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Discussion: (5 comments)

  1. Wayne Abernathy

    Presumably, we won’t know the genuine tipping piont for certain until we tip. That, of course, is too late. Is it enough to know that it is coming, and that we are closer today than we were yesterday?

  2. what effect does internally-owed debt have on externally-owed debt?

    if we owe ourselves how does that affect credit ratings…

  3. Federal Reserve Governor Jerome Powell isn’t so alarmed, pointing out that unlike many nations that ran into debt troubles, the US borrows in its own currency-.

    So what? Does Mr. Powell not understand that destroying one’s currency is not a way to prosperity? The fact that people like James take anything that Fed governors say seriously given their inability to see bubbles even as they are popping is somewhat puzzling.

  4. Todd Mason

    Our trading partners, and China and Japan in particular, work hard to keep the dollar strong against their currencies because a big translation hit would hurt their export industries. As a result, China keeps buying US Treasuries that yield negative real interest. And, no, they can’t say screw it without damaging their own economies.

  5. Todd Mason

    To address the blogger’s point, no, the internal debt is not a pressing issue. Taxpayers owe $2.7 trillion to the Social Security Administration, but we have 20 years to make good on it. The “entitlements” issue, setting aside Medicare, is more politics than problem (e.g. taxpayers owe retirees rather than the other way around.) If Congress required business to meet its unfunded pension liability in a single year, you’d be able to hear the corporate screams from Mexico City.
    To be clear I’d be happy to accept means testing or other cuts so long as the money goes to the real tax victims: the young workers for whom FICA is a Ponzi scheme.

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