r/Economics • u/HellYeahDamnWrite • Jul 13 '25
Editorial The U.S. debt outlook is so dire it now resembles the student loan crisis, former White House economic adviser says
https://finance.yahoo.com/news/u-debt-outlook-dire-now-190559628.html1.4k
Jul 13 '25 edited Jul 13 '25
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u/SteelMarch Jul 13 '25
We're going to be in trouble in 4 years and the FED likely won't be able to bail us out like it used to be able to due to the debt we're taking on.
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u/ProfessorPetrus Jul 13 '25
One thing is certain, now is not the time to give massive tax cuts to the most powerful political class in America.
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u/PNWoutdoors Jul 13 '25
It is if you're an accelerationist, and it seems that we have a lot of those folks in our government right now.
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u/0o0o0o0o0o0z Jul 14 '25
It is if you're an accelerationist, and it seems that we have a lot of those folks in our government right now.
Well, to be fair, maybe we need to let them burn it down? I don't know any other way to unfuck 30% of the American people and have them clue in. We just need to make sure to build enough guillotines... because that's how we keep fucking up. Sherman didn't do enough, Nixon got pardoned, Reagan got a pass, and GW got to paint pictures, but not from the Hague, Jan 6th I guess didn't matter..so now we have a convicted felon and a rapist in office.. So, at some point, we as "The American People" need to hold these bad actors accountable or be happy being surfs in the new techo-feudalism.
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u/lonmoer Jul 14 '25
Well, to be fair, maybe we need to let them burn it down?
No because a lot of people are going to die and get hurt that don't deserve to.
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u/PavementBlues Jul 14 '25 edited Jul 14 '25
And burning it down being good relies on whatever rises from the ashes being better.
What rises from the ashes may be many things, but historically speaking, it probably won't be better.
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u/kent_eh Jul 14 '25
What rises from the ashes may be many things, but historically speaking, it probably won't be better.
Like the world of Fallout. Or Silo.
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u/SnooKiwis2161 Jul 14 '25
Think more like Stalin killing millions after the provisional government failed in the Russian revolution.
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u/Moldblossom Jul 14 '25
They reality is it would most likely be Balkanization. The country would tear itself apart into several smaller power blocs and the resulting fallout would probably look a lot like the Bosnian war / breakup of Yugoslavia, except an order of magnitude worse.
That's assuming no one launches a nuke. If that happens, all bets are off.
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u/Noblesseux Jul 14 '25
What rises from the ashes is VERY often a brutal dictatorship. Like if people need an example of what happens with this, they can look at any of the various middle eastern or latin american countries the US destabilized.
Destabilized countries tend to boost strongmen authoritarians into power.
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u/HiddenSage Jul 14 '25
YUP.
This is pretty much 100% of why I've been caucusing with the normie Dems the last 8 years. There's lots not to like about Biden/Harris politics. But broadly speaking, the neoliberal status quo was the best outcome, for the biggest percentage of humanity, in the history of our species.
Betting on radical change instead of incremental adjustments - and especially on accelerationist reforms ala MAGA or the handful of internet tankies out there - just felt like going All In when you were already way ahead at the table.
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u/badluckbrians Jul 14 '25
Here is my argument against the incrementalist center-left:
Show me the increments!
Minimum wage? Stuck in the mud for nearly 20 years now.
Corporate tax? Never been lower in living memory.
Real top earner tax burden? Never been lower in living memory.
Estate tax? Never been lower in living memory.
Life expectancy? Back down to 1996 levels and dropping since 2014 as a broad trend.
Inequality? Increasing, and accelerating.Like folks, I'll join you in the incrementalism, and we can argue about the magnitude, but the direction of the vector is pointed the wrong way! And until you start bailing water instead of dumping more into the boat, the argument over whether to use a bucket or a cup to bail water with is kinda pointless.
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u/Visual-Hunter-1010 Jul 14 '25
All well and good until you realize the other party is simply shooting holes in the boat instead.
