Since February 2019, the US national debt has increased by $12.5 trillion and the US GDP by $7.2 trillion. In the last five years for 1 unit of GDP, the US government has created 1.7 units of debt.
American Economics Thread
- Thread starter Bernard
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Since February 2019, the US national debt has increased by $12.5 trillion and the US GDP by $7.2 trillion. In the last five years for 1 unit of GDP, the US government has created 1.7 units of debt.
16% sounds unrealistically low.
FriedRiceNSpice
Captain
Let's compare the US vs say Germany, because due to the colors used, Germany is one of the few non-US countries where the data can be seen clearly for all deciles.
For the 90 percentile, American incomes are more than 2x Germany's. For the 80 percentile, American incomes are still a little over 2x Germany's. By 70 percentile, American incomes are about 50% greater. At 50 percentile, American income falls to just about 30% more. For the bottom 30%, American incomes are roughly the same as Germany's. But all Germans can enjoy free healthcare, much better public services, have more access to public transportation, and send their children to universities at a fraction of the cost as Americans. Housing subsidies are also available on much larger scale and on a more uniform basis in Germany than the US. The average German works 22% less hours, and is entitled to far more days of paid vacation. Comparing private incomes directly is misleading when the structure of privatized vs socialized costs differ so greatly. American system is great for individuals that: have the work ethic, is blessed with natural talent, and is willing to pursue materialism and affluence over other quality of life factors. That is why you see some Chinese that were unable to compete for the best jobs in China deciding to move to the US and occupy a disproportionately high proportion of the top 5% of jobs in the US. The US possesses enormous advantages in natural resources (especially energy resources), available land, and control over the global financial system, yet cannot provide a better life for at least 50% of its population when compared to many other developed nations.
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Yes: COVID happened and there was a flurry of fiscal aid that involved substantial borrowing
All these borrowing is still going on after covid.
you don't understand. the borrowing is due to the incredible level of wealth and unlimited consumption enabled by AI, NVIDIA and Tesla, since every single American works at NVIDIA, Tesla, FAANG, and if they don't, they don't matter and can safely be excluded from statistics. You don't see banks lending to homeless bums on the streets of San Francisco do you? That's why the more borrowing the more wealth. Duh.
FriedRiceNSpice
Captain
Yes: the fact that Americans can even make the choice to live in streets in tents is yet another testament to the mass affluence enjoyed by all Americans that are not: old, young, retired, students, pregnant, immigrants, ill, disabled, mentally challenged, clinically dead. The level of mass abundance available to Americans today means that Americans do not even need jobs nor housing to enjoy unprecedented levels of discretionary consumption and financial stability. Even the homeless in San Francisco can consume premium luxury food at 6-star soup kitchens and live in tent cities that have been growing in sq. ft over the past few decades. The degree of innovation in pharmaceutical production is such that even the homeless can engage in discretionary consumption of pharmaceutical products, not because they need to, but because they choose to. America has such an overabundance of goods of all types that the homeless can even enter into super markets in San Francisco and take up to $999.99 of goods without needing to pay for them. The fact of the matter is, ever increasing numbers of Americans are choosing to become homeless not because they have to, but because they can afford to.
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I think you mean they get to experience the highest median income urban region on earth for free, in a place where the police never even need to worry about crime. I can't imagine this level of luxury and affluence.
Yes, I mean, if you want to examine standard labor market outcomes for individuals - you should indeed exclude individuals that are too old or too young to be in the workforce, and then control for variables that effect labor market outcomes that cannot be changed by economic policy (disability status, physical health, being enrolled in school, being foreign-born with low education) or alternatively, cannot be changed from economic policy right now (such as individuals who were prematurely pregnant).
Regardless: you have 1/3rd of individual workers who make >70K a year, mostly distributed in low cost metro areas, the widespread amount of affluence and comfort is an outcome of the longest stretch of peaceful economic development ever recorded anywhere. That’s obviously more common once you exclude individuals who are distressed by no fault of anyone but whose conditions are not conducive to high wage-earnings.
Yes. The optimal level of borrowing is non-zero since capital projects have positive economic returns so borrowing money ends up being NPV positive. As @FairAndUnbiased ends up pointing out quite well - borrowing and “leverage” are in effect, the same concept: and just like a company such as Meta might borrow money to build a data center, same too will a sovereign borrow money to build something such as a road or an airport