US with problems to raise the debt ceiling... again

[paxmao]

Again, the US Government has spent more than expected and now has to borrow more to pay the bills. If this was you, this is the closest to an overdraft on your account that a country gets. The problem is that the limit has to be raised by law, and it is not simple to do so in an age of exacerbated partisanship and little wide-angle vision about the needs of the country.

Incredible as it may seem, the US could actually default in its obligations.

https://www.nytimes.com/2021/09/26/business/economy/america-debt-limit-political-game.html

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[Hydrogen]

Today's vote is against raising the debt ceiling.

I seem to remember the last shutdown occurring when Obama was President. Not everything closes down. Essential segments of the government continue running.

Government Shutdown Looms as Senate Republicans Block Debt Ceiling, Funding Bill

After clearing the House last week in a party-line vote, Senate Democrats failed to sway 10 Republicans to reach the 60-vote threshold needed to overcome a filibuster and move forward with the continuing resolution that would, among other things, keep the government funded at current levels through Dec. 3. No Republicans supported the procedural vote.

Monday's unsuccessful vote puts pressure on Democrats to rethink how they'll renew government funding over the next few days. If a short-term plan doesn't clear Congress and get signed into law by midnight Thursday, the government faces a shutdown the next morning.

https://www.msn.com/en-us/news/politics/government-shutdown-looms-as-senate-republicans-block-debt-ceiling-funding-bill/ar-AAOT0hw

On the bright side, if a shutdown occurs, they can't vote on or pass the infrastructure bill containing crypto regulation (which many disapprove of).

I'm surprised to see this much disagreement between parties. The current era could be the most centralized the US government has been in its history.

They have until thursday to raise the debt ceiling.

[Poker Player]

Incredible as it may seem, the US could actually default in its obligations.

Yeah, but would anyone bet on it?

The normal scenario is that there will be a lot of debate and a lot of drama, but when two are forced to understand each other because if they don't the outcome is worse for both, they end up doing it.

[Sithara007]

The republicans did the right thing by blocking it. Biden just want to borrow trillions of USD and then spend a large part of it on the most unproductive sectors of the US economy. It is just like putting all that money in to a black hole. Unless the Democrats come up with a more unbiased plan, the GOP should block whatever bill they bring. The US federal debt has already crossed $28.8 trillion, and now stands higher than the GDP. GOP needs to oppose it, because when they get back to power in either 2024 or 2028, they will face issues from this ballooning debt.

[so98nn]

It’s funny how governments work around the clock and still fails to accommodate the typical economic cycle. I’m wondering how country like US can go in debt if most of the income is from Home production and worth to note that they are the biggest supplier of biological products to high end machine and what not. They should be one giving out the loans and not borrowing to overcome their own situation.

Is it has got to do anything with money being spend on the crypto and taxes are not being filed? Could crypto be that effective to make the economic situation worst like this?

[Kittygalore]

They won't collapse that easily though, I am pretty sure that the government and it's oligarch friends is going to make sure that they're going to survive and the country they're exploiting is going to survive too. There's also that conspiracy that those debts that they had are already paid, and they just don't say it's already paid, that's why they're surviving doing this kind of thing.

[Kong Hey Pakboy]

If the country fails to meet its borrowing limits within the current period to overcome the financial situation and economic problems, it will be a dangerous event that will have a dangerous impact on the developing world developing economies will also be hit if the US government fails to take action interest rates will rise confidence will decline and economic growth will slow. It will further worsen the economic situation in the united states.

It's a different story for US though, I think they have enough influence to not follow the stuff that most countries abide by when it comes to borrowing stuff. They already have the solution in their country, and that would be taxing the uber rich people and companies in their country.

[aysg76]

Again, the US Government has spent more than expected and now has to borrow more to pay the bills. If this was you, this is the closest to an overdraft on your account that a country gets. The problem is that the limit has to be raised by law, and it is not simple to do so in an age of exacerbated partisanship and little wide-angle vision about the needs of the country.

Incredible as it may seem, the US could actually default in its obligations.

https://www.nytimes.com/2021/09/26/business/economy/america-debt-limit-political-game.html

The main problem is that government has no limits whether it's debt raising or money printing.Why? Because the lawmakers are the one running government and it's not the case with only US but if you monitor the charts you will find similar situations for most of the countries.The reason for it the same old one which is cost of living and inflation has been on significant rise from the past.The Dollar and Euro have lost major value after the Breton woods Agreement.The countries Debt to Gdp ratio has also been rising from long time as depicted in the charts:



You need to take care of your future safety and to have secured funds at that time so choose wisely as the government will not have an efficient solution for these problems.

[davis196]

The republicans did the right thing by blocking it. Biden just want to borrow trillions of USD and then spend a large part of it on the most unproductive sectors of the US economy. It is just like putting all that money in to a black hole. Unless the Democrats come up with a more unbiased plan, the GOP should block whatever bill they bring. The US federal debt has already crossed $28.8 trillion, and now stands higher than the GDP. GOP needs to oppose it, because when they get back to power in either 2024 or 2028, they will face issues from this ballooning debt.

I don't believe that the Republicans will be stupid enough to cause the default of the USA.Such default might cause a gigantic global financial crisis,maybe a new Great Depression,in times of a global Pandemic.
This seems like the perfect disaster,and the Republicans might take all the blame for causing such disaster,so I don't think that they will keep blocking the debt ceiling increase.
Like other members said,there will be some drama in the US congress,but both parties will eventually agree to an increase of the national debt,because there aren't any alternative solutions to the US debt problem.  

[leea-1334]

It’s funny how governments work around the clock and still fails to accommodate the typical economic cycle. I’m wondering how country like US can go in debt if most of the income is from Home production and worth to note that they are the biggest supplier of biological products to high end machine and what not. They should be one giving out the loans and not borrowing to overcome their own situation.

Is it has got to do anything with money being spend on the crypto and taxes are not being filed? Could crypto be that effective to make the economic situation worst like this?

Actually,,, I always thought that governments are the ones working the least In my country now, you can get the least working hours simply by working for the government!

But jokes aside,,, if a government is well run and the economy is healthy, they actually do not have to work round the clock.

And the answer to your debt is war. You know the US government borrows from the Feds billions to go to war right? 6 Trillion debt in 20 years

China owns 1 Trillion of US debt by the way

[ven7net]

Again, the US Government has spent more than expected and now has to borrow more to pay the bills. If this was you, this is the closest to an overdraft on your account that a country gets. The problem is that the limit has to be raised by law, and it is not simple to do so in an age of exacerbated partisanship and little wide-angle vision about the needs of the country.

Incredible as it may seem, the US could actually default in its obligations.

https://www.nytimes.com/2021/09/26/business/economy/america-debt-limit-political-game.html

There is nothing surprising in this, the United States has not fulfilled its obligations for a long time and what should it do the same this time. And all due to the fact that the US policy turned out to be erroneous and at the moment we see how all institutions, both in power and in finance, are crumbling. Which ultimately led to the fact that no matter how much new money was printed in the United States, it will only get worse. The same applies to the obligations that the United States has assumed, they can no longer comply and fulfill them, since there are no more resources for this either. As a result, the United States is currently on the path to collapse. Perhaps they will be able to hold out a little longer, but in the end, sooner or later, the system will come to a complete dead end and the inevitable will happen - collapse.

[AicecreaME]

Again, the US Government has spent more than expected and now has to borrow more to pay the bills. If this was you, this is the closest to an overdraft on your account that a country gets. The problem is that the limit has to be raised by law, and it is not simple to do so in an age of exacerbated partisanship and little wide-angle vision about the needs of the country.

Incredible as it may seem, the US could actually default in its obligations.

https://www.nytimes.com/2021/09/26/business/economy/america-debt-limit-political-game.html

This is a problem that they need to address as soon as possible before it gets out of hand. I don't think raising the limit should be one of their top priority to pay existing bills. The US government has to learn good financial decision-making to avoid this kind of scenario. Surely they have their great accountants in the department of finance, it is just that the officials decided to take a wrong turn making a bad decision that cost this to happen. Hopefully, they'll be able to handle this. They are the US after all. They won't stumble that fast.

[tyz]

China owns 1 Trillion of US debt by the way

Not only China, but Japan and many other countries own a lot of U.S. government bonds, too. The USA is immensely dependent on foreign countries. If at some point these countries decide to stop buying U.S. government bonds, the U.S. will no longer be able to issue any debt at all in this form without its currency collapsing.

[o_e_l_e_o]

GOP needs to oppose it, because when they get back to power in either 2024 or 2028, they will face issues from this ballooning debt.

