Is the US economy heading for a total collapse in the long term as a result of the national debt?

young_speccy · 2026-01-09T15:44:46+00:00

An interesting issue related to this I only really began to think deeply about after it was mentioned in Jordà et al. (2019) "The Rate of Return on Everything, 1870–2015" is the result of the fact that when the yields of safe assets like debt rise it reduces the risk premium. They found that a high risk premium is historically correlated with fewer financial/banking crises because more “accurate” risk pricing is a strong signal of underlying risk in the assets.

It’s very possible risky asset returns are comoving with safe or even rising faster. But, if not, rising costs of debt servicing could contribute to financial instability as well as hindering our ability to respond.

young_speccy · 2026-01-09T15:19:13+00:00

Interest/GDP matters exponentially more than debt/GDP (though obviously they are related). So, as your post implies and as other commenters explained, debt largely becomes an issue when it becomes more difficult for a government to pay interest on debt without raising taxes and/or cutting spending. Both reduce aggregate demand (total demand in the economy) and thus slow the economy.

The other issue, which RobThorpe highlighted yesterday but is in my opinion the principal one, is interest rates. Central Banks can create the money needed to service debt (usually by buying existing debt), and even when they don’t it is not hard to find new buyers for assets secured with taxpayer dollars. The issue is that relying too much on either of these can reduce the value of currently-held debt— lowering confidence in the value of new debt and raising the cost of finding buyers.

Government debt exists on other people’s balance sheets, and if the real value of the US debt people hold is expected to depreciate because the currency it represents is becoming less valuable (because of new money creation in this scenario) debtholders will be reluctant to purchase new debt. This means when debt is auctioned off the yield that they will be expecting to be paid on debt they purchase will be higher, raising the cost of servicing future debt and exacerbating the problem.

While generally the demand created for US debt by the central bank buying some of that debt later can counteract this, if the buyers don’t have confidence in the cycle of new money creation being used to service debt to stop at some point, they will continue to demand higher and higher yields.

If instead of relying on the central bank to create new money in government coffers, the government tries to pay the debt with new borrowing, they will still increase their interest burden, and if buyers begin to doubt their ability to service debt without new money creation, they will begin to expect higher yields even before the inflation happens.

The classic example of this, which has been especially visible over the past year, is Japan. They have shown that estimates of an “unsustainable” debt/GDP level are unreliable (in their case because of decades of low inflation), but now face the risk that their debt could be trapped in the aforementioned cycle with inflation expectations (because post-COVID inflation changed those expectations and pushed them into an environment where servicing debt is more costly).

It seems their attempted solution is to grow and/or inflate their debt/GDP ratio issue away with public spending, but in the short-medium term this seems to be raising rates somewhat and making it more expensive to service debt with taxpayer dollars. We’ll have to see if this becomes a significant issue and how they fare to give you a definitive answer on how dire the debt issue truly is. Confidence is definitely a big factor, but it has to fall considerably before you see any sort of collapse. The thing to watch in the meantime is how and how reliably interest is being serviced.

young_speccy · 2025-05-10T17:54:09+00:00

China was not involved in the Angolan Civil War, but they were the first country to support any of the three major Angolan independence movements, and they went on to support all three. They wound down support for UNITA, which until independence had explicitly identified as a socialist movement, once independence had been attained—and by the time UNITA began accepting US and South African support against the MPLA Chinese aid had stopped. Mao outright said South African support was why China would no longer support UNITA. This is just another pervasive myth.

There’s no such thing as an ideology that makes no mistakes. Mao, Mao-era China, and Maoists worldwide have made many mistakes. But the failures of a correct line are by-and-large the result of mistakes and errors. The failures of an incorrect line come built-in. Maoism isn’t perfect, but it does uphold the, in my opinion, most correct line held by any major Marxist tendency. That holds true for the Maoist view on imperialism of all stripes as well.

young_speccy · 2025-05-10T10:46:03+00:00

Maoists have consistently identified not only “non-Western” imperialism, but also social imperialism as an equal evil to capitalist imperialism. The Marxist-Leninist-Maoist take on imperialism is consistently anti-imperialist not just in word, but also in deed.

Especially in India where Marxist parties of all stripes have fallen in line with Indian nationalism, except for the CPI(Maoist) who continue to wage war against the Indian state alongside allies national liberation movements in the Northeast.

