US national debt exceeds $30 trillion

[Hydrogen]

The United States’s national debt exceeded $30 trillion for the first time, according to Treasury Department figures released on Tuesday.

The national debt is now about double China’s entire gross domestic product.

The sobering milestone comes after the federal government spent trillions of dollars to stimulate the economy and lessen the economic blow that came with the pandemic.

The country’s debt has increased by a whopping $7 billion since the end of 2019, just before the pandemic took hold.

“The milestone of $30 trillion in debt should be a giant red flag for all of us about America’s future economic health, generational equity, and role in the world,” said Michael Peterson, CEO of the Peter G. Peterson Foundation, a group that works to raise awareness about the debt.

“Our high and rising debt makes us less prepared for the next pandemic, less secure against future adversaries, less resilient to the changing climate, and less able to build the strong and inclusive economy that we all want for the next generation,” he added.

Most of the trillions of dollars that Congress spent sending out three stimulus checks to people, propping up businesses, and providing jobless benefits during the worst of the pandemic was financed through borrowing rather than being offset through revenues — a fact that raised the national debt to the $30 trillion mark much sooner than expected.

The gross national debt burden, which represents the debt the government owes its creditors, is greater than the U.S. economy. The national debt differs from the federal debt held by the public, which represents only the amount of government bonds held by the public and not the money the government owes itself. That number is lower, at $23.5 trillion.

News that the U.S. has crossed the $30 trillion threshold comes as the Federal Reserve unwinds its ultraloose monetary policies and prepares to raise the federal funds rate for the first time in years to combat soaring inflation.

Increased borrowing costs would make it even more difficult to finance the debt.

“It doesn't mean a short-term crisis, but it does mean we are going to be poorer in the long term,” David Kelly, chief global strategist at JPMorgan Asset Management, told CNN. The U.S. owes a lot of its debt to foreign investors, particularly China and Japan.

“That means American taxpayers will be paying for the retirement of the people in China and Japan, who are our creditors,” Kelly said.

During a meeting last week, top central bank officials indicated that the first in a series of interest rate hikes will likely come in March. Investors are pricing in several rate hikes this year, which could bring the federal funds rate to a range of 1-1.25%.

https://www.washingtonexaminer.com/policy/economy/us-debt-exceeds-30-trillion-for-first-time

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American politicians promise americans free stuff. Free student loans, free healthcare, free UBI.  Our $30 trillion in national debt is the price we pay for it.

Not many make a connection between free social programs and national debt. People believe they can enjoy free things without incurring penalty or price. Greed and ambition blind us to the long term consequences of our short term choices.

If the road to hell is paved with good intentions. Might it be fair to say, the road to high inflation and a bankrupt state might be paved with free things.

Unfortunately, many are desperate and willing to sell their souls to get ahead. If any choose to sell their souls in exchange for free things from the government, I hope they read the fine print.

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[arallmuus]

Unfortunately, many are desperate and willing to sell their souls to get ahead. If any choose to sell their souls in exchange for free things from the government, I hope they read the fine print.

The fine print of paying taxes for all those free stuff? Tax is a way to distribute wealth to everyone in the country so the rich are paying more taxes than the poor in exchange of getting all those 'free' stuff across the country so everyone can 'enjoy' the benefits from it. Everyone will be taxed even when a country doesnt have a huge amount of foreign debts

As for the debt, US is also creditor for debts in foreign countries so as long as long the country is still functioning as it should then it should be alright

[Lucius]

“It doesn't mean a short-term crisis, but it does mean we are going to be poorer in the long term,” David Kelly, chief global strategist at JPMorgan Asset Management, told CNN. The U.S. owes a lot of its debt to foreign investors, particularly China and Japan.

“That means American taxpayers will be paying for the retirement of the people in China and Japan, who are our creditors,” Kelly said.
....

The fact that the US owes something to Japan is not a tragedy, given that we know that the country is already on the list of the biggest foreign collaborators in terms of anything since the time they bombed them with atomic bombs and have remained occupied to this day - here I am thinking primarily of Japanese politics that is prone to the US all the time.