The ever increasing debt and printing ever more money to deal with it is obviously a problem, but painting the GOP as the party of fiscal responsibility is laughable. They borrow and print more with abandon when they are in power, and then blame the Dems for it when they are not in power. Republican presidents have overseen the largest increases in the deficit and in the debt over the past 40 years, whereas both Clinton and Obama greatly reduced the deficits they inherited, with Clinton being the only president in the last 40 years to turn a surplus.

The debt ceiling was increased three times under Trump. If Trump was in office just now, Republicans would have no issues increasing it again. They are doing this for their own political gain, not for any concern about our ballooning debt. Everyone knows it will be raised eventually, since the US defaulting on its debt would ruin the country, but Republicans have to play their stupid little games first.

[oHnK]

The main problem is that government has no limits whether it's debt raising or money printing.Why? Because the lawmakers are the one running government and it's not the case with only US but if you monitor the charts you will find similar situations for most of the countries.The reason for it the same old one which is cost of living and inflation has been on significant rise from the past.The Dollar and Euro have lost major value after the Breton woods Agreement.The countries Debt to Gdp ratio has also been rising from long time as depicted in the charts:

There are no restrictions on printing money and debt due to the decision of the former US president himself who decided not to be bound by Breton Woods, since then the freedom of governments in all countries to manage their version of the financial system is not controlled.  The US as a country whose currency is the standard in all countries, has inflated its economy through debt.  Likewise other countries that follow the policies taken by the US.  Funnier is the current condition, it seems that it is normal for the government to issue bonds and pay their maturity by issuing new bonds again.  And so on, so that this debt will continue to increase and will never decrease as long as the system used is still floating value like this and does not have underlying assets.

[stompix]

The Dollar and Euro have lost major value after the Breton woods Agreement.

How could the Euro who was launched in 1999 lose value after an agreement that happened half a century earlier?  

As for the debt ceiling,

The debt ceiling has been changed 104 times since 1944 - 94 increases and 10 decreases

every single time the same, if just a political game, the opposition is against it to put pressure on the party who runs the country, nothing else, nobody really wants a complete shutdown, they use this as a bargain to reach agreements.

I'm far more concerned about that 3.5 trillion bill, which will come with a lot of headaches and will just amplify what's happening, is not enough that the snowball is rolling downhill anyhow on it own, you feel the need to give it a serious push.

Not only China, but Japan and many other countries own a lot of U.S. government bonds, too. The USA is immensely dependent on foreign countries. If at some point these countries decide to stop buying U.S. government bonds, the U.S. will no longer be able to issue any debt at all in this form without its currency collapsing.

Foreigners hold only 30% of the debt, the US can still run its debt even without them with just the the Federal Reserve.
Besides, none of that country would want to see the $ collapsing, 2007 was a clear example of what happens if the US is in trouble, if the $ goes down so does China as it's so dependent on the US for its exports, where are all the goods going to go, what are your going to dow with all the workers and all the companies? No country other than NK really wants the $ to collapse for real, politics and briefings and propaganda are one thing, the situation coming real would hurt everybody eveywhere.

[bryant.coleman]

The ever increasing debt and printing ever more money to deal with it is obviously a problem, but painting the GOP as the party of fiscal responsibility is laughable. They borrow and print more with abandon when they are in power, and then blame the Dems for it when they are not in power. Republican presidents have overseen the largest increases in the deficit and in the debt over the past 40 years, whereas both Clinton and Obama greatly reduced the deficits they inherited, with Clinton being the only president in the last 40 years to turn a surplus.

The debt ceiling was increased three times under Trump. If Trump was in office just now, Republicans would have no issues increasing it again. They are doing this for their own political gain, not for any concern about our ballooning debt. Everyone knows it will be raised eventually, since the US defaulting on its debt would ruin the country, but Republicans have to play their stupid little games first.

The GOP used to be a party of "fiscal responsibility" until two decades ago. Back then, they used to depend heavily on suburban white voters and a seizable chunk of their votes used to come from white collar workers. However, suburban voters have moved towards the left recently, and it is more noticeable among the female suburban voters. The Iraq war, which was initiated by George W Bush just destroyed whatever reputation they had in fiscal responsibility.

And by the time Trump was voted to power, the core support group was white blue collar workers. Suburban areas, where the GOP used to receive 60% or more of the votes now vote >60% for the Dems. Under these circumstances, it makes perfect sense for the GOP to cater to their core support group. And doing that means handing out more welfare benefits, thereby widening the fiscal deficit.

[Sterbens]

Finally this news has reached our ears. From the point of view of the increasingly clear US economic downturn, Biden seems unable to overcome the upheaval by increasing the competitiveness of the global economy. Adding debt is the last resort? embarrassing isn't it?

Of course, it cannot be separated from the various effects that will later have a more dominant impact on the government shutdown and also of course as the point of origin to witness in US history leading to the financial crisis. But don't forget that even during Trump's time, the same thing happened, namely for 35 days to be exact in December 2018.

As Senator Schumer put it "It's playing with fire. Playing with the debt ceiling is playing with fire and putting it on the backs of the American people" Lol what's up with the US becoming increasingly estranged from the power of the powerful world economy?

This is a heavy blow after Covid 19 America has had some kind of difficulty in recovering the economy.

[o_e_l_e_o]

The GOP used to be a party of "fiscal responsibility" until two decades ago.

I don't think that's true either. In terms of percentage, outside of the two World Wars, Reagen added more to the debt by a long shot than any other president, with Bush 43 coming 2nd.

Under these circumstances, it makes perfect sense for the GOP to cater to their core support group. And doing that means handing out more welfare benefits, thereby widening the fiscal deficit.

GOP handing out welfare benefits? What? The GOP consistently push to cut Medicaid, Medicare, and a variety of social security programs such as SNAP and TANF. Trump's big tax cuts, which contributed to a big chunk of his increased deficit prior to COVID, largely benefited the wealthiest in society - https://www.taxpolicycenter.org/publications/distributional-analysis-conference-agreement-tax-cuts-and-jobs-act/full. The top quintile made a saving of over $7,000 per year, with the lowest quintile making a saving of only $60 per year. How you can say that is catering to blue collar workers I don't know.

[Fortify]

Again, the US Government has spent more than expected and now has to borrow more to pay the bills. If this was you, this is the closest to an overdraft on your account that a country gets. The problem is that the limit has to be raised by law, and it is not simple to do so in an age of exacerbated partisanship and little wide-angle vision about the needs of the country.

Incredible as it may seem, the US could actually default in its obligations.

https://www.nytimes.com/2021/09/26/business/economy/america-debt-limit-political-game.html

It is crazy that this happens so often, it seems to be every year or two now. What sort of country allows their system of government to bring the whole country to a halt as the (only) two political parties, full of rich old people, engage in some pathetic brinkmanship in order to try and extract the most leverage out of the other side while receiving the least bad publicity. Fixing this constantly reoccurring situation should be the absolute priority of all US politicians because it causes so much unnecessary anguish repeatedly. America already has enough problems without millions of people wondering if they will wake up on a certain date and possibly be going to work unpaid when they have regular bills to clear.

[bryant.coleman]

GOP handing out welfare benefits? What? The GOP consistently push to cut Medicaid, Medicare, and a variety of social security programs such as SNAP and TANF. Trump's big tax cuts, which contributed to a big chunk of his increased deficit prior to COVID, largely benefited the wealthiest in society - https://www.taxpolicycenter.org/publications/distributional-analysis-conference-agreement-tax-cuts-and-jobs-act/full. The top quintile made a saving of over $7,000 per year, with the lowest quintile making a saving of only $60 per year. How you can say that is catering to blue collar workers I don't know.

Trump claimed that his policies discourage American companies to shift jobs abroad, thereby securing native jobs (especially in the blue-collar sector). I will give you one example. In 2017, Trump forced Ford Automobiles to cancel their plans to open a car manufacturing unit in Mexico, and instead invest that amount in Michigan. And regarding Obamacare, Trump has always argued that it was putting a huge strain on small businesses. In the rust-belt states, even in 2020 Trump performed much better than what opinion polls predicted (especially in states like Wisconsin and Pennsylvania).

[Kyraishi]

I don't think that there will be an issue with raising the debt ceiling.

They have demonstrated over and over again that they are willing to do this.

Perhaps it will take a while, but at the end of the day they will want to continue borrowing at astronomical figures at incredibly low rates, and will not let this roadblock push them back.

