Insurance, banks, pensions, etc. are more reliant on them as a means to cover payouts.

On my phone or I’d post a pic but this PDF is from Treasury Direct, so it’s safe. Top of the last page if you want to see. But sorry lol Bezos isn’t sitting around rubbing his hands together waiting for his Treasury interest payments every 6 months, he has teams of people managing his wealth in much more productive ways.

If anyone relies on treasuries, it’s pensioners and retirees. Foreign investors typically use Treasuries and German bonds to shelter money during down markets since they’re considered safe.

https://fiscal.treasury.gov/files/repor ... 4-3ofs.doc

[Truth To Power]

Short term treasury notes are used to measure the risk free rate of return because they produce the least return for the least risk.

So that's how much we have to pay rich, greedy, privileged parasites purely for being rich.

The largest holders are, in the following order: Foreigners (usually governments), mutual funds, state level governments, and banks.

Mutual funds and banks are mostly owned by the rich.

I’m sure the ultra wealthy have exposure to them through these institutions, but they are not counting on them as a means to grow their wealth.

Of course there are more profitable -- but just as unproductive -- vehicles for those who have some risk tolerance.

The ultra wealthy have enough money and assets to weather downturns. Insurance, banks, pensions, etc. are more reliant on them as a means to cover payouts.

Insurance companies and banks are mostly owned by the rich.

On my phone or I’d post a pic but this PDF is from Treasury Direct, so it’s safe. Top of the last page if you want to see. But sorry lol Bezos isn’t sitting around rubbing his hands together waiting for his Treasury interest payments every 6 months, he has teams of people managing his wealth in much more productive ways.

No, he has merely created an unproductive rent-seeking operation that is far more profitable than owning treasuries.

If anyone relies on treasuries, it’s pensioners and retirees.

Rich ones.

Foreign investors typically use Treasuries and German bonds to shelter money during down markets since they’re considered safe.

So that's how much we have to pay them just for being rich.

[SpecialOlympian]

So that's how much we have to pay rich, greedy, privileged parasites purely for being rich.

No, it's literally, "This is best possible return for the least risk." This is a pretty basic investment concept. The wealthy are not satisfied with the risk free rate of return. People who have the wealth to shield themselves from the market seek out riskier investments because it is generally accepted as the least efficient use of their money (outside of maybe some small ownership for diversification/maintaining readily accessible liquid assets). If the ultra rich are seeking to enlarge their already substantial holdings through Treasury issues, then they are probably gambling on the bond market as a whole rather than counting on twice yearly interest payments.

I'd be happy to explain basic concepts to you, like how insurance companies (and in a similar vein, state or privately run employee pension plans) invest premiums and contributions to cover annuity payments, insurance payouts, etc. because it would be inefficient for them to allow their cash reserves to lose value due to inflation. But you seem to be hyper focused and pointlessly combative, so further conversation would be unproductive.

Please note, my understanding of capital/money markets does not mean I think Capitalism is the greatest system known to man. I work in a profession where I help people understand how to invest and plan for retirement. Regardless of your ideology, you live under capitalism and have to engage with it until the revolution comes. Having to engage with reality on a basic level is not an endorsement of the system.

Let me help you put this in perspective. The current return on a 1 month Treasury is 5.33%, after a quick Google search (keep in mind, interest rates on bonds are projected annually regardless of the term). The Fed is projecting 5.25% to 5.5% interest.

[Hakeer]

No, it's literally, "This is best possible return for the least risk." This is a pretty basic investment concept. The wealthy are not satisfied with the risk free rate of return. People who have the wealth to shield themselves from the market seek out riskier investments because it is generally accepted as the least efficient use of their money (outside of maybe some small ownership for diversification/maintaining readily accessible liquid assets). If the ultra rich are seeking to enlarge their already substantial holdings through Treasury issues, then they are probably gambling on the bond market as a whole rather than counting on twice yearly interest payments.