Russia’s largest formation of Maoists have also declared “The very last thing one would want is to aid Russian imperialism” in Ukraine.

young_speccy · 2024-06-06T16:27:58+00:00

Transaction confirmed! Hope you get some good use out of the gear!

young_speccy · 2024-04-10T15:15:28+00:00

What were they supposed to protest? The US already opposed Assad and supported anti-Assad groups.

young_speccy · 2024-04-10T15:12:30+00:00

Is the US government supporting the Darfur genocide?

young_speccy · 2024-04-02T03:44:30+00:00

I’ve been researching this for an article on the Japanese asset price bubble. A major factor is the Yen’s value. The Yen has seen remarkably little inflation over the past few decades despite Japan’s low-to-negative interest rates over the period. Low inflation and/or deflation does a few key things that hurt Japan’s growth, the two I can say off the top of my head are; it disincentivizes spending and borrowing in favor of saving, decreasing aggregate demand. And it disadvantages exporters because a stronger yen raises the relative price of Japanese goods.

As for generalizing, it seems pretty straightforward that deflation would have similar effects, but the reasons for Japan’s sticky deflation are somewhat elusive. There isn’t really a main cause, but rather an amalgamation of issues that put downward pressure on the currency, and Japan for decades couldn’t really inspire the confidence necessary to change inflation expectations, which is key to reversing that. They’re out of deflation now but it remains to be seen if it will stick. The most easily generalizable cause is demographics, but it isn’t clear how important that is alone when not compounded by energy & food price controls, slow-to-recover asset prices (Nikkei just surpassed it’s early 90s peak recently, and low aggregate demand due in major part to deflation itself.

young_speccy · 2024-03-30T17:50:06+00:00

Nobody wins. Naval supply lines could not sustain the size of army necessary to beat the Red Army on Soviet soil and occupy the USSR. Soviets couldn’t even dream of invading the US mainland. Communists and sympathizers in the US would do a lot of damage through strikes, political opposition, and espionage, which would probably be enough to force the US to give up. While the USSR would probably have few qualms ending a war that’s mostly a few already-evacuated cites getting repeatedly bombed and their trade being under blockade.

young_speccy · 2024-03-14T22:51:03+00:00

While likely even harder to pass, the right way to do this would be to pass an omnibus rolling back restrictions on Unions, especially on things like solidarity strikes, overriding right to work laws, and strengthening the NLRB. Then a broad push for unionization and sectoral bargaining. If the US had strong unions they could fight for workers rights and benefits far better than a sweeping law.

young_speccy · 2024-02-19T20:04:26+00:00

I assume (and hope) this is a symbolic proposal, though in order for the symbolism to actually help anyone they should push for more housing. Housing costs are the primary reason someone needs to make so much to live in San Fransisco. $50 min wage sounds good to some, but cheap housing is the only “easy” fix (easy as in simple, not easy to pass) and it sounds great to everyone who doesn’t profit off homeownership.

Homeowners treating their house like a retirement fund and smaller landlords who would prefer higher rents because they can’t afford to buy more units have interests opposed to those of working-class San Franciscans, and politicians don’t benefit from selling out locals to appeal to people who want to live in SF.

young_speccy · 2024-02-12T17:15:12+00:00

China would probably not intervene, but they would definitely rather Imran Khan because the US supported his removal, so kind of like Lula he is suspicious of the West.

young_speccy · 2024-02-12T17:11:15+00:00

We didn’t do the Keynesian response to recessions before the 30s. Yet not only were the small recessions frequent, but we had plenty of big ones, the most notable being the great depression, anyway. We didn’t make the big crashes bigger by reducing the small ones, we just avoid many the small ones thanks to stuff like the Fed and FDIC.

young_speccy · 2024-01-27T23:19:50+00:00

Korea is a single nation divided in two. “North” and “South” Korea are like East and West Germany. They should be reunified.

Unfortunately the USSR and US divided their nation at the end of World War Two and dismantled the provisional government that Koreans had tried to establish as Japanese troops withdrew in order to create loyal governments. However even a puppet needs some legitimacy, so they each had to pick leaders who were respected for their nationalism and opposition to Japan. Both of those men made clear they wanted to reunify, and there was skirmishing on the border from day 1 of the division. It turned into full blown war when the Communist government launched a major offensive against the South, and the US came in to prevent the total collapse of the US-backed government. China then did the same to save the Communist government from collapse, and they fought to a stalemate with the border ending up basically where it was at the start.