[Silberman]

If the country fails to meet its borrowing limits within the current period to overcome the financial situation and economic problems, it will be a dangerous event that will have a dangerous impact on the developing world developing economies will also be hit if the US government fails to take action interest rates will rise confidence will decline and economic growth will slow. It will further worsen the economic situation in the united states.

It's a different story for US though, I think they have enough influence to not follow the stuff that most countries abide by when it comes to borrowing stuff. They already have the solution in their country, and that would be taxing the uber rich people and companies in their country.

Correct, the US government has something that no other government has and that is that its fiat currency is the currency used as the reserve currency of the world, this means that they can get away with things that no other government can, they can reach levels of debt that no other country can because if the countries that are holding their currency as a reserve currency try to say anything about it then their reserves can go to dust if the US decides to keep printing more money, however I really think we are reaching a critical point in which it is possible that countries begin to decide to use their reserves, and this could create hyperinflation in the US as we have never seen before as that money finds its way back to the US.

[Sithara007]

Correct, the US government has something that no other government has and that is that its fiat currency is the currency used as the reserve currency of the world, this means that they can get away with things that no other government can, they can reach levels of debt that no other country can because if the countries that are holding their currency as a reserve currency try to say anything about it then their reserves can go to dust if the US decides to keep printing more money, however I really think we are reaching a critical point in which it is possible that countries begin to decide to use their reserves, and this could create hyperinflation in the US as we have never seen before as that money finds its way back to the US.

On top of that, the US Dollar is considered as the most stable fiat currency, and many of the countries that don't have their own currency (El Salvador, Ecuador.etc) use USD as default national currency. And this makes the situation even more interesting. The Federal Reserve can print unlimited amounts of banknotes, thereby increasing the inflation rate and then distribute the surplus funds among US citizens. However, those using USD in other countries will suffer from it, because the purchasing power of their savings will go down.

[o_e_l_e_o]

It is crazy that this happens so often, it seems to be every year or two now.

It is political theater. There is nothing in our Constitution which requires a debt ceiling. Both sides rack up debt when they are in power, but then Republicans threaten to default on that debt (and potentially force millions of people in to poverty) when they are not in power to try to score points against the Democrats. And yet some people still think Republicans are "fiscally responsible".

-snip-

Obviously Trump's very poor overall record on jobs isn't really a fair comparison due to COVID, but even before the pandemic, Trump's record on job was distinctly average when compared to the last 100 years.

On top of that, the US Dollar is considered as the most stable fiat currency

Widely used, maybe. Stable? Not even close. Take a look at the ballooning deficit, debt, debt ceiling, Federal Reserve balance sheet, etc. The most stable fiat currency is probably the Swiss Franc (CHF).

[stompix]

Widely used, maybe. Stable? Not even close. Take a look at the ballooning deficit, debt, debt ceiling, Federal Reserve balance sheet, etc. The most stable fiat currency is probably the Swiss Franc (CHF).

It is not such a big difference, if you compare to some other small currencies from Europe you will see it's nothing special, against the Czech crown it was 1:20 in 2005, it's 1:23 now, even against the euro it was 0.92 5 years ago it's still 0.92 today.
Besides, on long term even against the USD there is nothing major, just a 4% increase, of course with his and downs but for the last decade, the most traded currencies have somewhat kept the same ratio.

If we compare it with currencies from the so-called third world it's pretty damn stable, gaining 2-300% even against countries who are not at war or under sanction or went through a revolution, I think all south American currencies have lost at least 3x compared to the USD in the last ten years.

Deficit, debt, spending, inflation, people would still put more faith in the economy of the US rather than in the Russian economy who has barely 10% debt to GDP ratio but who has a habit of going bankrupt. Romania has 30% ratio, one of the lowest in the EU, and interestingly they have a homeownership of nearly 90%, what would you buy dollars, euros, or Romanian lions?

Obviously Trump's very poor overall record on jobs isn't really a fair comparison due to COVID, but even before the pandemic, Trump's record on job was distinctly average when compared to the last 100 years.

To be honest, considering the amount of Americans that were screaming they will immigrate to Canada if Trump becomes president and how many anticipated another catastrophe and collapse, I must say he did pretty well, he actually managed to raise the employment rates (I never look at unemployment rates as I consider that misleading) a thing Biden will have no way to accomplish, not with millions of immigrants coming into the country, no matter how many trillions he will spend with that stupid bill he will not be able to create 5 million jobs on top of the lost ones and adding the population ratio.

[o_e_l_e_o]

I'm not familiar with this debt ceiling rise, what does it do? It's the first time that I've heard of it. I just assume that probably it's the increase in what they can borrow for loans or that they're debt just increased.

If the US government hit the debt ceiling, then they are not allowed to borrow any more money to fund government expenditure. There are a variety of temporary measures they can enact to free up some more money to continue to pay their expenditures for a short period of time, in the range of a month or two, but once these run out, the government essentially defaults on its debt. It's unclear exactly what would happen here, but it would likely involve huge cuts across the board in everything from healthcare to education, salaries not being paid, millions of jobs losses, and a huge financial crisis. There would also be huge implications around the world if the government of the primary reserve currency in the world effectively said "Uhhh yeah, we can't honor its value anymore."

It is not such a big difference, if you compare to some other small currencies from Europe you will see it's nothing special, against the Czech crown it was 1:20 in 2005, it's 1:23 now, even against the euro it was 0.92 5 years ago it's still 0.92 today.
Besides, on long term even against the USD there is nothing major, just a 4% increase, of course with his and downs but for the last decade, the most traded currencies have somewhat kept the same ratio.

Yes, the difference is not huge, as it won't be with any fiat currency, but it is significant enough over long periods. 20 years ago a US dollar bought around 1.6 Swiss Francs, today it only buys around 0.9. 20 years ago a Euro bought 1.49, today it buys 1.08. You'll see similar (or even worse) ratios with CNY, JPY, GBP, RUB, etc.

Obviously I don't disagree that the USD is far more widespread and widely used, but saying it is the most stable fiat currency is just plain incorrect.

[leea-1334]

China owns 1 Trillion of US debt by the way

Not only China, but Japan and many other countries own a lot of U.S. government bonds, too. The USA is immensely dependent on foreign countries. If at some point these countries decide to stop buying U.S. government bonds, the U.S. will no longer be able to issue any debt at all in this form without its currency collapsing.

Yes, every big country owns a lot of debt from each other, but China is the biggest holder of US treasury bonds and even after already letting go of a lot they still own almost 40% more than the next.

The only reason US debt going higher does not seem like a legitimate concern for economists is because every other country (including China) is also putting up debt every year,,, just not as bad as US, who loves going to war for made up reasons. I will not be surprised one day they go to war with Bitcoin  

[oHnK]

every single time the same, if just a political game, the opposition is against it to put pressure on the party who runs the country, nothing else, nobody really wants a complete shutdown, they use this as a bargain to reach agreements.

I'm far more concerned about that 3.5 trillion bill, which will come with a lot of headaches and will just amplify what's happening, is not enough that the snowball is rolling downhill anyhow on it own, you feel the need to give it a serious push.

I see that the political conditions between these parties are only just playing their roles, no one is really carrying out their responsibilities and authorities.  Due to the fact, every decision between parties is only limited to bargaining for interests.  Because basically, it's not the people who focus on them but their own power.  Debt and policies only become their instruments to strengthen their power in personal and group interests, not in the name of society.

[SquallLeonhart]

Again, the US Government has spent more than expected and now has to borrow more to pay the bills. If this was you, this is the closest to an overdraft on your account that a country gets. The problem is that the limit has to be raised by law, and it is not simple to do so in an age of exacerbated partisanship and little wide-angle vision about the needs of the country.

Incredible as it may seem, the US could actually default in its obligations.

USA could increase the debt ceiling as much as they want and as long as people keep giving USD a lot of value and they do not care about the debt they have, then it will not be a problem for them. If another weak nation did what USA is doing right now then the value of that nation's currency would be destroyed, but when USA does it then it is nothing at all, which is the biggest advantage they have.

If it was a problem and they couldn't do it then they would have avoided it as well, but since they are doing fine then it becomes not a problem for them at all. I personally believe that we should not be shocked if they increase it again in few years and then again and again because nobody does anything to stop them.

[The Sceptical Chymist]

On the bright side, if a shutdown occurs, they can't vote on or pass the infrastructure bill containing crypto regulation (which many disapprove of).

I thought they already voted and passed it.  Did they not?  I'm certainly against that bill, and I contacted my senators about a month ago and voiced my opinion on it.  My state is blue, so I'm not keeping my hopes up if indeed they haven't voted on it yet.

