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Seems like a totally sustainable situation.
It is a good thing. You shouldnt look at total debt, but the service costs of holding such debts. A country with massive debt doesnt pay it, it will refinance it. We figured out about 5 years ago that debt isnt finite for a country. Op is a meme poster with zero clue on how money works.
Its free to read and you can inform yourself on why you shouldn't worry about these things.
Looking at the replies from OP he doesnt really grasp how debt works so I wouldnt listen to his odd takes.
Imagine peddling QE while claiming other people have zero clue how money works. 😃
You should learn a bit about how debt works yourself. US has been able to effectively create unlimited debt by virtue of the dollar being the global reserve and being needed for countries to buy essential things like oil that modern economies need to function. When US prints money, it gets absorbed by other countries. That's the magic trick US has been using. Now, countries are starting to dedollaraize and demand for US currency is dropping. Meanwhile, you don't need dollars to buy things like oil now either. And that's where the problem for US comes in. Actual economists, such as Micheal Hudson, have explained this dynamic in great detail. One example being here https://valdaiclub.com/a/valdai-papers/valdai-papers-116/
Maybe try educate yourself a bit on the subject before making personal attacks on people out of sheer ignorance.
Yeah, not many are actually dedollarizing. The big ones are China, Russia, Brazil, Argentina, S. Africa, and Iran, and there are a few others. But most of these already don't do a ton of trade with the US because they're not on good terms politically and economically.
The common thread here is that most of these countries have one or more of the following:
- poor monetary policy - e.g. in Argentina, the President has pretty much direct control over the Treasury
- authoritarian leaders
- poor fiscal policy
In other words, they're not turning to the yuan because they think it's better than the dollar, but because they're desperate, and I'm guessing they have deals with China that are likely more beneficial to China than the countries themselves (i.e. China may be helping bail them out in exchange for some leverage).
So I'm not too worried about the yuan or another currency supplanting the dollar in a real, meaningful sense. That said, I do think it's concerning that the US has such a large amount of deficit spending. However, I trust the US dollar more than the yuan.
BRICS has already surpassed G7 in terms of GDP when adjusted for PPP, and that's the main force behind dedollarization. What is likely to happen is that there will be two parallel economies for global trade. One will be based on the US dollar and another on the BRICS currency.
What that means for US is that dollar based trade is shrinking, and along with it the demand for dollar. So, when US does a bunch of QE, there won't be the same level of demand for the dollar as there war previously.
Meanwhile, the yuan in particular is valuable to countries for the simple reason that China is the biggest trading partner for majority of the countries now. Countries can always convert yuan into something tangible they need from China. The dollar has no inherent value behind it.
China is the best trading partner of the majority of the countries now
I'd like a source for that, because I'm pretty sure the EU is the biggest trading partner for a majority of countries. Yeah, it's not a country per se, but it acts as one when it comes to trade.
And I'm not sure what you mean by the yuan having more inherent value. Fiat currencies have no inherent value, they're only worth what you can trade them for. So it really doesn't matter if you hold yuan, dollars, or pounds, they can be easily exchanged for another reserve currency for transactional purposes.
How much the country backing the currency exports isn't particularly important. Maybe it was hundreds of years ago when mercantilism was relevant, but it isn't relevant today.
As the yuan grows in popularity, the dollar will certainly lose some status, but it's not likely to crash. Look at what happened to the pound when the dollar supplanted it, or the yen when Japan's economic growth slowed, both are still valuable and stable currencies today. So the yuan gaining popularity doesn't spell doom for the US, it just means monetary policy will need to adjust to manage changes in demand. That's it.
https://www.wilsoncenter.org/blog-post/china-top-trading-partner-more-120-countries
And I’m not sure what you mean by the yuan having more inherent value.
I mean that countries buy products from China which means that they can always convert yuan into something they need. This was basically the premise behind petrodollar as well. When you could only buy oil in dollars, that made dollar valuable as an international currency.
How much the country backing the currency exports isn’t particularly important.
Of course it's important, it's why Russia is currently trading with India in yuan instead of rupees. They can't spend rupees on anything they need, but they can spend yuan.
As the yuan grows in popularity, the dollar will certainly lose some status, but it’s not likely to crash.