I'd be happy to explain basic concepts to you, like how insurance companies (and in a similar vein, state or privately run employee pension plans) invest premiums and contributions to cover annuity payments, insurance payouts, etc. because it would be inefficient for them to allow their cash reserves to lose value due to inflation. But you seem to be hyper focused and pointlessly combative, so further conversation would be unproductive.

Please note, my understanding of capital/money markets does not mean I think Capitalism is the greatest system known to man. I work in a profession where I help people understand how to invest and plan for retirement. Regardless of your ideology, you live under capitalism and have to engage with it until the revolution comes. Having to engage with reality on a basic level is not an endorsement of the system.

Let me help you put this in perspective. The current return on a 1 month Treasury is 5.33%, after a quick Google search (keep in mind, interest rates on bonds are projected annually regardless of the term). The Fed is projecting 5.25% to 5.5% interest.

This whole idea that the stock market is a “risky” investment is total bullshit. I am rich today, but not when I started in the 1970’s. I buy quality companies and never sell during recessions.

I would never buy a lousy bond that pays only 4-5% interest.

[SpecialOlympian]

There's different reasons to buy different investments based on age, goals, risk tolerance, total available funds, etc.

Individual stocks are risky. A diverse and properly managed portfolio (or index fund) will grow faster than equally funded money market or bond portfolio investments over the long term (which most people will describe as 7 to 10 years). If you establish a business and, over a decade, the return on your money is equal to either the money market or bond investment, then your business is essentially a failure from an investment standpoint. You have taken on greater risk for a return you could reasonably expect to obtain elsewhere. If your income comes from owning capital, there is literally no reason for the business to exist otherwise. You are doing more work with more risk for a reward you could receive from a more passive investment (whether you run the business or simply have to monitor your stock portfolio, as stocks are more volatile and require more attention).

That safer level of return and guaranteed return of the face value of the bond can make more sense for a retiree who is spending down the wealth they accumulated in youth and needs supplemental income to their annuities, Social Security income, etc. They don't have the option to go back to work to recoup losses, and can't afford to wait out downturns.

[Hakeer]

There's different reasons to buy different investments based on age, goals, risk tolerance, total available funds, etc.

Individual stocks are risky. A diverse and properly managed portfolio (or index fund) will grow faster than equally funded money market or bond portfolio investments over the long term (which most people will describe as 7 to 10 years). If you establish a business and, over a decade, the return on your money is equal to either the money market or bond investment, then your business is essentially a failure from an investment standpoint. You have taken on greater risk for a return you could reasonably expect to obtain elsewhere. If your income comes from owning capital, there is literally no reason for the business to exist otherwise. You are doing more work with more risk for a reward you could receive from a more passive investment (whether you run the business or simply have to monitor your stock portfolio, as stocks are more volatile and require more attention).

That safer level of return and guaranteed return of the face value of the bond can make more sense for a retiree who is spending down the wealth they accumulated in youth and needs supplemental income to their annuities, Social Security income, etc. They don't have the option to go back to work to recoup losses, and can't afford to wait out downturns.

This is also not true. I have been retired for 27 years, stayed 100% in stocks. I am up 216% over the last 7 years, which beats the crap out of an S&P index fund or your “diversified” portfolio that includes crappy bonds. I just set up a college fund for my grand daughters. I have about $300,000 in JEPQ, which has about 9% return, not a crappy 5%. It owns only rock solid stocks. I don’t worry at all about “risk.”

[SpecialOlympian]

I agree it’s not true for you and your situation, but I’m not wrong.

[Truth To Power]

No, it's literally, "This is best possible return for the least risk."

No, it's literally, "There's no earthly reason for the national government to give them that return, other than the fact that they demand it."

The wealthy are not satisfied with the risk free rate of return.

But it's useful as a floor.

I'd be happy to explain basic concepts to you, like how insurance companies (and in a similar vein, state or privately run employee pension plans) invest premiums and contributions to cover annuity payments, insurance payouts, etc. because it would be inefficient for them to allow their cash reserves to lose value due to inflation. But you seem to be hyper focused and pointlessly combative, so further conversation would be unproductive.