There are a variety of temporary measures they can enact to free up some more money to continue to pay their expenditures for a short period of time, in the range of a month or two, but once these run out, the government essentially defaults on its debt. It's unclear exactly what would happen here, but it would likely involve huge cuts across the board in everything from healthcare to education, salaries not being paid, millions of jobs losses, and a huge financial crisis.

And it's amazing that this would follow all the money printing and stimulus and unemployment benefits--basically the government creating money and giving it away like it was cheap candy.  I have no idea what the morons in the government are going to do, but frankly I'd rather just take the consequences sooner rather than later.  All they've been doing for years is kicking the can down the road, and they can't keep doing that indefinitely.

[Darker45]

And now here is the Treasury Secretary, Janet Yellen, warning that the government is now about to run out of cash by October 18. That's just a little more than two weeks from now. Even with that bleak possibility, however, the republicans and the democrats have yet to meet halfway about the issue of raising the debt ceiling.^[1]

On the bright side, if a shutdown occurs, they can't vote on or pass the infrastructure bill containing crypto regulation (which many disapprove of).

I thought they already voted and passed it.  Did they not?  I'm certainly against that bill, and I contacted my senators about a month ago and voiced my opinion on it.  My state is blue, so I'm not keeping my hopes up if indeed they haven't voted on it yet.

It seems they haven't yet. The standoff continues and reconciliation is nowhere to be seen in the near future. And now the democrats are resorting to another way of avoiding shutdown. They are now trying to pass the reconciliation bill, which wouldn't require a vote from a single republican for as long as every democrat votes yes to it. However, it seems they are still facing a hard time selling the same to every single democrat in the senate. It appears Senators Kyrsten Sinema and Joe Manchin are opposed to it.^[2][3]

[1] https://edition.cnn.com/2021/09/28/economy/debt-ceiling-deadline-yellen
[2] https://www.cbsnews.com/news/whats-in-reconciliation-bill/
[3] https://www.cbsnews.com/news/government-shutdown-2021-senate-bill-vote/

[Gyfts]

It's probably in the interest of the US just to open up the new credit card and raise the debt ceiling, because the debt burden is never going to be lowered. It's just best to pretend that Americans are stupid enough to believe they can continue spending and somehow never default on their loans. What's even more scary is the 3.5 trillion in additional spending they want to do, absolute madness.

[Sithara007]

On top of that, the US Dollar is considered as the most stable fiat currency

Widely used, maybe. Stable? Not even close. Take a look at the ballooning deficit, debt, debt ceiling, Federal Reserve balance sheet, etc. The most stable fiat currency is probably the Swiss Franc (CHF).

OK.. I would agree. US Dollar is at least the most recognized fiat currency and the one with maximum acceptability. CHF is one of the strongest fiat currencies available (I would rate the Norwegian Krone as another strong fiat currency). But it is hardly used in international trade and rarely features among the forex reserves of various countries. The Swiss government also has made no attempt to widen the usage of CHF. It is surprising, because it is a much stronger currency when compared to USD, EUR, GBP or JPY.

[robattfield]

I quite doubt on this matter whether the US government is in danger of shutting down
And the reality is that there will be concrete solutions and the problem is still becoming very politically tense, going beyond the economic sphere before. It is not uncommon for the beginnings of the US economy to fall into a recession if the debt ceiling is breached.

[o_e_l_e_o]

I thought they already voted and passed it.  Did they not?

It voted and passed the Senate. It's currently being debated in the House. It was supposed to have been voted on earlier this week, but it seems Pelosi keeps pushing it back because she's not sure it will pass.

All they've been doing for years is kicking the can down the road, and they can't keep doing that indefinitely.

And they show no signs of stopping. $3.5 trillion here, another $1 trillion there. The debt isn't just increasing, but the rate of increase is increasing as well. It took the entire history of the US until 1996 to rack up $5 trillion in debt. It then took 13 years until 2009 to add another $5 trillion on top. The last $5 trillion we've added didn't even take 2 years. In the 80s, as a percentage of GDP our debt was 30%. By 2000, 55%. By 2010, 90%. Today, above 130%. How far can we go until people starting losing faith in the USD? For comparison, in 2010 during the Greek debt crisis, their debt-to-GDP ratio was 150%, peaking at 180% a few years later. We are only a few years away from those numbers at this rate.

[leea-1334]

And they show no signs of stopping. $3.5 trillion here, another $1 trillion there. The debt isn't just increasing, but the rate of increase is increasing as well. It took the entire history of the US until 1996 to rack up $5 trillion in debt. It then took 13 years until 2009 to add another $5 trillion on top. The last $5 trillion we've added didn't even take 2 years. In the 80s, as a percentage of GDP our debt was 30%. By 2000, 55%. By 2010, 90%. Today, above 130%. How far can we go until people starting losing faith in the USD? For comparison, in 2010 during the Greek debt crisis, their debt-to-GDP ratio was 150%, peaking at 180% a few years later. We are only a few years away from those numbers at this rate.

To be fair, most countries are also increasing their rate of debt increase. Us in Asia here are also making shocking debt increases, in the last 10 to 20 years almost all of us have doubled our debt,,, and yet I see things are not getting better with inflation and economic crisis getting worse not better. I guess we are all following US financial tactics and it is getting us nowhere.

Luckily we do not have wars to pay for too otherwise I probably will end up homeless.

What happens now if US becomes Greece? Can they save themselves?

[stompix]

What happens now if US becomes Greece? Can they save themselves?

If the US would end like Greece you wouldn't care about them anymore because everyone in this world would be so deep in sh*** a submarine would be crushed. And don't think gold or bitcoin or having a garden would save you, such an economic disaster would drag down instantly both the Eu and China, then the contagion will spread to every last place in this world and even people who come into cities once a year to buy salt and sell fur would be affected.

On the bright side, if a shutdown occurs, they can't vote on or pass the infrastructure bill containing crypto regulation (which many disapprove of).

I thought they already voted and passed it.  Did they not?

It voted and passed the Senate. It's currently being debated in the House. It was supposed to have been voted on earlier this week, but it seems Pelosi keeps pushing it back because she's not sure it will pass.

I'm getting confused with all these damn bills.
Isn't the one with the crypto-related stuff the infrastructure bill, that should be voted prior to this one on social spending, the one with 3.5t? So if this doesn't pass the other has no chance of going through, because if the leftist wing doesn't vote on this one of the courses the moderates will drop that one too?

Seriously sometimes politics in the US are more messed up than in European countries where having 6-10 parties in the parliament is normal.

[Gyfts]

I thought they already voted and passed it.  Did they not?

It voted and passed the Senate. It's currently being debated in the House. It was supposed to have been voted on earlier this week, but it seems Pelosi keeps pushing it back because she's not sure it will pass.

All they've been doing for years is kicking the can down the road, and they can't keep doing that indefinitely.

And they show no signs of stopping. $3.5 trillion here, another $1 trillion there. The debt isn't just increasing, but the rate of increase is increasing as well. It took the entire history of the US until 1996 to rack up $5 trillion in debt. It then took 13 years until 2009 to add another $5 trillion on top. The last $5 trillion we've added didn't even take 2 years. In the 80s, as a percentage of GDP our debt was 30%. By 2000, 55%. By 2010, 90%. Today, above 130%. How far can we go until people starting losing faith in the USD? For comparison, in 2010 during the Greek debt crisis, their debt-to-GDP ratio was 150%, peaking at 180% a few years later. We are only a few years away from those numbers at this rate.

The US federal reserve liabilities chart just shows you where all this economic policy ends up.

https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm

Taking on more assets than they can chew, unfortunately. All in the so called quantitative easing strategy which they hoped would not produce inflation, except it did. So now you're left with an increased money supply and a balance sheet that doesn't quite add up.

The inflation crisis isn't necessarily a surprise, a lot of the institutional investors are calling this properly. But as far as total USD collapse, perhaps you're right that the debt will be the tipping point at which the debt to GDP ratio will reach a critical point. Although I must say, anyone that is paying even a little attention has probably already jumped ship.

[zanezane]

It's probably in the interest of the US just to open up the new credit card and raise the debt ceiling, because the debt burden is never going to be lowered. It's just best to pretend that Americans are stupid enough to believe they can continue spending and somehow never default on their loans. What's even more scary is the 3.5 trillion in additional spending they want to do, absolute madness.

Well, credit card is a billion dollar industry so US government will definitely not let go of that one, they will continue this even though they know that the economy won't be able to handle it, plus it's hard for them to fall because they're a superpower nation so they know their way around this kind of stuff.

