Why does US Global Debt keep rising?

[bluerhino]

Short answer is US is too big to fail and rest of the world cannot afford for USD to fall because they park so much of their assets in USD.

Is it fair though is a very different question. Of course it is not fair, US is spending way more than it is producing. It's like you have a neighbour who work as a security guard but keeps buying Ferraris and visit JPMM FL for 1k a shot. He pay for it by taking out an A4 paper and using a marker pen to write $1m on it and using that A4 to pay. You can see how ridiculous this sounds but that is exactly what the US is doing.

I raised this a few times on EDMW when people discussing about US economy, US trade deficit or any one of the many China vs USA threads but always kena wallop by the US bulls. To them it is nothing wrong. In their words, nothing wrong with the economic system we live in and only people like me think there is something wrong.

 

[Iyarash11]

wait till you find out about ccp debt

 

[ouroboroso]

Short answer is US is too big to fail and rest of the world cannot afford for USD to fall because they park so much of their assets in USD.

Is it fair though is a very different question. Of course it is not fair, US is spending way more than it is producing. It's like you have a neighbour who work as a security guard but keeps buying Ferraris and visit JPMM FL for 1k a shot. He pay for it by taking out an A4 paper and using a marker pen to write $1m on it and using that A4 to pay. You can see how ridiculous this sounds but that is exactly what the US is doing.

I raised this a few times on EDMW when people discussing about US economy, US trade deficit or any one of the many China vs USA threads but always kena wallop by the US bulls. To them it is nothing wrong. In their words, nothing wrong with the economic system we live in and only people like me think there is something wrong.

There is another interim scenario.

If an investor/speculator believes that the USD is going to zero, then he might also source for USD-denominated loans to enter a short-position i.e. borrow USD and use that to buy gold or other tangible assets.

This creates an interesting paradoxical situation where the shortists are actually the ones generating the demand for USD (albeit temporarily).

 

[curiosity_20]

BRICS is the anti-dollar

It will be a double whammy for the US as BRICs takes off and US Central Banks struggle with losses from de-dollarisation.

It would polarise the banking and finance world even further. And SG being a double lapdog to US and China cannot sit on the fence..

 

[bluerhino]

There is another interim scenario.

If an investor/speculator believes that the USD is going to zero, then he might also source for USD-denominated loans to enter a short-position i.e. borrow USD and use that to buy gold or other tangible assets.

This creates an interesting paradoxical situation where the shortists are actually the ones generating the demand for USD (albeit temporarily).

Yes but what you are describing is if the investor believes that the USD will go to zero very rapidly which will never happen. Most countries hold USD in their sovereign funds. Banks, insurance companies all hold USD assets on their balance sheet. It has to be a such a doomsday scenario for everyone to offload at the same time. The only way this can happen is if there is a strong USD alternative. So if everyone sees the security guard giving out A4 money to no end, they can sell USD and hold the alternative on their balance sheet. Euro had such great potential but the Europeans just cannot do anything right. CNY could get traction but only in countries not aligned to US. As long as EU are not on board CNY will not become a dominant currency as well. So that explains why US can still print with impunity.

 

[ouroboroso]

Yes but what you are describing is if the investor believes that the USD will go to zero very rapidly which will never happen.

Yes, true, there is also a holding cost for that debt. Nevertheless there are those who already doing so but hedging against that cost using layered instruments.

Most countries hold USD in their sovereign funds. Banks, insurance companies all hold USD assets on their balance sheet. It has to be a such a doomsday scenario for everyone to offload at the same time.

Agreed, however the dynamics are always complex and almost always contingent on the dark swan event that serves as the last straw which breaks the camel's back.

The only way this can happen is if there is a strong USD alternative. So if everyone sees the security guard giving out A4 money to no end, they can sell USD and hold the alternative on their balance sheet. Euro had such great potential but the Europeans just cannot do anything right. CNY could get traction but only in countries not aligned to US. As long as EU are not on board CNY will not become a dominant currency as well. So that explains why US can still print with impunity.

Yes indeed, usually whatever we see on the surface doesn't reflect the undercurrents of the largest money flows taking place beneath the superficial happenings.

 

[yeokiwi]

It's strange to view debt without looking at the assets. SIngapore debt to GDP is 168%. Are we going to bankrupt soon?

US assets' lie in their services, products. While the folks here were complaining about US debts despite all the complaints were written using Windows, IOS or android.

How about going for a overseas education?? well, where are the best universities, stanford, harvard, MIT..
And, how do you valuate harvard university? Their endowment fund is $50 billion but I think their IP and their services is easily 10 times more. And Harvard is just one of the many top universities in US.

It is quite easy for US to go bankrupt. Everyone just stops using their products and services.

It is not healthy to have a growing debt but that does not mean that US is in deep ****.
If they stop selling products and services to us, then we are in deep ****. No amount of CPF will save singapore.

 

[Krabs.]

the debt outlived the thread

 

[final1]

Please allow Biden and Kamala Harris's Chief Economic Adviser to explain to you about this issue about the US's ability to print money in relation to the US government borrowing money and adding to the US national debt. This is indeed the Chief Economic Adviser. It is not fake and it is not a parody and it also tells you all you need to know about the competence of Biden and Kamala as well.

 

[enigmastar]

Wow very rare to see people dare to use global time as their source. Its even rarer to find people not china chinese who will read it.

 

[hawkwind]

globaltimes.cn


funny thing is, countries keep saying it's a ticking time bomb, but they keep pouring money into the US of A treasury bills.

Yes but US Treasury yields gone up a lot last few years. This shows trust in USD is eroding.

 

[VEF888]

Yes but US Treasury yields gone up a lot last few years. This shows trust in USD is eroding.

isn't that more to do with the fed rates?

gauge for USD? just look at the mag 7, the world demands and needs US of A goods and services.

 

[hawkwind]

isn't that more to do with the fed rates?

gauge for USD? just look at the mag 7, the world demands and needs US of A goods and services.

A few US auctions have been weak so yields gone up. Of course Fed rates also play a part.

 

[Whimsica]

Globaltimes?

Could be China FOMO after "dumping" US debts and spending its USD but see others keep accumulating.

 

[firebrand83]

After depeg from gold this is the natural outcome, it's suppose to be like this, but open to tons of abuse