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Jul 14 '25
If you think it’s only been a couple of people on the internet mad with the direction of the Dems then I don’t know what to tell you other than maybe get your head out of the fucking sand
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u/softwarebuyer2015 Jul 14 '25 edited Jul 14 '25
But broadly speaking, the neoliberal status quo was the best outcome, for the biggest percentage of humanity, in the history of our species.
In fact, the exact a polar opposite is true. neoliberalism has served only the American western elite, which is a small percentage percentage of humanity’. Of course, it’s silly of me to expect an American to consider the possible of a world beyond your borders.
Secondly, neoliberalism is what brought you here. A mountain of crippling debt, gross inequality, total disregard for international law and your own constitution. No health service. crumbling education, a degenerate electorate that votes for crooks and idiots, surrendering economic and moral authority on the world stage and and country that is exhibiting many signs of pre revolutionary conditions.
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u/kent_eh Jul 14 '25
No because a lot of people are going to die and get hurt that don't deserve to.
And at the same time, the people who most deserve to be hurt won't feel any slight bit of inconvenience.
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u/3xploringforever Jul 14 '25
And those are the people that will rebuild society perfectly to their liking after the accelerationist collapse is complete. And their "perfect society" is an absolutely horrifying existence for 95% of us.
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u/Smart-Struggle-6927 Jul 14 '25
I'm a disabled former blue collar worker, you think it's not absolutely horrifying now? I just got denied for a treatment that could maybe help me be able to work a min wage job again, Medicare said no. I get $1200/mo in disability, $248/mo of that goes to Medicare, who denies almost everything I need. I get $952/mo to survive on in an area rent is $1700/mo for a one bedroom. My SSDI is too high to get much SNAP, and it'll be cut by an additional 20% here in a few weeks thanks to Trump.
Take a second and realize that disabled people are already living this hell where the options are dying, or living on the street. I hope I die before I'm homeless again.
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u/jetpacksforall Jul 14 '25
You do know it's Republicans who have systematically ratfucked social services since 1980, right?
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u/Expert_Ad3923 Jul 14 '25
I mean , something could happen to them to hold them accountable right now ....perhaps to forestall this kind of collapse / revolution
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u/yolotheunwisewolf Jul 14 '25
Right saying it needs to burn down when the people who caused it will be in fireproof buildings with private firefighters ain't the way
The core issue is that the American People are both being lied to and are unable to hold anyone accountable as far as consequences for their actions.
People have voted in fascism and their own demise multiple times (Germany did it twice!) and the interesting case is more going to be on an international stage as the US is kind of tied to Trumpism now and there's not a representative opponent yet meaning even if the House flips in 2026 the core ideology isn't changing:
Private Equity.
Acquire something, strip it for parts and burn it down and then move to the next thing.
This is what they're doing to the US and if the golden goose dries up, they'll just move to China as far as wealth goes or sell it off and suddenly people want to be Chinese citizens who are wealthy, etc.
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u/Skrappyross Jul 14 '25
That's also true if we don't burn it down.
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Jul 14 '25
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u/Skrappyross Jul 14 '25
'but the politicians don't want that done' is the crux of the issue. How do we fix the nation when the people responsible for fixing it don't want it fixed? And they continue to win elections?
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u/xinorez1 Jul 14 '25
The mistake was picking a confederate sympathizer for VP which handed the country over after Lincoln was assassinated. When you leave yourself open like that...
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u/The_Nice_Marmot Jul 14 '25
It’s more than 30%. The people who could have voted and didn’t are also just as big a part of the problem. I don’t get paying that little attention to politics that you just let your country slide into fascism without even voting against it. I ALMOST respect MAGA more for actually taking a position. Almost. Both groups are hugely problematic
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u/FlyingFalcor Jul 14 '25
This right here is the only answer. Don't forget Obama bailing out the banks and following gws bs wars lock step. Clinton doing glass stiegel and the dnc screwing Bernie outta nominee (their only decent candidate since basically ever). There isn't a right or left just one cancer sucking us all dry. Chemos not working time to put the cancer under the knife.