[Gyfts]

It's probably in the interest of the US just to open up the new credit card and raise the debt ceiling, because the debt burden is never going to be lowered. It's just best to pretend that Americans are stupid enough to believe they can continue spending and somehow never default on their loans. What's even more scary is the 3.5 trillion in additional spending they want to do, absolute madness.

Well, credit card is a billion dollar industry so US government will definitely not let go of that one, they will continue this even though they know that the economy won't be able to handle it, plus it's hard for them to fall because they're a superpower nation so they know their way around this kind of stuff.

I was being figurative. Raising the debt ceiling is like opening a new credit card account so you can continue taking on debt after your current issuer cut off your borrowing limits. So really, the debt ceiling doesn't mean much because you can keep opening up new accounts and keep borrowing. It also means you can continue to convince the population, and other countries, that you're still good for repayment on the debt when they're just pushing the collapse off.

[leea-1334]

What happens now if US becomes Greece? Can they save themselves?

If the US would end like Greece you wouldn't care about them anymore because everyone in this world would be so deep in sh*** a submarine would be crushed. And don't think gold or bitcoin or having a garden would save you, such an economic disaster would drag down instantly both the Eu and China, then the contagion will spread to every last place in this world and even people who come into cities once a year to buy salt and sell fur would be affected.

I totally agree. Out there we have people thinking they save Bitcoin and when the world ends like they predict, they will be saved. But if USA fails, the world at large will suffer consequences. Maybe having Bitcoin helps a lot but it will not be the saviour.

After all if 1 Bitcoin becomes 1 million dollars but dollars is not the same value as before, then what is the point?

Such stories from people lining up to buy limited food only happened 50 years ago. We should not forget the lessons of our grandparents.

[Silberman]

Correct, the US government has something that no other government has and that is that its fiat currency is the currency used as the reserve currency of the world, this means that they can get away with things that no other government can, they can reach levels of debt that no other country can because if the countries that are holding their currency as a reserve currency try to say anything about it then their reserves can go to dust if the US decides to keep printing more money, however I really think we are reaching a critical point in which it is possible that countries begin to decide to use their reserves, and this could create hyperinflation in the US as we have never seen before as that money finds its way back to the US.

On top of that, the US Dollar is considered as the most stable fiat currency, and many of the countries that don't have their own currency (El Salvador, Ecuador.etc) use USD as default national currency. And this makes the situation even more interesting. The Federal Reserve can print unlimited amounts of banknotes, thereby increasing the inflation rate and then distribute the surplus funds among US citizens. However, those using USD in other countries will suffer from it, because the purchasing power of their savings will go down.

Good point, this is not something that I have thought about but you are absolutely correct, I think in part this is what is motivating the actions that we are seeing at El Salvador, the US dollar is legal tender there as well, but the US by expanding its money supply is also expanding its inflation and exporting it to the countries that are making heavy use of their currency, whether this is done as reserves or as a legal tender, so it seems to me the president of El Salvador is preparing his country for this scenario before it becomes a reality.

[jaysabi]

Again, the US Government has spent more than expected and now has to borrow more to pay the bills. If this was you, this is the closest to an overdraft on your account that a country gets. The problem is that the limit has to be raised by law, and it is not simple to do so in an age of exacerbated partisanship and little wide-angle vision about the needs of the country.

Incredible as it may seem, the US could actually default in its obligations.

https://www.nytimes.com/2021/09/26/business/economy/america-debt-limit-political-game.html

I don't think anybody credibly believes the US would default; it would usher in an instant global financial meltdown and global recession, if not depression.  Default is always a theoretical possibility, but extremely unlikely given the consequences which are well known.  If investors believed it was more than a remote possibility, you'd see deep waves of selling in the markets, not these piddly 2-3% drops. 

[Sithara007]

Contrary to what being posted here, it is the "liberal" wing of the Democrat party that is responsible for the current impasse. The GOP is ready to vote for the bill, but the ultra-left wing led by Pramila Jayapal want the $3.5 trillion bill on welfare to be passed first. They have threatened that they will not allow this bill to pass, unless the other one is tabled first. Despite all that, the media is painting a picture of GOP blocking the bills and bringing the United States closer to a default. Hardly anyone want to talk about Pramila Jayapal, Ilhan Omar and the ultra-leftists who are responsible for the current crisis.

[o_e_l_e_o]

What happens now if US becomes Greece? Can they save themselves?

The main difference is that Greece have no direct control of their own money since they use the Euro. They can't just print more at will like the US can with the dollar, so their only option was sweeping cuts to get their deficit back under control. The US can go the sweeping cuts route, or more likely, just continually raise the debt ceiling and print more USD, but obviously at some point, that become untenable. When is that point? Who knows.

I'm getting confused with all these damn bills.
Isn't the one with the crypto-related stuff the infrastructure bill, that should be voted prior to this one on social spending, the one with 3.5t? So if this doesn't pass the other has no chance of going through, because if the leftist wing doesn't vote on this one of the courses the moderates will drop that one too?

The crypto provisions are part of the $1.2 trillion infrastructure bill. That has passed the Senate and is currently waiting for a vote in the House, which Pelosi keeps delaying because she is not sure it will pass. There is a second $3.5 trillion budget reconciliation bill, which left wing democrats are demanding is passed before they support the $1.2 trillion bill.

Seriously sometimes politics in the US are more messed up than in European countries where having 6-10 parties in the parliament is normal.

It's not so much the split in the parties, but rather the way we make bills. Bills like these are thousands of pages long. Hardly anybody (and probably none of the people voting on it) have read the whole thing. Different people try to sneak in different things to get them passed without due consideration (such as these crypto provisions), and then amending these provisions becomes next to impossible because other Senators or Representatives demand things in return to not block amendments, such as Shelby blocking the crypto amendments unless everyone agreed to another $50 billion in military spending - two completely separate issues which should be debated and voted on separately. And then the bills can bounce back and forth between the House and the Senate for months.

It's utterly insane, but there is no desire to fix it because it allows politicians (both parties) to pass a lot of crap legislation for their own benefit.

Despite all that, the media is painting a picture of GOP blocking the bills and bringing the United States closer to a default. Hardly anyone want to talk about Pramila Jayapal, Ilhan Omar and the ultra-leftists who are responsible for the current crisis.

The leftist Dems are responsible for blocking the spending bills. The GOP are responsible for refusing to raise the debt ceiling. The two things are separate issues.

[leea-1334]

What happens now if US becomes Greece? Can they save themselves?

The main difference is that Greece have no direct control of their own money since they use the Euro. They can't just print more at will like the US can with the dollar, so their only option was sweeping cuts to get their deficit back under control. The US can go the sweeping cuts route, or more likely, just continually raise the debt ceiling and print more USD, but obviously at some point, that become untenable. When is that point? Who knows.

I totally forgot about the euro actually,,, as I have never been there I still actually cannot practically imagine many countries using one single currency when they each have different rates of goods (like in Asia many similar things were proposed but because things cost very differently in different countries it posed a problem for us who should give in, to make price equal).

I always found it strange that US dollar can keep inflating supply but value actually is pretty good.

So for example my father said 1 dollar 30 years ago (I did not even know about money then I guess),,, 1 USD was good for one big lunch at a local store here. And the exchange rate was very small to our local currency.

Today 1 USD still can buy a big lunch, but the exchange rate has blow up to our currency, so we locals struggle with price increase but you could bring the same dollars 30 years ago today and live well, just as that time.

Judging from this, I would say US are unafraid to print more because outside, people still value their fiat more than majority of other countries in the world.

[o_e_l_e_o]

I always found it strange that US dollar can keep inflating supply but value actually is pretty good.

The value is good for you, because you are comparing it against your local currency which has inflated even more than the USD has. Sure, USD hasn't undergone hyperinflation like some currencies such as the Zimbabwean dollar or the Argentinian peso, but it has still devalued pretty rapidly. 30 years ago a Big Mac meal would cost you around $2. Today you can't even get a medium fries for that much.

Judging from this, I would say US are unafraid to print more because outside, people still value their fiat more than majority of other countries in the world.

But yeah, there is a global desire for the US dollar to remain solvent. If it fails, we are looking at a global recession, trillions of dollars of lost value, and hundreds of millions of lost jobs. The US will certainly be "allowed" to rack up far more debt than a country like Greece, but when debt, deficit, federal reserve balance sheet, etc., are all already at an all time high and are all continuing to increase more quickly, you have to question what the end game is here.

[Silberman]

What happens now if US becomes Greece? Can they save themselves?