I'm familiar with the financial "industry" and investing, and have taught economics at the post-secondary level, so, thanks anyway.

Please note, my understanding of capital/money markets does not mean I think Capitalism is the greatest system known to man. I work in a profession where I help people understand how to invest and plan for retirement. Regardless of your ideology, you live under capitalism and have to engage with it until the revolution comes. Having to engage with reality on a basic level is not an endorsement of the system.

Under capitalism, you are guaranteed to be a victim; but you can also arrange to be a perpetrator by investing in privilege. That said, it still beats the hell out of socialism.

[Truth To Power]

I am rich today, but not when I started in the 1970’s.

I am shocked -- shocked! -- to learn that you are one of the people in whose narrow financial interests the policies and institutions you so assiduously rationalize and justify are designed.

[Truth To Power]

As mentioned, there are countries with far larger debts like Luxembourg with a wooping 3800% total debt to gdp ratio or something.

Wait, what? That cannot be right.

[Potemkin]

This is also not true. I have been retired for 27 years, stayed 100% in stocks. I am up 216% over the last 7 years, which beats the crap out of an S&P index fund or your “diversified” portfolio that includes crappy bonds. I just set up a college fund for my grand daughters. I have about $300,000 in JEPQ, which has about 9% return, not a crappy 5%. It owns only rock solid stocks. I don’t worry at all about “risk.”

[Hakeer]

That’s why we have FDIC. 2008 financial crisis was the worst annual percentage decline in S&P history. I did not sell anything. It bounced back 25% in 2009 and another 15% in 2010. By then, I was ahead of where I was before the crisis.

[Hakeer]

I am shocked -- shocked! -- to learn that you are one of the people in whose narrow financial interests the policies and institutions you so assiduously rationalize and justify are designed.

Exactly what policy do you think I rationalize? Private ownership of land? So do 190 of 195 countries in the world. I voted for Bernie Sanders. I subscribe to the policies of the progressive wing of the Democratic Party.

[JohnRawls]

Wait, what? That cannot be right.

@Hakeer

Actually i found it.

https://en.wikipedia.org/wiki/List_of_c ... ernal_debt

Luxembourg at 4279%

Palau technically is a bit more but info is outdated.

Which is around 5,790,000 per citizen.

[Hakeer]

@Hakeer

Actually i found it.

https://en.wikipedia.org/wiki/List_of_c ... ernal_debt

Luxembourg at 4279%

Palau technically is a bit more but info is outdated.

Which is around 5,790,000 per citizen.

The data is an error. No country in the world is even close to 4,000%. They would default long before they could get to that level, and nobody would loan them a dime.

The actual debt to GDP ratio for Luxembourgh is, by all estimates, less than 30%. That is pretty good….

https://tradingeconomics.com/luxembourg ... ebt-to-gdp

https://www.google.com/search?q=Luxembo ... CyFVz-RcHd

https://www.worldeconomics.com/Debt/Luxembourg.aspx

[JohnRawls]

The data is an error. No country in the world is even close to 4,000%. They would default long before they could get to that level, and nobody would loan them a dime.

The actual debt to GDP ratio for Luxembourgh is, by all estimates, less than 30%. That is pretty good….

https://tradingeconomics.com/luxembourg ... ebt-to-gdp

https://www.google.com/search?q=Luxembo ... CyFVz-RcHd

https://www.worldeconomics.com/Debt/Luxembourg.aspx

Your looking at the wrong thing. You are looking at public debt which is only 1 subset of debt. External debt(total debt to foreigners) is public + private debt that is owned to individuals and other institutions outside the country by residents or institutions of a given country.

The reason why this is important, is because I am trying to show you an extreme scenario. Where external debt is so colossally high that it would be unsustainable by any of your logics. But its not, because debt is about risk/reward/managing interest, so even a redicilous number like 4000% is okay and makes Luxembourg one the richest countries in the world because they are managing it all well.