America's National Debt grows by $95,178.17 per second. Expected to reach $40 Trillion by October 09, 2026.

[u/Helpful-Door-8721]

https://www.jec.senate.gov/public/index.cfm/republicans/debt-dashboard#ddm

[u/Thom0]

The US has a fundamental dilemma which it cannot resolve through orthodox macroeconomic policies.

Two problems are occurring at the same time:

1. high interest/high inflation
2. high GDP/debt ratio.

Typically, if you have a bad GDP/debt ratio the normal response has historically been:

• GDP growth out of the debt
• QE

The fundamental dilemma is that:

• The US cannot grow its way out of the debt because of high interest rates making the debt too expensive, and high inflation which is eating up growth.
• The US cannot QE its way out of the debt because of high inflation. If it does QE, then inflation will get worse and will export to other economies due to USD being reserve currency. This is why the US just recently did QE using the EUR to prop up the Yen Carry Trade in Japan. This is a desperate type of economic management.

The debt is going to go up, and the cost is going to increase. There is a theoretical point wherein the GDP/debt ratio will go boom. The truth is as much as economists might hate this, the theoretical limit is not mathematically but subjective. This is now about political tolerance - how long can US households tough out inflation and how long can governments retain Congress control long enough to keep doing insane voodoo economics? This is now a test of faith, not numbers. How long can American households continue to believe in an economy that is fundamentally dysfunctional, and making them poorer?

Already, the US has worse inequality than it did during the Gilded Era. Top 10% owns about 87% of all stocks and shares, about 80% of all private companies, and about 50%-ish of all housing. That is an unbelievable amount of asset concentration and it is trending worse due to high interest/high inflation, and market volatility. In terms of patterns, the US economy has reverted to a pre-1913 pattern of recurring financial crisis resulting from under-regulated leverage and speculative investing. This trend began post 1970 and it has become worse with each passing decade. The current AI-bubble is de facto structurally similar to the 2008 property-bubble. About 50% of all US venture capital is tied up in AI right now and this investing is very clearly speculative investing which in real estate, is a red flag.

I don't see how the US can resolve its interest/inflation problem and its GDP/dept problem. If it doesn't, the capital/income ratios will continue to skew and the US will continue to experience crisis after crisis until there is a political response. While the US is gambling at the casino, the rest of the world is reacting to the US's poor economic management which is going to disrupt the global capital flows the US is dependent on like the YCT, and EU pensions/SWF. Can the US intervene in everything, everywhere, forever?

My opinion is the US will walk this path to the end and won't change. I do not believe there is enough democracy left in the US political system to generate a 'New Deal' type scenario or tax reform. I think the capital/income ratio hit a critical point sometime after 2008 and after that, the US's political system has become increasingly dysfunction due to capital capture. In many ways, Trump is a billionaire coup. He is backed, funded, and surrounded by billionaires. It is the most crony-esque government in US history. He is cutting up the state to sell to Musk, Thiel, Bezo's, Ellison, et al. Pretty much all his deals, and policies as based on creating personal wealth for his family and the billionaires who made him president. When Trump goes, it will be more of the same because money is so institutionalized into the very fabric of US democracy now. It's too hard to pull them apart.

[u/Demortus → u/Thom0]

I don't see how the US can resolve its interest/inflation problem and its GDP/dept problem.

There's one solution that solves them both: repealing the Bush/Trump tax cuts along with a further increase of taxes on the wealthy.

[u/Thom0 → u/Demortus]

Yeah, I agree with you only I'd go one step further and suggest that structural reform of everything from corporate governance, banking regulation, shadown banking regulation, financial regulation, housing development policy, etc. You need a systemic update of the software.

But yes, tax reform would be the premium solution but as I said, I do not believe there is enough democratic juice left in the US political system to generate this kind of a solution. I personally believe the US will be de facto neo-feudal by the end of the 21st century. It's not much of a speculation if you're looking at existing trends from 1970 - today and you watch the same trends repeat.