The main difference is that Greece have no direct control of their own money since they use the Euro. They can't just print more at will like the US can with the dollar, so their only option was sweeping cuts to get their deficit back under control. The US can go the sweeping cuts route, or more likely, just continually raise the debt ceiling and print more USD, but obviously at some point, that become untenable. When is that point? Who knows.

I totally forgot about the euro actually,,, as I have never been there I still actually cannot practically imagine many countries using one single currency when they each have different rates of goods (like in Asia many similar things were proposed but because things cost very differently in different countries it posed a problem for us who should give in, to make price equal).

I always found it strange that US dollar can keep inflating supply but value actually is pretty good.

So for example my father said 1 dollar 30 years ago (I did not even know about money then I guess),,, 1 USD was good for one big lunch at a local store here. And the exchange rate was very small to our local currency.

Today 1 USD still can buy a big lunch, but the exchange rate has blow up to our currency, so we locals struggle with price increase but you could bring the same dollars 30 years ago today and live well, just as that time.

Judging from this, I would say US are unafraid to print more because outside, people still value their fiat more than majority of other countries in the world.

There are several reasons why the dollar still has value and it is impossible to mention them all, however while many people talk about the dollar being printed as if there is no tomorrow the same is happening with all fiat currencies around the world and in many cases the dollar is not being as heavily printed as those currencies, so when that is the case the local currency crashes while the dollar becomes a store of value and still buys what it bought years ago, however another reason is that a great deal of the dollars do not enter the real economy and instead are used to speculate in the stock market or are never used as governments store those dollars as their reserves.

[Sithara007]

There are several reasons why the dollar still has value and it is impossible to mention them all, however while many people talk about the dollar being printed as if there is no tomorrow the same is happening with all fiat currencies around the world and in many cases the dollar is not being as heavily printed as those currencies, so when that is the case the local currency crashes while the dollar becomes a store of value and still buys what it bought years ago, however another reason is that a great deal of the dollars do not enter the real economy and instead are used to speculate in the stock market or are never used as governments store those dollars as their reserves.

I have to disagree. Look at the M1 money supply of the US Dollar. Right now, it stands at $19.6 trillion ($4 trillion in January 2020). On the other hand, the M1 supply for EUR stands at $11 trillion ($9 trillion in January 2020). I don't know whether my source is accurate, but if it is so, then the growth in M1 money supply during the last two years for the US Dollar is just alarming. It went up by almost 5 times. I know that USD is the reserve and trade currency of the world. But does that justify this insane increase?

[leea-1334]

The value is good for you, because you are comparing it against your local currency which has inflated even more than the USD has. Sure, USD hasn't undergone hyperinflation like some currencies such as the Zimbabwean dollar or the Argentinian peso, but it has still devalued pretty rapidly. 30 years ago a Bic Mac meal would cost you around $2. Today you can't even get a medium fries for that much.

This phenomenon is so bad in many parts of Asia in more and more countries already people are happy to accept US dollar even though it is not legal tender,,, I can say in Thailand and Vietnam even you can get a discount on items if you use USD, so it even makes sense for more and more people to hold USD bank accounts (yes, most Asian banks give you the option as far as I know) instead of their own fiat, regardless that it is actually NOT legal tender. Such is the sad state of fiat in this region. India is so proud of their currency but they are as well suffering from inflation you need more than 100 rupees for coffee (less than $1). Nobody uses the coins anymore.

Funny how USD works outside. I checked prices. $2 30 years ago would get you KFC meal (no McD yet in 1990 in my place) AND some change. $2 today still gets you that but no more change.

Local currency on the other hand, it has become over 3x the price.

Min wage has stayed 40 years and wage increase is <1% a year.

when debt, deficit, federal reserve balance sheet, etc., are all already at an all time high and are all continuing to increase more quickly, you have to question what the end game is here.

We ask that all of the time here as well. And economists have answers saying progress is more important and tell us all poverty is going lower and people are healthier and more educated etc.

But what is the worth of "health" and education and longer lifespans,,, when you live in debt forever, we are almost all renting rooms and not houses, and even afraid to have children because we cannot even feed ourselves.

The end game is so disastrous and yet,,, we may all be dead before it happens.

[o_e_l_e_o]

But does that justify this insane increase?

Of course not, but the other option is for the US government to decrease its spending a lot to get the deficit to zero (or ideally, turn a surplus). That means huge cuts across the board to healthcare, social security, the military, education, pensions, transportation, housing, veterans, food stamps, unemployment, etc., with the loss of millions of jobs. Whichever party did this would be committing political suicide for more than a generation. The average citizen doesn't understand the debt or the deficit, and doesn't understand the implications of national debt being ~140% of GDP and rising. But they would definitely understand if the government took away their food stamps, their healthcare, their pension, or their job. Both sides are therefore incentivized to just keep on printing and borrowing.

Min wage has stayed 40 years and wage increase is <1% a year.

Another common phenomenon we are seeing. Wages being stagnant or increasing at below inflation rates, resulting in real terms pay cuts due to inflation. The average blue collar US worker has never had a higher wage in real terms than they had in 1973. Although only being paid at $4 per hour then, that was equivalent to over $23 per hour in today's money due to inflation.

[leea-1334]

Min wage has stayed 40 years and wage increase is <1% a year.

Another common phenomenon we are seeing. Wages being stagnant or increasing at below inflation rates, resulting in real terms pay cuts due to inflation. The average blue collar US worker has never had a higher wage in real terms than they had in 1973. Although only being paid at $4 per hour then, that was equivalent to over $23 per hour in today's money due to inflation.

Yes,,, I have seen all the memes about Boomers who had jobs as waitress and station attendants able to buy nice houses and finish paying them off by the nineties.

It is completely the same here. You could work for the government on very low salary but you would own a house, car, even send kids to uni and finish paying everything off in 30 years and retire on good pension

Now, even with 40 year loans you would need 10% downpayment which is in any case 20 years salary to collect. I know only one or two people in my school who have houses and even that is far away from the city. Us we are all renting until we retire

[kryptqnick]

Again, the US Government has spent more than expected and now has to borrow more to pay the bills. If this was you, this is the closest to an overdraft on your account that a country gets. The problem is that the limit has to be raised by law, and it is not simple to do so in an age of exacerbated partisanship and little wide-angle vision about the needs of the country.

Incredible as it may seem, the US could actually default in its obligations.

https://www.nytimes.com/2021/09/26/business/economy/america-debt-limit-political-game.html

It's questionable, but there's also a reason the US does it. It's something that wouldn't work for any other country in the world, but the US might get away with it. The reason for that is that the dollar is very popular and always in demand, with the US is the #1 economy in the world. So they can borrow too much, but other countries won't pressure them to give away their debts. The can overprint fiat because people all over the world will still believe in the USD and this will protect it against hyperinflation. I think there's still a limit to all this, and if they're not careful (and they're clearly not over the last couple of years), it will backfire hard, but they can allow to do more than anyone else.

[stompix]

Seriously sometimes politics in the US are more messed up than in European countries where having 6-10 parties in the parliament is normal.

It's not so much the split in the parties, but rather the way we make bills. Bills like these are thousands of pages long. Hardly anybody (and probably none of the people voting on it) have read the whole thing. Different people try to sneak in different things to get them passed without due consideration

The process is not different from what's happening here, trust me.
We also have amendments, which are added on the day of the vote and which are voted on the spot, it's not that different.

What I find really confusing is that most in European parties decided on a vote on pro or against and then the who party or alliance proceed to vote like that, exceptions are rare and usually in the 1-2%, but on how it's looking now the entire democratic party seems like being both rulings, opposition, minority, acting as a whole parliament on its own, fragmented as I've rarely seen in my life.
If we compare it with the Netherlands which has about 20 parties and has gone +200 days without a government yet the country's economy was still unaffected, what's happening right now in the US is not even a joke, right out depressing.

30 years ago a Big Mac meal would cost you around $2. Today you can't even get a medium fries for that much.

I'm willing to bet you can get those still cheaper than in the EU  , the exchange rate tells me 4.30$ for the only size that is deliverable.
But I've always argued that it's really not fair to compare things like this, the pressure from a higher population, higher demand for commercial space, increased minimum wages, increased taxes, and regulations are putting a lot of extra costs on some items.

Here is a good example why the numbers might not really show the full true picture, we have milk prices who are on a decline because there is nothing else to be added here, efficiency in production does its job and we have others where demand in housing is putting pressure on the market, you have 80 millions more poeple in 30 years, or with cars, you really can't compare a car from the 70 with nothing extra on it with all the tech even a 10k VW up or I10 has on it.
Not even mentioning oil, let's drop the consumption back to the '90s, where do you think the price would drop?