Both UK and Japan are in an incredibly precarious economic situation right now, and US has astronomic debt servicing of which is directly tied to global demand for dollars. If this demand starts shrinking then US will not be able to service the debt and will be forced to default.
the BRICS currency.
Which currency might that be though? Don't get me wrong, I'd love to see a world where we don't have to pitch in to US spending by solely using dollars for trade, but I don't see any BRICS currencies being able to rise in the next 30 years to be even in the same league as the dollar.
The plan is to have a currency that's backed by a basket of commodities that BRICS countries produce. Given that BRICS countries are where most of commodities and manufacturing is located, I definitely see a rapid rise for such a currency. Especially coupled with projects like BRI that China is aggressively pushing. China will be building infrastructure in developing countries on a massive scale, and all the trade that will result from that will most likely be done in the BRICS currency.
In economics it's hard to say something for certain until it has been carried out by a big macroeconomical subject, and if what you mean is something of infinite debt accumulation, it's even harder to measure it because it can mean that at any point there could be a non prevented scenario where things didn't go as planned. I doubt there has ever been a case in history of an entity with so much debt, and while maybe it works as is described here, it can also mean that it could act in a totally different way under a different scenario. For example one where a country who's currency is used globally stops being so. Time will tell, I guess. I'd love to see some quotes about how this paper says things work, if you have read it.
So?
So, Americans can expect more austerity policies, and higher interest rates.
In what sense does that follow from what you posted? Did you mean to post a different article?
I see you don't understand the implications of national debt.
I do; do you?
But of course what I’m actually doing is showing that posting pure statistical data, and then using it to make strong unsourced unattributed assertions, is very silly. If you have something to say, say it and post proof for it. A screenshot of number going up is meaningless.
The only silly thing here is claiming that the huge amount of debt increase is not indicative of anything. I recommend reading up on what this has meant historically to understand what to expect going forward.
Why not post that, instead of posting screenshots of numbers and claiming it means whatever you want it to?
Because this is a world news community as opposed to historical literacy community.
In what sense is a screenshot with scribbles on it "world news?"
To be fair the web site does a terrible job at presenting the information since it only gives you a couple of of datasets at a time, so the screenshot makes it easier to see the difference. Although I agree that having the link in the URL field and the image on the body would have been better, I guess.
If you don't understand how US national debt going up by a trillion in a month is not world news, don't really know what else to tell you. I just love how you're sealioning here trying to act like you have a perfectly valid point to make.
I've made it perfectly clear what else you should be saying: literally anything. An interview? An article? A study? Is a screenshot truly the limit of what you can offer us in terms of world news?
I also have a perfectly valid point, and I believe I've made it, but since it seems to escape you:
Your submission quality is bad. Do better in the future.
Your only point appears to be that you don't seem to understand why this is significant. The fact that there is a lively discussion happening with people explaining the significance to you shows that the submission quality is just fine.
Except it's not numbers going up, it's statistical data about the US debt, such as the titled implied. In neoliberal right wing governments such as the one in the US, the way they fight this kind of scenarios is austerity policies such as not raising wages as inflation goes up, the lowering of the living standards of the working class, and so on, instead of making the actual culprits pay the price.
This and the current trend of dedolarisation, plus the recent failure of China buying US debt, and a lot of other factors could indicate some bad times for the US economy.
I think it would have been more useful if you would have asked about the consequences of unsustainable debt or some other thing related to economy, since none of us are experts probably, were we could have created a meaningful debate, rather than acting arrogantly. The title says what the body shows, what you can get from that data depends on your field of study, but statistical data is not useless numbers going up, even in something like Cookie Clicker mean things that can be interpreted.
That's because the dollar is declining as the world reserve currency as a result of the US declining as the hegemon .
The debt will only become relevant after the petrodollar is dead and after countries stop pegging their own currency to the dollar and after SWIFT becomes irrelevant and all the other things that prop up the dollar, and we've already long passed the point where the debt could be reduced enough to save the dollar after it loses its status. The high global demand for dollars meant the debt was irrelevant, but now that demand is on the decline the dollar is fucked and it can not be saved.
Exactly, US has been able to finance its debt at the expense of the rest of the world up to now, and those days are quickly coming to an end.
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this post was submitted on 11 Jul 2023
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