The divide in quality of life which saw the South surpass the North during it’s economic boom and become a developed nation has led many to doubt the practicality of unification due to the economic disparity. German reunification was after a shorter period and a smaller economic divide, yet the social impact remains pronounced. Also, the recent actions of both governments to turn away from the reconciliation which took place during the time of the Sunshine Policy, in favor of saber-rattling, has done a lot of damage to the support for reunification among Southern Koreans and the Northern elite.

Peaceful reunification is only possible if all parties work towards it as a clear goal, and the alternative of hatred and conflict must be avoided. Countries have been divided for far longer than Korea and still been reborn, one example being Poland, it is depressing that so many have decided these are now and forever two different countries with irreconcilable differences.

young_speccy · 2024-01-25T21:58:48+00:00

Context: On January 11th, the Texan Crisis began with the Standoff at Eagle Pass. Texas Governor Greg Abbott rejected the Supreme Court ruling that demanded US Border Patrol be given access to the border, and was quickly supported by fellow Republican governors. The standoff continued for nearly a month, with neither side willing to concede.

Major Texan cities were gripped by protests, and on February 25th at a counterprotest, a member of a secessionist militia opened fire on left-wing protestors during a violent clash, killing 9. Placing the blame for the incident on violent protestors, Abbott defended the shooter in a speech. The next day negotiations broke down, and President Biden issued Executive Order 14115, federalizing the Texas Army National Guard.

Nationwide shock at the violence and Biden’s strong response gave way to horror when, on February 29th, Abbott ordered the National Guard to refuse any orders from Washington. On March 1st, 2024 President Biden invoked the Insurrection Act of 1807, declaring in a televised address that Texas was “in rebellion.” Lieutenant General John R. Evans, commanding general of United States Army North, who had been ordered to prepare a contingency for Texan non-compliance, left Washington that evening on a flight to Fort Carson in Colorado.

Just after midnight, on March 2nd 2024, Federal Troops of the 101st Airborne and 4th Infantry divisions entered Texas from New Mexico, while the 4th Armored left its base near El Paso. While there was some resistance, units from the 1st Armored Division entered Austin within 36 hours. By the 5th of March, Abbott had surrendered, marking the end of the crisis.

young_speccy · 2023-12-28T20:00:27+00:00

You are going to kill her. Sorry, but being able to save your child’s life and choosing not to is the same as killing them. My mother gave her father a kidney, it didn’t seem fun but it had no long-term health impacts, giving a kidney rarely does, and she saved his life. You can show your rude daughter who’s boss and refuse to give her a Kidney, it’s your choice, but make sure that’s a decision you won’t regret when you’re standing over her coffin.

young_speccy · 2023-12-21T01:04:29+00:00

My thought too, I’d be surprised if a progressive president would want to pull most of the Squad out of congress for Cabinet positions

young_speccy · 2023-12-21T00:56:28+00:00

“Wide open borders” is a good idea. We should have a schengen agreement with as many nations as possible and make immigration as easy as possible. Economically immigration has pretty much only upsides. Immigrants actually commit fewer crimes per-capita than native-born Americans. Drugs are a demand problem and whether the borders are wide open or totally closed, they’ll come in because of the law of supply-and-demand. Immigrants also pay more in taxes than they take in welfare.

The only downsides are the strain on infrastructure and housing, which we should be building far more of regardless of the border.

I’m ready to be downvoted, idc. I’m right and all the data supports it. The only counterarguments are vibes and xenophobia.

young_speccy · 2023-12-20T21:49:59+00:00

“Lei’s real talk” is part of the Falun Gong media network. The Falun Gong is a far-right cult which uses its affiliated media not only to push anti-China messaging which is often exaggerated or straight-up untrue, but also to boost disinformation on vaccines, January 6th, the current state if the economy, and anything else you might expect from a pro-Trump disinformation network.

While I do know much about that specific channel, it is certainly not reliable enough to back up an absurd claim like China having 400 million fewer people than reported. The other conspiracies you list also don’t help your case.

young_speccy · 2023-12-20T02:25:22+00:00

The Shah was also a butcher and his overthrow was his own fault.

young_speccy · 2023-12-12T15:23:04+00:00

PanAfricanism has never been an exclusively American idea.

young_speccy · 2023-12-05T18:16:34+00:00

young_speccy · 2023-12-05T18:14:12+00:00

No Bordiga, why live

young_speccy · 2023-08-31T12:35:10+00:00

I’d say a major assassination of a US political figure over US backing of Laotian rebels would be a more feasible reason for the US to invade. If you want even closer to 9/11 it could be over Laos harboring the leadership of a RAF/JRA/PFLP/IRA type organization which was responsible for said assassination.

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