[o_e_l_e_o]

What I find really confusing is that most in European parties decided on a vote on pro or against and then the who party or alliance proceed to vote like that, exceptions are rare and usually in the 1-2%, but on how it's looking now the entire democratic party seems like being both rulings, opposition, minority, acting as a whole parliament on its own, fragmented as I've rarely seen in my life.

That could be to do with the multiple parties, as you point out. If there are 20 different parties, and you find that the one you are in is making you vote for or against things you don't agree with, then surely you can just up and leave and join one of the multiple other parties which are more closely aligned with your views. In the US that can't happen. If you are not part of the Democratic or Republican party, then realistically you have almost no chance of being elected. If you disagree with the party leadership on an issue, then your only option is to fight against them, since you can't leave the party without "defecting" to the complete opposite side.

you really can't compare a car from the 70 with nothing extra on it with all the tech even a 10k VW up or I10 has on it.

A piece of technology like a car or a phone where you are getting much more than you did 50 years ago, sure, but a Big Mac hasn't changed since the 70s. Actually, that's not quite true - it has got significantly smaller, despite the price continuing to increase.

[Sithara007]

That could be to do with the multiple parties, as you point out. If there are 20 different parties, and you find that the one you are in is making you vote for or against things you don't agree with, then surely you can just up and leave and join one of the multiple other parties which are more closely aligned with your views. In the US that can't happen. If you are not part of the Democratic or Republican party, then realistically you have almost no chance of being elected. If you disagree with the party leadership on an issue, then your only option is to fight against them, since you can't leave the party without "defecting" to the complete opposite side.

A two party system has its own advantages and disadvantages. I would still say that multi-party democracy is much worse. On paper, they claim that it takes everyone in to account and is the most representative system. But look at countries like Israel and Germany. They have a proportional system in place and this means that it is extremely difficult for a single party to get outright majority (unlike those countries with the FPTP system). And as a result they have a ruling coalition comprised of extreme-right, right, center, left and extreme-left in Israel. I would be surprised if this coalition survives for even a single year.

But as you suggested, there is a way to challenge the two party system. The best example is Donald Trump winning the GOP primaries in 2016. He was a complete outsider and he defeated the establishment wing of the GOP.

[stompix]

A piece of technology like a car or a phone where you are getting much more than you did 50 years ago, sure, but a Big Mac hasn't changed since the 70s. Actually, that's not quite true - it has got significantly smaller, despite the price continuing to increase.

The ingredients in the big mac haven't changed in price that much compared to the final price tag, what has changed is the other costs involved and most importantly their share in the final price. I can tell you this from my actual experience when it comes to meat production, although the price of the food for the animals has constantly gone down, so has the mortality rate, their place has been taken by the number of permits and authorizations controls, inspections, and new regulations that come with a lot of costs, not going into details but when you're arriving at a point where vaccinations costs are 1/10 of the entertainment costs for piglets, somebody has to pay.

For any fast food business, the costs have shifted too, the actual costs of the fries and the mac are probably not even 20%, you need to pay workers, you need to have always full staff as a client will start yelling if he waits more than 30 seconds, you have to give far more importance to hygiene, to preparing food, to clean bathrooms and more important rent which back in the past didn't matter that much, now it's one of the main cause killing business after business.

Let's compare what was need to open a franchise and run a fast food in the '70s and what's required of you now.
Every single thing has changed its cost structure if we would still make everything as we did in the past we would be seeing totally different price to wage ratios.

[DrBeer]

Again, the US Government has spent more than expected and now has to borrow more to pay the bills. If this was you, this is the closest to an overdraft on your account that a country gets. The problem is that the limit has to be raised by law, and it is not simple to do so in an age of exacerbated partisanship and little wide-angle vision about the needs of the country.

Incredible as it may seem, the US could actually default in its obligations.

https://www.nytimes.com/2021/09/26/business/economy/america-debt-limit-political-game.html

This is a right and a "feature" of the US budget - in fact, there is no limited opportunity to expand its "financial abyss" without harming its economy. Firstly, there is a need, and secondly, there is most likely an understanding of the global, systemic, and, which is very important, protracted crisis in China, which means the return of the "scales" of the US position in the world market, to its previous positions. You can count and shout for a long time about the US national debt, but the funny thing is that, in general, the US economy "contains" the whole world, and not the "culprits" of printing money ...

[theymos]

I was hoping for some serious fireworks, but I expected that they'd reach some sort of deal before the deadline, and it looks like they will, at least for the next 2 months.

The game theory of the situation prohibits a default of more than a couple of weeks at the absolute most, and any default at all is always unlikely. If a default happened, very quickly the "bodies would start to pile up", so to speak, and the pressure would just continually build for the ceiling to be raised. Everybody would be running around with their hair on fire, with the temperature going up and up and the fire spreading more and more, and there'd really be no way to end it except for raising the debt ceiling. In this sort of situation, it's certain that either 10 Republicans would flip or all 50 Democrats would kill the filibuster: raising the ceiling is a foregone conclusion, one way or another. And everybody knows all of this, so the threat of default just isn't very good leverage.

Maybe McConnell would've allowed a default to last a few hours -- just long enough to create a loud but ultimately meaningless crisis and blame it on the Democrats --, but I actually think that he would've been the one to flinch first if the Democrats had been willing to call his bluff, and he wouldn't have allowed even a brief default. This being the case, it was skillful for him to get even the minor concessions he got.

Isn't the one with the crypto-related stuff the infrastructure bill,

They both have crypto-related stuff. The bipartisan bill adds ridiculous reporting requirements. The $3.5T bill isn't finalized yet, but last I heard it removes crypto's exemption from the wash sale and constructive sale rules, at least.

[stompix]

The $3.5T bill isn't finalized yet, but last I heard it removes crypto's exemption from the wash sale and constructive sale rules, at least.

Seems like indeed, both bills come with nothing good for crypto in the current format.

Not even going to pretend I completely understand the taxation on the second, the construction sale rule, but for the wash sales rule I don't think the impact will be that big, I'm a bit surprised poeple quote it as something happening on a large scale. You need to sell now at a loss to offset future gains but in this crypto market, I see this strategy backfiring at you easily, one pump in the few seconds you need to sell and then rebuy and you've ended with a bigger loss than you could gain from tax avoidance, and even then future gains caused by a bull run might totally offset it.

Anyhow, even if it's a common strategy or not terminating the exemption isn't for sure a good thing, let's wait and see, I have a feeling they have a lot of stupid ideas on the sidelines, far worse.

As for the debt, is anyone genuinely surprised by what seems to be the outcome now?

[o_e_l_e_o]

And everybody knows all of this, so the threat of default just isn't very good leverage.

It's pretty much no leverage at all. Each side is only interested in delaying while they can plausibly blame it on the other side. As long as the Dems can continue to blame the GOP for threatening to filibuster, then they will do so to score political points. As long as the GOP can continue to blame the Dems for not using budget reconciliation, then they will do so to score political points. The GOP say the Dems are reckless for spending trillions in these bills. The Dems say the GOP are reckless for spending trillions during Trump's presidency.

The media are as much to blame for this, instead of just reporting "Both sides as bad as each other".

Anyway, we've passed legislation to raise the ceiling by $480 billion, which will last us less than 2 months, thanks to 61-38 vote and 11 Republicans allowing it pass. So check back in again at the end of November, when we get to do all this nonsense again.

[LUCKMCFLY]

Now Biden just wants to borrow trillions of dollars and then spend a large portion of that on the least productive sectors of the American economy. It's like putting all that money in a black hole. Unless Democrats come up with a more unbiased plan. I think this is going to be a dangerous event that has a dangerous impact on developing economies around the world that will also be affected if the US government doesn't act on interest rates that will boost confidence. This is what they did, which is taxing the rich people in their country and big companies.

I do not know very well the economic policy of the USA, but from the little that I have heard they are having serious problems, I have read comments from people who affirm that 10 years ago with 100 USD you could buy many more things than now, and this is a total consequence of inflation, I have seen how some news indicates that the FED is unable to give more makeup to the country's accounts and they have also taken into account that the crypto economy is an option that if or if they should take it, all this speaks that it is a country that despite the fact that its main currency is the dollar and the dollar has a global hegemony, the debt is increasing, but as the USA also has debtors, when collecting from other countries, that internal debt is much easier to driving, until now is what I have interpreted from the USA, although I know that internally the problems have not diminished, quite the opposite.

