The idea that the GOP was ever about "fiscal restraint" is one of the most successful propaganda exercises ever because this hasn't been true since probably the Eisenhower administration.

What's funny is that this era (the 1950s) is often fetishized by people who absolutely oppose the policies that made that possible, including a top marginal tax rate of 91% and a CEO to median worker ratio of 20-25x instead of the 400x+ it is now.

So the Cato Institute finally realized something that hasn't been true for 50+ years. What we're witnessing is the looting of government coffers and transfer of wealth from the poor to the rich on a scale never seen before. And they don't care about the consequences because capital is mobile. They'll simply leave.

    Democrats          Change In Deficit
    -----------        --------
    Joe Biden          -$999B
    Barack Obama       -$747B
    Bill Clinton       -$383B
    Jimmy Carter       +$25.3B

    Republicans        Change In Deficit
    -----------        --------
    Donald Trump       +$2.108T
    George W. Bush     +$1.541T
    George H. W. Bush  +$102B
    Ronald Reagan      +$73.7B
    Gerald Ford        +$47.5B
    Richard Nixon      +$9.4B
    Dwight Eisenhower  -$3.2B

Former Republican here aka Rino. It’s easily explained; the GOP ceased to exist when they all fell in line with Trump first term. Trump threatened to to form his own party with his massive following and make the GOP the third choice on the ballot. Trumpism is not conservative in any sense; it’s jingoistic nationalism to benefit Trumps interest.

> From 2018, "Sadly, Fiscal Restraint Is No Longer a Core Principle of the GOP":

While I agree, surely the assumption that the Democrats will be more fiscally responsible isn't true either?

This is more an issue with modern political expectations imo – compounded by challenges of aging demographics.

I can only give my view as a Brit, but I think the same applies here as in the US. Here people expect far more from the government today than at any point in history. Some of these exceptions are reasonable, but many are not.

But either way, despite huge government revenues theres just never enough money to fund all of the social programs voters ideally want. And under this pressure the only option to win elections is to borrow.

I guess to frame it another way – what spending would people want to see the politicians cut? I suspect the only way Western governments will get spending under control is to understand that government can't solve every problem, however nice it might be if they could.

The US will become insolvent by trying to prop up Japan.

"The Insane US-Japan Currency Bailout" - https://youtu.be/yh18YXKMk3g

Why does the US need to prop Japan? Because they are the biggest holder of US treasuries ...and if they need to prop up their own currency, they will need to sell them. <Insert Pearl Harbor reference...>

May sound very similar but it's more like if everything is going down, the strongest one is going to go down last. It's not really "unlikely to be a scenario where the US becomes insolvent" — it's that if it happens, it happens last. And a lot of that just has to be because the US "owns" the dollar, and the world ended up picking (let's not get into how) the dollar as the reference point for their own currencies; aka everyone's reserve currency.

So no matter how much the US fucks up, they just print more and more dollars and ensure the entire world collectively pays up for their fuck-ups. But if the US doesn't fuck up and does something good, then the benefits of that? Oh, that's a different story. No excessive benefit printing, no sir.

All hail exorbitant privilege.

>The markets generally respond to US concerns by buying more US treasuries. That’s counter-intuitive but reflects the situation that if things hit the fan they feel loaning the US money is still the safest place for their money.

I thought that dynamic broke down with the liberation day tariffs, where both stocks and bonds dropped at the same time?

> The markets generally respond to US concerns by buying more US treasuries.

I think the market is buying more gold from US than ever -- this is trading US dollar for gold

US gold export is at its all-time high.

The financial markets only bought US treasuries under those conditions because they were the least bad option during risky moments. There's no law of physics which says that will always be the same.

Trumpanomics is trying to weaken the dollar to make us more competitive as an exporter (along with tariffs which make imports into the US less competitive with domestic goods) and he is Trump's Congress is blowing away previous deficits, so investors are wise to reevaluate their previous risk mitigation strategies.

The Yen Carry Trade is now fully in reverse and both JP and US are going to see higher interest rates, causing both of their debt service to take up an increasing slice of the budget pie.

Investors are jumping into CN bonds now and are likely to look to the rest of the BRICS nations as the IS looks increasingly unable to manage a responsible budget, an economy that doesn't seem to be growing much, and sovereign bonds which have fewer buyers today than a month ago.

>For better or worse there’s unlikely to be a scenario where the US becomes insolvent

How can any organization that issues its own fiat currency become insolvent? Being solvent is simply an issue of adding digits to the borrowers' account in an electronic database.

The only thing that happens (and is happening) is the increase in the supply of currency outpaces the increase in the economic value of goods and services that can be exported, hence the currency loses purchasing power.

The US also used to have the distinction of being the most stable large organization, allowing it to earn a "trust" premium on its currency. But we are voluntarily giving that up.