China is a whole other story, but according to data from 2021, China owns only 3.68% of that debt, or about $1.065 trillion, which cannot be considered too much to keep the US at a disadvantage. In addition, there is a reason why China and Japan want the US dollar to be more valuable than their national currencies - it helps them export to the US.

Japan owned $1.32 trillion in U.S. Treasurys in July 2021, making it the largest foreign holder of the national debt. The second-largest holder is China, which owns $1.07 trillion of U.S. debt. Both Japan and China want to keep the value of the dollar higher than the value of their own currencies. This helps to keep their exports to the U.S. affordable, which helps their economies grow.

The debt structure is very interesting, but it should be noted that only about $7 trillion is in the hands of foreign countries and investors, while about the same amount the US owes to itself. Although it seems like a real mess, I don't believe that's the case - they have a plan to get out of it - Japan, China, or some other country will fail rather than the US.

The Treasury owes this part of the debt to other federal agencies. Intragovernmental holdings totaled more than $6 trillion in October 2021
Why would the government owe money to itself? Because some agencies, like the Social Security Trust Fund, take in more revenue from taxes than they need. These agencies then invest in U.S. Treasurys rather than stick this cash under a giant mattress, This transfers the agencies' excess revenue to the general fund, where it's spent. They redeem their Treasury notes for funds as needed. The federal government then either raises taxes or issues more debt to raise the cash.

[el kaka22]

At this rate, they are just going to raise the ceiling over and over again and they will not care about the debt at all. I mean who would stop working with the USA just because they have a lot of debt?

If you and I, or even our nations had even 10% of that type of debt, then there is a good chance that we wouldn't even be able to get new things, we wouldn't be able to create new debt until we paid our old debt. However, the reality is that the USA is not like that and they realized this long time ago and they are creating debt that would pay decades later without care and every year they pay a small part of it and create even bigger ones.

[Similificator]

Leaders should've been more responsible and thought ahead about what the future will bring after such decisions. The people of course want's an easier life and if it can be achieved even at the expense of the future generations most wouldn't care. Knowing this, politicians most of the time take advantage of such greed from the normal people and capitalize on it to expand their political status or "likeability". It's just sad that even if the influence of the US can temporarily set this issue aside, a day will surely come when the US will have to pay for the wrong decisions of the past leaders. I pity the children, the ones that get affected the most ;(

[Mauser]

And so the debt spiral continues to spin, there is no real end insight. And still most people believe in the system, but the system is broken and will not fix itself. As long as politicians have full control over the financial system is there no pressure to act responsible. Why bother working towards a balanced budget if you can just issue new debt to make gifts for the voters and lobbyist? We have seen this in the past with the debt ceiling, in the end the politicians all worked together to increase the limits. There is no oversight in place that enforces rules and prohibits politicians from changing them. It's up to the voters to wake up and demand change. Also it's not only USA who is piling up these massive debt levels, many other countries are sitting in the same boat.

[kryptqnick]

The US is a debt-based country, unbelievably so. Young people take big student loans and end up in debt, mortgages are very popular, credit cards are very popular, and taking all sorts of loans and having all sorts of debts is considered normal. The country itself does a similar thing, ending up in more and more debt. But while it's #1 by total external debt in the world, it's not even in top-10 by debt-to-GDP. Also, being the biggest superpower and economy in the world, the US can pretty much heavily dictate its own rules, and nobody would be able to actually pressure it to pay up. So while it's a lot, and it increased by so much over the last couple of years, I'm not sure it'll have any serious implications for the US economy. At least, not in the near future. But yeah, it will probably become a load on the taxpayers, once again, and of course the most vulnerable will suffer most, while insanely rich will keep living off their wealth without selling stocks and thus not really paying taxes.