[DrBeer]

Now Biden just wants to borrow trillions of dollars and then spend a large portion of that on the least productive sectors of the American economy. It's like putting all that money in a black hole. Unless Democrats come up with a more unbiased plan. I think this is going to be a dangerous event that has a dangerous impact on developing economies around the world that will also be affected if the US government doesn't act on interest rates that will boost confidence. This is what they did, which is taxing the rich people in their country and big companies.

Such a decision is more like sabotage than a search for a solution to a difficult situation. Throwing money into ineffective areas is not a good idea, but to be honest, disgusting. It's like putting out a fire by throwing coal at it ...
Given the growing crisis in China, it would be more correct for the United States to think about transferring production from China to the United States. organization of workplaces, etc. Moreover, now, when there is an understanding that any crisis in China has an extremely negative impact on a large number of American companies. Well, for the growing confrontation between the United States and China, this will play into the hands of the United States, and a new problem for China

[o_e_l_e_o]

I have read comments from people who affirm that 10 years ago with 100 USD you could buy many more things than now, and this is a total consequence of inflation

This is not unique to the US by any means.

I have seen how some news indicates that the FED is unable to give more makeup to the country's accounts

Where did you read this? The Fed's balance sheet is continuing to increase at record pace.

and they have also taken into account that the crypto economy is an option that if or if they should take it

The US government will never consider cryptocurrency as a viable option to replace fiat, pretty much ever. Everything they do regarding debt ceilings and printing more dollars and issuing fake credit would all be impossible with bitcoin. They are not about to give away the only thing that props the entire government up.

but as the USA also has debtors, when collecting from other countries

Debt held by foreign governments, businesses and investors accounts for only around 25% of the debt. The majority is held by various pension and mutual funds and by social security.

[PrimeNumber7]

The game theory of the situation prohibits a default of more than a couple of weeks at the absolute most, and any default at all is always unlikely. If a default happened, very quickly the "bodies would start to pile up", so to speak, and the pressure would just continually build for the ceiling to be raised. Everybody would be running around with their hair on fire, with the temperature going up and up and the fire spreading more and more, and there'd really be no way to end it except for raising the debt ceiling. In this sort of situation, it's certain that either 10 Republicans would flip or all 50 Democrats would kill the filibuster: raising the ceiling is a foregone conclusion, one way or another. And everybody knows all of this, so the threat of default just isn't very good leverage.

Democrats have the ability to raise the debt ceiling via reconciliation with a simple majority vote. Senate rules limit the number of times reconciliation can be used, and Democrats want to use it for their $5.5 trillion spending bill. The senate rules can be changed with a majority vote, but doing so would be more difficult than getting the votes to vote for the crazy reconciliation bill currently being proposed. Raising the debt ceiling via reconciliation would also mean the bill would need to raise the ceiling to a certain limit rather than the debt incurred prior to a date, and would also mean that Republicans would be able to force Democrats to vote on amendments that take stances on things they don’t want to take stances on.

McConnell got the messaging wrong on the debt ceiling this time around. He has since made it clear that he will not deliver any votes to raise the debt ceiling in the future (he had trouble getting 10 votes to vote this time around). It is, or should be clear that Democrats need to raise the debt ceiling via reconciliation as a longer term solution.

Once the US defaults on its debt, meaning it doesn’t pay interest and/or principal of treasury securities on time, it cannot be reversed. In theory, the treasury could issue securities late at night in order to pay for interest and principal of bonds it needs to redeem that day. So a “default” of 4 hours would not actually be a default.   

[perryxi2]

Now Biden just wants to borrow trillions of dollars and then spend a large portion of that on the least productive sectors of the American economy. It's like putting all that money in a black hole. Unless Democrats come up with a more unbiased plan. I think this is going to be a dangerous event that has a dangerous impact on developing economies around the world that will also be affected if the US government doesn't act on interest rates that will boost confidence. This is what they did, which is taxing the rich people in their country and big companies.

[Sithara007]

Now Biden just wants to borrow trillions of dollars and then spend a large portion of that on the least productive sectors of the American economy. It's like putting all that money in a black hole. Unless Democrats come up with a more unbiased plan. I think this is going to be a dangerous event that has a dangerous impact on developing economies around the world that will also be affected if the US government doesn't act on interest rates that will boost confidence. This is what they did, which is taxing the rich people in their country and big companies.

Another $5-$6 trillion to the US federal debt will destroy the economy in the long term. Republicans are worried about the default, but they should have been more aggressive. Anyway, the American people opted for this, when they gave the Democrats (+Murkowski) a majority in the senate. The uber rich will be insulated from any tax increase, as they have infinite number of loopholes available at their disposal. On the other hand, the middle class will witness the erosion in their wealth and a higher tax cut from their salaries.

[o_e_l_e_o]

Republicans are worried about the default, but they should have been more aggressive.

No they aren't. They don't actually care about the debt ceiling or the deficit (which explains why the Republican presidents have racked up higher deficits and more debt over the past 40 years than Democratic presidents). They care about scoring political points and winning elections, that's all.

The uber rich will be insulated from any tax increase, as they have infinite number of loopholes available at their disposal.

The uber rich are insulated from tax increases because of Trumps tax cuts, which overwhelmingly benefited the uber rich, and which will run until at least 2025.

By no means are the Dems blameless here, but painting this entirely as the fault of the Dems and suggesting the Republicans are the party of "fiscal responsibility" is incorrect at best and outright laughable at worst.

[PrimeNumber7]

They care about scoring political points and winning elections, that's all.

You can say that about every politician, and every political party.

No they[Republicans] aren't. They don't actually care about the debt ceiling or the deficit (which explains why the Republican presidents have racked up higher deficits and more debt over the past 40 years than Democratic presidents).

There are obviously external circumstances that do not necessarily reflect if one party cares about the deficit more than the other party. A recession for example usually means it is appropriate to have temporarily increased deficits in order to attempt to overcome the recession and get the economy growing again. Similarly, the country being at war means that it must spend a lot more money on said war than it otherwise would. Reagan for example had to overcome the economic mess left by Carter and spent heavily to win the Cold War. HW Bush had to protect American interests in the Middle East. W Bush had the war on terror and the economic mess caused by 9/11. Trump had to deal with the economic mess left by Obama, and had to deal with Covid.

Clinton saw budget surpluses due to the Republican congress, and because demographics meant social security saw huge surpluses. Obama gave money to politically favored groups and made attempts to get people to rely on government welfare.

The uber rich will be insulated from any tax increase, as they have infinite number of loopholes available at their disposal.

The uber rich are insulated from tax increases because of Trumps tax cuts, which overwhelmingly benefited the uber rich, and which will run until at least 2025.

The uber-rich generally will not benefit from lower tax rates because they are able to delay realizing income, possibly forever. They can also more easily take advantage of tax loopholes that are more politically feasible to exist when there are higher tax breaks, and are politically easy to close when tax rates are lower.

[o_e_l_e_o]

You can say that about every politician, and every political party.

I wouldn't say every politician in every political party, but certainly the vast majority in the two major parties, yes.

There are obviously external circumstances that do not necessarily reflect if one party cares about the deficit more than the other party.

And Obama had to deal with the largest financial crisis since the Great Depression, and Trump's deficit was growing exponentially long before COVID hit.

Clinton saw budget surpluses due to the Republican congress

That will be the same Republican congress which voted unanimously against the 1993 budget reconciliation bill which was largely responsible for achieving a surplus?

As I said above, both sides have to take responsibility here, and efforts by some to try to pin all this on Biden or the Dems are hilariously wrong.

[Webetcoins]

^It is obvious that republicans are worse when it comes to deficit, they had the biggest increases during their time, each time they were in charge for the past 30+ years, they have always done worse financially, and the moment a democrat becomes a president they start to care about fiscal responsibility, this has been a tactic for over 4 decades now and never changed. However as democrat people (I am not from usa, but if I was I would be a progressive democrat) we have to realize that we are closer to middle more than we are to left.

It means that when you have people like Sinema who end up getting more donations from republicans than democrats, do we really call the senate as house majority for democrats? It is obvious that we still have 2 democrats with sinema and manchin who are republicans, they have a (D) side of their name, but they are obvious republicans.

Biden was literally asking for war just 20 years ago, he now bombed Syria I believe a few times (you can google where he bombed) and got out of Afghanistan as well with absolutely no change at all, 20 years, nearly 20 trillion dollars, over 3 billion dollars spent per day, and they got absolutely nothing to show for, the same people they fought against are now in charge once again, if nothing was changing then why did they even got in? All in all yes Republicans are worse if you ask me, but that doesn't mean democrats are good, it just beats they are less shit.