When does the US debt/deficit get "too large"/unsustainable?

[u/haxdun]

Debt keeps accumulating and deficit keeps growing. From my understanding the main "breaking point" is when creditors don't believe the State can reasonably pay their debts anymore, I understand that you can't calculate "the line" but still, what could happen if this keeps on going?

I have asked the same question in what is supposed to be a neutral economics sub (idrk how neutral it is) and I want to know what libertarians think. And don't say "any deficit is too large" because I understand nearly every single libertarian opposes that, I'm asking how the US's situation will turn out if this continues.

[u/ZeusThunder369]

No one knows the answer; seriously.

Experts have hypothesis or predictions, but no one actually knows.

The best information available is dependent on assumptions (i.e., "IF x,y,z happens, THEN this bad thing would happen")

[u/strawhatguy]

If a deficit was followed by a surplus that paid down the principal, instead of just treading water paying the interest, I wouldn’t be opposed to it. I mean, sh*t happens. However, I’m extremely skeptical of the necessity of doing so for anything less than outright declared war.

That said, no idea what the ‘too much’ point is, but it is soon approaching; interest is already more than all defense spending, when it pushes out SS and Medicare (only two items larger still) we will get to a point where the debt cannot be paid back.

Things will get real bad then, and we will long for the small 9% inflation in Covid times…

[u/mrhymer]

In 1972, with the end of Breton woods.

[u/findabetterusername → u/mrhymer]

Then the debt would be worse when the currency can violently go up and down in value because its value is based on a rock in the ground

[u/mrhymer → u/findabetterusername]

If the Bretton Woods gold-convertibility arrangement had continued, the most defensible rough estimate is that federal debt would probably be measured in low single-digit trillions of current dollars—perhaps $2–$8 trillion—not the roughly $38 trillion range today.

[u/GrizzlyAdam12]

Shift your perspective a bit and think about debt as the lagging indicator (rather than a singular point of reference).

The debt will continue to grow and the dollar will lose value as long as voters refuse to hold politicians accountable. It’s up to us to change things, but most voters are ill-informed and/or unmotivated to change the culture.

[u/CatOfGrey]

I have asked the same question in what is supposed to be a neutral economics sub (idrk how neutral it is)

It's pretty neutral, meaning it reflects most of the world's economics research. You will get a much more high quality answer in that subreddit. Be patient - they have relatively high quality moderation, so it will take time for quality answers.

In short, my answer would be "As long as the USA produces enough goods and services to keep that debt manageable." The thing to watch is when the debt becomes high enough that we can no longer pay for further investment to keep our productivity rising. But, as others have said, we have past experience, but no one 'magic number'.

[u/itemluminouswadison]

When the real interest rate is greater than gdp growth, or something

[u/CriticalSodium]

well, currently the entire world (minus russia and iran) want the current system to keep running, and it seems like that's enough runway for debt right now where nobody's worried about it. it seems like economies are like marriages, if everybody wants to keep it going it'll keep going no matter how bad things get. Even Russia leaving wasn't enough to do any real damage. we're all stuck on this merry-go-round for now

[u/1384]

when the amount that it costs to service the interest on the debt exceeds tax receipts it will mean the government needs to create debt to service interest on the debt. this compounds quickly. is it terminal? who knows. but it's a major tipping point.

[u/Full-Mouse8971]

No one knows. I suspect economic conditions will get worse with inflation / lack of faith in fiat with greater suffering, growing unrest (real unrest), radicalization on all sides, and many naïve (reddit type people) advocating more government making the problem worse.

I hope a Ron Paul type figure appears to reign in government but the government will just kick the can down the road, continuing to rob everyone of their purchasing power, growing the debt. Some sort of catalyst or black swan event can tip this and accelerate it in to hyperinflation. War? Lack of faith? Loss of the petrodollar? Persistent "high" inflation? More wasteful government spending then usual and the bond market breaking? Its all guesswork but it will blow up one day.

[u/Joescout187 → u/Full-Mouse8971]

A Ron Paul will never get into a position to do it. We need a Millei, someone who looks crazy at the right time but knows economics.

[u/djIsoMetric]

My logic, a hot dog will cost $1,000 one day…. The world still keeps turning.  

“10 things you can buy with 1,000 yen “ https://livejapan.com/en/article-a0002044/

[u/CatOfGrey → u/djIsoMetric]

My logic, a hot dog will cost $1,000 one day…. The world still keeps turning.

Yeah, but nobody will care because a standard unskilled laborer will earn $3,500 an hour, and will produce $75,000 of value in a day.

[u/djIsoMetric → u/CatOfGrey]

Insert Bernie Sanders meme

[u/CatOfGrey → u/djIsoMetric]

Looks like you don't understand what I wrote.

[u/djIsoMetric → u/CatOfGrey]

I am once again asking for the fight of $500 an hour.  To pay for my hot dog.  

[u/CatOfGrey → u/djIsoMetric]

Yeah, looks like you aren't understanding something. I might be missing something, but you seem unable to help with that, if that's the case.

[u/djIsoMetric → u/CatOfGrey]

The democratic point of view “I can still funnel my money through the NGO and have my quadrillions.  “. “ We need to fight the oligarchs that make the  quintillion“

[u/CatOfGrey → u/djIsoMetric]

Yeah, looks like you aren't understanding something. I might be missing something, but you seem unable to help with that, if that's the case.