[fiulpro]

This is not just the debt being held by the government, it's also the debt being held by individuals as well. The public is themselves holding more than 20 trillion which does show the weak economic stability of individuals as well. Health care! Free?? This is a ridiculous claim, as far as I know the government is earning so much from it. Their taxes are also not in line, plus they are taking loans from smaller countries as well. Credit cards are definately a big thing in developed countries and people don't realize till the debts pile up. There are companies that offers 0% interest rates but at the end I have seen some of them changing their policies as well and people never read the new Terms and conditions.

[Gyfts]

A few ways you can cut the national debt: Raise taxes, grow the economy, reduce spending. US has chosen to ignore all three, continue inflating their currency, and loaning themselves an indefinite amount of money with no intention of ever paying it back. Absolutely nothing will stop the U.S. from printing even more money, and the 7.5% inflation rate isn't a deterrent either. Why do you think there's so much talk about a fed coin? Instead of printing, the money supply can be controlled by a number pad.

[paxmao]

My thinking is a follows: There are some situations in which it is great to have debt and to be able to extend your credit. Among these, the first one is dirty cheap money, which is now the case - not to mention if it is European debt, that actually has "cash back" in the form of negative rates. The other one is high inflation, which reduces your debt strongly just by letting time go by.

As long as the debt super-cycle holds at world level, US is just on the right place - at risk of overdoing true.

[Similificator]

My thinking is a follows: There are some situations in which it is great to have debt and to be able to extend your credit. Among these, the first one is dirty cheap money, which is now the case - not to mention if it is European debt, that actually has "cash back" in the form of negative rates. The other one is high inflation, which reduces your debt strongly just by letting time go by.

As long as the debt super-cycle holds at world level, US is just on the right place - at risk of overdoing true.

Also my initial thoughts. The thing I find problematic though is that if this continues (and I think it will and at even larger scales due to increasing problems) the cash back and inflation may not be that much of a help. And as time goes, resources gets scarcer. Just thinking about the future of this world frightens me and makes me pity not only the future generations of the US but also the entire world.

On a side note though, even if the leaders today or on the upcoming administrations want to change how it leads and break this debt cycle, it's probably already too late. And even if we don't cancel out it's possibility, it certainly won't be that easy considering that the people has gotten used to such benefits. I may be wrongly assuming here but the thought of it happening is frightening. Even when I am not from the US itself because if US sinks, the world will change and that is another uncertainty that I'd rather not find out the results.

[so98nn]

This is example of developed country with poor ecosystem management. It’s ridiculous how they went into $30 trillion in debt. It’s seriously not a joke for Americans. The inflation is on one side and the rising debt on another; this could be damaging in further development of the country. This is the point where healthy relationship between government and peeps start to break apart.

Government will go rogue and impose unimaginable charge backs through taxes, reduced facilities, defaulters with high penalties and much more. When this happens Americans won’t be able to understand what is happening because they would have already been very dependent on government schemes and shoulders.

I hear they spend $3-4 trillion on defence system. Man, 10 years budget right there!!

[DrBeer]

I'll ask a simple question - SO WHAT? What will happen to the USA? NOTHING ! Tomorrow the Fed will issue 1 coin worth $40 billion and the matter will be closed. And the whole world will be with an open mouth, and scratching the back of the head - how so? Why can't we do that? But this is an interesting question - why are these just numbers for the USA, but for the rest of the world - trouble and difficulties?

[beerlover]

The thing I find problematic though is that if this continues (and I think it will and at even larger scales due to increasing problems) the cash back and inflation may not be that much of a help. And as time goes, resources gets scarcer. Just thinking about the future of this world frightens me and makes me pity not only the future generations of the US but also the entire world.

On a side note though, even if the leaders today or on the upcoming administrations want to change how it leads and break this debt cycle, it's probably already too late. And even if we don't cancel out it's possibility, it certainly won't be that easy considering that the people has gotten used to such benefits. I may be wrongly assuming here but the thought of it happening is frightening. Even when I am not from the US itself because if US sinks, the world will change and that is another uncertainty that I'd rather not find out the results.

They are not using the money as you assumed they are, you know that right? If you look at USA, they have citizens increasingly having more debt, they have people getting poorer by purchasing power, they have medical bills that many other nations do not have, and they are also in big financial trouble with national debt mainly taken from them.