I'll tell you what is going to happen, b/c it is happening as we speak. The U.S. Government is soft-defaulting on the debt by devaluing the currency. (The debasement rate is somewhere in the 7%-8% range)

There will never be a real default, but it is likely that the USD will lose reserve currency status. The U.S. Government has $114+ Trillion in total debt. (Something like $325,000 per person in the US) We are never paying that off. The only way we can do anything about it is to grow the economy and devalue the debt via inflation.

Nobody knows. There is no precedent for that happening in a post globalisation world.

Think sht would get very real for everyone fast both inside and outside the US.

Global economy can’t even deal with a ship stuck in the suez without wobbling…

> continue to earn USD for oil?

Iraq started taking Euros for oil. Shortly after that, they were invaded. Venezuela started selling oil for Yuan. Shortly after that, their president was kidnapped by American troops. Iran is selling oil in Yuan. Shortly after that, American bombs started falling on them.

There is a very strong incentive for oil producing nations to only accept USD.

If the US becomes insolvent, that would severely impact the USD. But other currencies will not try to follow the USD, there would be no point in that. The USD would just lose more status as an anchoring point. The US is also not a major oil exporter, so presumably most oil will trade for other currencies, rather than try to sell for an inflationary currency.

In short, if the US becomes insolvent, the rest of the world will largely ignore what happens in the (at that point) 8th economy in the world, and mostly try to untie their economy from it.

There is no way, unless by political choice, for the US to become insolvent, meaning, not paying it's "debt" in US dollars

The US can’t become insolvent. Those who say it can are just hard of accounting.

It’s scaremongering nonsense.

All treasuries will be swapped back into dollars on maturity and interest settled

America will move to Trump Coin of course!

/s

This is the truest and most impactful point so far on this thread. Rescinding the Trump I tax cut (IIRC technically the permanent extension of a temporary tax cut) would fix a lot of problems. That and not being belligerent to our creditors gets you pretty close to a complete solution.

>> There are so many other issues to worry about at the moment more immediate than solvency.

The U.S. government spends about one-third! (roughly 33% to 39%) of individual income tax revenue strictly to pay the interest on the national debt and that is not even paying off the principal balance itself:

https://budget.house.gov/imo/media/doc/cbo_baseline_february...

A raise in interest rates for treasuries, can bring this into 50% to 60% within days.

Yeah...worry about other things...

The word in the headline “solvency” versus the phrase in the article “debt crisis” is a major difference.

To your point, I don’t think anyone has to be worried about American solvency, but a looming debt crisis doesn’t seem like a stretch of imagination at all.

Our creditors will be reliable because of American soft power. Do you think we could lose that in single presidential term, much less a year?

Wait...

> but even most economists misunderstand how the monetary system works.

It seems to be more of a subjective topic to me. Otherwise we would all have a perfect plan and never any monetary concerns. Highlighting weak links in the system is I believe a perfectly healthy thing to do. A sanity check would go a long way these days.

Tell that to the Romans.

When enough non-"serious" people believe it, they still sell the bonds, and shit can hit the fan pretty quickly.

The US ticked all the boxes that are credited with the break up of the USSR last year aiui.

Anyone not taking that seriously is in for the most hilarious of surprises.

Others know how to use https://news.ycombinator.com/item?id=49329360.

I guess most promote the title by sentiment.

The US is not going to go bankrupt, but the purchasing power of the dollar will continue to go down and down and down.

You will not go bankrupt, its just that a BigMac will cost you $10,000.

They don’t need to print—they could revalue US gold holdings (artificially held at $42.22/oz). Revaluing this to current market value (over $4k/oz) would instantly generate hundreds of billions on paper, enough to slightly offset debt-to-GDP. Revaluing it even higher would weaken the dollar without any printing. This can be done statutorily even if the statutory price is higher than the market price.

If all hell breaks loose wouldn’t the US just say “screw you we aren’t paying” and utilize the largest military (by far) in the world to keep the goods flowing? Some version of that seems far more likely than UBI does. I’m not saying this would be good (it wouldn’t) and it would be a terrible threat to quality of life and make the US an absolute hellhole, but let’s be real here, if the bread and circuses stop the US citizenry is going to call for blood long before they even remotely consider UBI.

UBI is usually proposed at 1k per month. Nobody is living off that. But doing that increases the budget by 3 trillion.

Why exactly would UBI help the average person? It gives them pennies and only worsens US spending.

Sounds like a reheated version of MMT, modern monetary theory. The "just print money" approach exploded in a mushroom cloud of inflation during the COVID years, just as any economist even remotely aligned with the Austrian school of thought could've predicted. And you're still seeing the inflation, it's just partly hidden in and taking place in frothy equity markets.

MMT isn't inevitable. You're describing a path to where Argentina was before Milei. A path to amplifying all the social issues that started in the US with the creation of the welfare state. The alternative would simply be fiscal restraint.

The only real problem or question is if democracy is capable of restraint. The answer is unclear, seems like it may be 'no'.

Sounds vaguely like the dissolution of the Soviet Union. There too, assets of the State were distributed to the People. Somehow it all ended with oligarchs in the end.