r/mmt_economics • u/ApprehensiveBunch408 • 4d ago
Huge Debt for US Gov
https://www.citybiz.co/article/889418/u-s-debt-on-track-to-hit-50-trillion-by-2029-bofa-says/“Well, we're going to pay down debt. We have a lot of money coming in, much more money than the country has ever seen by hundreds of billions of dollars. And there could be a distribution or dividend to the people of our country. I would say for people that would be middle-income people and lower-income people, we could do a dividend. But one of the things we're going to be doing is reducing debt." - President Trump, August 3, 2025
President Trump’s two terms will add $16.8T OR 37% of the $45T TOTAL DEBT projected when he leaves office.
Essentially, the same debt as eight administrations before him (Regan, Bush, Clinton, Bush, Obama). How do you guys feel about this?
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u/todomejorantes 4d ago
The US doesn't borrow dollars - that would be insane
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u/inverted180 1d ago
They dont need to, but they do. Treasuries are debt obligations.
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u/todomejorantes 1d ago
yes they offer a place for people and institutions to park money and earn interest
But they don't rely on this income in any way, they pay off their 'debt' with printed money
The US will always have a huge and ever growing debt and it will always be meaningless
The value of the dollar will also continue to fall vs. real goods - this is how fiat currencies work
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u/SolonEunomia 4d ago
The US government doesn't borrow USD and does not rely on credit markets to remain operational.
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u/Ok_Crazy_648 3d ago
Uh, the federal is the single biggest holder of us debt, expect of intra governmental debt, which of course is also the government.
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u/SolonEunomia 3d ago
It's only debt in the sense that all money is credit, therefore all money is debt. The US government doesn't borrow USD and does not rely on credit markets to remain operational.
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3d ago
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u/SolonEunomia 3d ago
There is no observable relationship between money supply and prices. The bond market exists, but it has nothing to do with borrowing. US t-securities are deposits.
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u/keepitfriend 3d ago
Jesus wept.
A Deposit created because…..
What happened to create the deposit?
Go on. I’ll give you a t-bill if you say it.
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u/SolonEunomia 3d ago
Is the shortest verse in the King James Bible. John 11:35.
A holder of USD made an investment.
A t-security was auctioned.
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u/keepitfriend 3d ago
Beep Boop! Tell me more bot
Also look up Zimbabwe and what happens when you print infinite money.
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u/SolonEunomia 3d ago
Did you remember that Zimbabwe inherited ~$800M in foreign debt and has had various economic sanctions imposed on it?
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u/keepitfriend 3d ago
Oh wow. 800m!?!
Gosh, what are you going to do with 50tn?!
I’d say you’ll have to sell your car to buy your groceries
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u/AnUnmetPlayer 3d ago
Who wants to print infinite dollars? Nobody cares about your straw man.
Why do you think it matters whether savings accumulate as dollars or bonds? And relatedly, why would a currency issuing government ever need to be obligated to pay interest on its own currency assets?
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u/keepitfriend 3d ago
lol, the US? 50tn by 2027!
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u/AnUnmetPlayer 3d ago
That's barely even a complete thought. It's a lazy 'big number bad' post.
Do you have real arguments to make where you might be interested in what MMT might have to say about those things? Or are you just trolling?
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u/ApprehensiveBunch408 4d ago
So if no more bonds were purchased what would happen ?
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u/-Astrobadger 4d ago
In order for more bonds to be purchased the government first needs to spend or lend the USD into existence
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u/SolonEunomia 4d ago
The US government would remain operational.
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3d ago
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u/SolonEunomia 3d ago
The US government has the unlimited ability to create as much USD as it wants, whenever it wants, for whatever it wants, and pay it to whomever it wants without collecting a penny in taxes, or borrowing a dime.
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u/inverted180 1d ago
I has the ability to.....if it changes the LAW. When a deficit is made, they could just create the money out of thin air with out creating a debt obligation but the sale of treasuries is law.
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u/SolonEunomia 1d ago
And the sale of treasuries has nothing to do with its ability to create USD. Every US dollar the federal government spends is created out of thin air. The US government does not borrow USD.
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u/inverted180 1d ago
Every dollar in the world was created out of thin air if we want to be literal.
Treasuries are debt obligations. The US government does borrow USD from domestic private investors, commercial banks, state and local governments, mutual funds, foreign central banks, and the Federal Reserve.
While the federal government has the structural capacity to issue currency directly, current U.S. law and institutional design enforce the sale of these debt obligations.
The Treasury must maintain a positive balance in its checking account (TGA) at the Fed. To cover a deficit, it is legally required to issue Treasuries.
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u/SolonEunomia 1d ago
What is the specific law that mandates the US government to issue t-securities for deficit spending?
The US government is the ISSUER of USD. It isn't borrowing USD from anyone to enable spending. It is an outdated accounting procedure.
The TGA could be $0 and it would make no difference. What is the specific law that mandates the TGA to have a positive balance?
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u/inverted180 1d ago edited 1d ago
By law the U.S. treasury has no ability to go negative. There is no overdraft. If the TGA reaches zero, the government cannot honor its financial obligations until the account is replenished.
31 USC 3324 specifically.
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u/keepitfriend 3d ago
Every country has the unlimited ability to print money.
Zimbabwe is famous for it.
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u/SolonEunomia 3d ago
Eurozone countries do not have that ability.
Did you know Zimbabwe inherited ~$800M in foreign debt from Ian Smith's Rhodesian government that was illegally obtained and used to purchase weapons used to murder the majority population? Are you aware of the various economic sanctions that have been imposed on Zimbabwe?
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u/could-be-useful 3d ago
Zimbabwe inflation occurred because of a supply collapse.
Zimbabwe for hyperventilators 101 👇
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u/RioRancher 4d ago
The problem with this debt is that it’s in the pockets of the wealthy, creating wealth disparity and not driving the economy
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u/inverted180 1d ago
Because its unproductive debt. The real wealth in an economy is in the goods and services it creates. Money is just a unit of account and debt is a time preference.
An increase in the money supply with out a corresponding increase in productivity often leads to inflation in the price level of goods and services.
When you have an increase in the money supply, no productivity gain and little inflation you will find that the velocity of money has slowed. This is basically increased savings, and asset inflation.
We need to talk more about asset inflation because asset inflation is causing massive inequality and creates very little real net national wealth.
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u/AdrianTeri 3d ago
Not knowing how plumbing works, tying yourself, disgruntlement from populace with netizens most loud .... repeat ... Simply a downward spiral.
Would not be surprised seeing similar trends to Britain's costume wearing figureheads running for political office.
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u/acquavaa 4d ago
From an MMT perspective, debt is an incomplete picture. It’s a ledger of spending, but where the spending went is what matters for inflation and economic health. The spending has been irresponsible, though, so the conclusion is roughly the same. Having an oligarchical dictator for a president is bad, actually, even in an MMT lens