I mean, it is clear to me that USA debt is not a good one, sure it is good to increase your debt if you are building something that is beneficial for you, but they were lately talking about infrastructure bill in north of 2+ trillion dollars to fix things, and that tells you how screwed they are if after 30+ trillions they yet to even start that.

[Similificator]

I stand corrected then. I initially thought that most if not all of the debts they have are being used to improve the lives of the US citizens. Because on some of the speaches I have seen online, they boast about the things they have done and are still planning to do and so I initially assumed that they really are doing something significant and helpful towards the citizens of the country they are governing in. Even on campaigns before elections they boast about these things.

Man, now I even feel more awful for the people of the US. ;<

[gantez]

I stand corrected then. I initially thought that most if not all of the debts they have are being used to improve the lives of the US citizens. Because on some of the speaches I have seen online, they boast about the things they have done and are still planning to do and so I initially assumed that they really are doing something significant and helpful towards the citizens of the country they are governing in. Even on campaigns before elections they boast about these things.

Man, now I even feel more awful for the people of the US. ;<

It is looking as if the past administration is always better of with the current one, this I'm thinking and having this thought like back during Clinton, Bush, Obama, Trump and now Biden I think it has been a progressional increase in budget and debt all together. This is becoming a global situation that successive government get worse than the previous. Now US is having high debts which that still causing inflation , yet America is threatening Russia and having trade war with China and still the economy will be affected.

[tyz]

Basically, this debt is not the problem of the USA but of the lenders who are mainly foreign countries and which invest their export surpluses in dollars, first and foremost China and Japan. With the USD as the world currency, there are hardly any alternatives that have enormous export-strong countries. As long as this is the case and the US does not overdo it with debt, then they can continue the debt game forever.

[Sithara007]

Basically, this debt is not the problem of the USA but of the lenders who are mainly foreign countries and which invest their export surpluses in dollars, first and foremost China and Japan. With the USD as the world currency, there are hardly any alternatives that have enormous export-strong countries. As long as this is the case and the US does not overdo it with debt, then they can continue the debt game forever.

USD is the trade currency around the world and most of the forex reserves in other countries are made of US Dollar bonds and other derivatives. Even the exchange rate for other fiat currencies are denominated with regards to the USD. But now we are seeing hints that governments around the world are looking for alternatives. El Salvador has already made Bitcoin as legal tender. Many other countries, including Panama, Malta and Tonga are considering awarding legal tender status to Bitcoin.

[Kakmakr]

People should understand the difference between the federal government's annual budget deficit, and the country's national debt. The Federal government generates a budget deficit whenever it spends more money than it brings in through income-generating activities, such as taxes.

The national debt is the net accumulation of the federal government's annual budget deficits. The proceeds of the selling of Treasury bills, treasury notes, and treasury bonds SHOULD be used to stimulate the growth of the economy and the goal should be to help the country's long-term prosperity. (Not paying Politicians and government employees salaries and arranging kickbacks on corrupt tenders)

In short.... it is how the money is spend and how it is used to grow the economy and not how it inflates individuals or a small percentage of government employees pockets.  

[Similificator]

It is looking as if the past administration is always better of with the current one, this I'm thinking and having this thought like back during Clinton, Bush, Obama, Trump and now Biden I think it has been a progressional increase in budget and debt all together. This is becoming a global situation that successive government get worse than the previous. Now US is having high debts which that still causing inflation , yet America is threatening Russia and having trade war with China and still the economy will be affected.

Well I won't go so far as to say that having the successive governments/administrations are getting worse than the previous ones but I get your point. Because mostly, that is the case. Even here in my country this has proven to be both true and not. I said so because last administration was worse than the one before here in my country but the administration right now though, is way better than the last one. Mainly because of the president that has good judgement and does not tolerate any type of corruption even when the ones involved are close friends or part of his political party. I cannot say the same for other countries, maybe you should start a separate thread about this asking this type of question.