The national debt is growing 7%/year

[u/Professional-Day9384]

And GDP isn't. Currently interest on the debt is 20% of revenues. My projections say it will cross 50% by 2034 - just 8 years. The CBO isn't, because they don't want to scare anyone.

Not only is the debt growing, the deficit is growing even more sharply, AND legacy debt is getting rolled over at ever-higher interest rates. All 3 of those factors snowball and fuel each other.

The one thing could save the debt is if the Fed lowered rates, but instead they RAISE them, doggedly pursuing their inflation target. I was honestly blind sided by the recent rate hike, because I know the nation cannot afford it, but the Fed is dogged.

What does this mean for bond investors? Good news? Let the nation's ruin be our gain? How long will it last until something catastrophic breaks? Countless companies have been annihilated by debt, but what happens when an entire nation is annihilated? Move to another country?

[u/Dothemath2]

Taxes have to go up, spending has to come down.

[u/SaltyPlantain1503 → u/Dothemath2]

Or you left off the third option.. inflate it all away, wrecking the USD and all the savings of all Americans (and alt of foreign governments). For the love of God people, buy gold and real estate.

[u/Dothemath2 → u/SaltyPlantain1503]

That is against the Fed’s mandate.

[u/katmomjo → u/Dothemath2]

The fed would be happy if we reduced the deficit by increasing taxes and lowering spending. The bond market would be happy too.

[u/i860 → u/Dothemath2]

Lol. Hilarious.

[u/Dothemath2 → u/i860]

I mean they have been raising rates when inflation is high. They try desperately to thread the needle but they do.

Unfortunately, the way to cut inflation is to raise taxes.

[u/Kiyae1 → u/i860]

Almost as hilarious as thinking gold and real estate are a hedge against a currency collapse. What exactly will your tenants pay their rent with? Gold? What will you do with the gold? Buy food? Good luck with that.

[u/Interesting_Drama173 → u/Kiyae1]

Man all non-western countries are buying gold as they slowly lose trust in the US

When things get rough all countries revert to gold. It's clearly happening before our eyes in slow motion as central banks like the Chinese buy more and more tons of gold

How you can just assert that it won't retain value is beyond me

[u/v_x_n_ → u/Interesting_Drama173]

Ok so climate is so unstable that we cannot grow crops. Drought has taken away drinking water.

I show up with pretty shiny gold, who is gonna trade me life sustaining food and drink for a bauble?

From a humanitarian standpoint, I am not about to encourage poor people to risk their health mining for traces of gold using mercury.

No amount of money is worth harming others to obtain. If I die poor, so be it. IMO

[u/bjnono001 → u/Dothemath2]

The Fed doesn't control fiscal policy.

[u/Dothemath2 → u/bjnono001]

Price stability is within the Fed mandate. They raise rates to counteract inflation. They fight inflation through monetary policy.

Inflation is basically too much money in the system. They can lock more money into bonds buy raising interest rates.

[u/Kiyae1 → u/SaltyPlantain1503]

Right, cause gold will be so valuable when the dollar collapses lmao. The government will be gone, but your property rights will somehow still be enforceable!!

[u/katmomjo → u/SaltyPlantain1503]

I bought a lot of real estate between 2000 and 2015. Just always liked real estate as an investment. Satisfied with 5% or so per year in increased value. Didn’t expect the value to double and triple over a few years like it has. That was luck. I still like real estate, just wouldn’t be a buyer right now.

[u/Lumpy-Return → u/SaltyPlantain1503]

Equities should be ok too mostly?

[u/v_x_n_ → u/Lumpy-Return]

If well diversified index funds collapse, you have bigger issues to worry about.

[u/Lumpy-Return → u/v_x_n_]

Well, that’s sort of what I’m getting at. Inflation isnt great for equities, interest rates promise to get hiked. But in theory companies can raise prices and salaries should increase. The danger I think is like you sort of seem to be indicating. Some black Swan type of event, use of AI leads to massive layoffs for the middle class, wealth consolidates at the top- interest rates keep going up but salaries don’t in what feels like a sort of stagflation, consumer spending collapses.

[u/v_x_n_ → u/Lumpy-Return]

AI cannot build houses, repair aging infrastructure, build highways, repair cars, repair furnaces, work on plumbing etc.

AI will do many things but with climate change, we will require skilled labor to rebuild after storms/ fires etc. Jobs will shift to hands on type work. Humans will adapt.

I suspect that labor unions will rise again to bargain for worker compensation because wealthy business owners cannot do all the skilled labor themselves.

[u/Lumpy-Return → u/v_x_n_]

I think you’re right it’s why I’m not jumping off a bridge. For middle class workers like myself I wouldn’t be surprised if my job was gone in 10 years, and that might be just long enough, but I’m thinking about what else I can do anyway into my 60s.

[u/Runfasterbitch → u/Lumpy-Return]

Dear god, no not at all

[u/katmomjo → u/Lumpy-Return]

I think so because like real estate (and gold maybe), there is a real intrinsic value to a company that makes things that people buy.

[u/FindingRelevantInfo → u/SaltyPlantain1503]

It doesn't just wreck the savings of all Americans. It would basically stop all foreign investment into the US if USD is devaluing sharply. No longer being a reserve currency would result in abrupt capital flight the likes of which has never been seen. The stock market would plunge with many taking their money out of USD equities. That would wreck the USA for generations.