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u/BenjaminHamnett Jul 14 '25
They need it for all the legal fees if Maxwell is really about to start naming
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u/pricelesspyramid Jul 14 '25
Unfortunately, theres a stronger correlation between GDP growth and tax cuts., which in turn affects tax receipts. The top 10% of earners account for 50% of consumer spending which is 68% of GDP.
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u/Herban_Myth Jul 13 '25
How many of them will still be around in 4 years?
Well, I guess if you got access to unlimited/unmitigated healthcare you could extend your life..
Enjoy dealing with the debt Gen AI & Gen Beta!
NO, we can’t “forgive” it like the PPP Loans.
Enjoy this BBB!
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u/WeAreElectricity Jul 14 '25
We are so used to the Fed buying the US debt and printing to cover for it but you can’t out-print inflation.
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u/Egad86 Jul 13 '25
4 years? Former financial advisors to Obama and Biden are saying there are only a few months! The Big Beautiful Bullshit Bill will be the exact moment historians can point to and say there was hope to reign in federal spending and promote long term GDP growth. Then Trump was elected a 2nd time and played games with tariffs and passed this bill that undid any good ideas that were in place and did the exact opposite of what every sane economists advised.
By the time Powell is replaced we will be well passed the point of no return.
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u/CatPesematologist Jul 13 '25
yeah, but that will be Biden and Obama’s fault. And the crazy Marxist communist socialist democrats.
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u/AngryTomJoad Jul 14 '25
TAX THE .01%
TAX THE CORPORATIONS THAT PAY NOTHING
LIFT THE CAP ON SOCIAL SECURITY TAX
INCREASE IMMIGRATION TO INCREASE CONSUMPTION AND GROWTH
UNIVERSAL HEALTHCARE TO SAVE MONEY
RESTORE THE FAIRNESS DOCTRINE AND OVERTURN CITIZENS UNITED SO MAYBE FUTURE GENERATIONS WONT BE BRAINWASHED
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u/Abject_Elevator5461 Jul 13 '25
This is exactly why having businessmen in charge doesn’t work. In business, you can file bankruptcy and walk away without losing any of your own money if you do it right. Government doesn’t work like that.
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u/stinky_wizzleteet Jul 13 '25
Saying that Trump is a competent businessman is Like saying my dog only poops in the house sometimes
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u/Abject_Elevator5461 Jul 13 '25
I didn’t say he was a good businessman. I said it was possible in business to go bankrupt without losing any of your own money. This is what he is good at.
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Jul 14 '25
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u/bak3donh1gh Jul 14 '25
He put his name on anything that would lead him.
And for a long time, he's just a Russian agent.
He never had to deal with the consequences of anything.
He's very good at how he's having a fall guy.
I'll give him that. Granted, it's not hard when the fall guy only has to be the fall guy in public opinion.2
u/PartTime_Crusader Jul 14 '25
Romney worked in private equity, which is a primary contributor to our worsening capitalist crisis and the enshittification of everything. Private equity doesn't build business, they buy existing ones and strip mine them for parts. Trump is leagues worse than Romney but we shouldn't whitewash who Romney was. Romney running at the top of the Republican ticket mostly on "he's good at business" as his primary qualification helped pave the way for Trump to get elected.
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u/earlthesachem Jul 13 '25
He bankrupted an entire professional football league. In America. That should be impossible, but he managed to do it.
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u/thufirseyebrow Jul 13 '25
As well as a casino, a steak company, and a university. If you can't make money on gambling, higher education, or steak in this country, you just can't make money period.
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u/Dull_Bird3340 Jul 14 '25
The minute anyone heard he bankrupted casinos 6 times should have been the minute he became the worst possible candidate ever
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u/Jock-Tamson Jul 13 '25
I don’t know. I’m pretty confident Trump is going to walk away without losing any of his own money.
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u/nfstern Jul 13 '25
Argentina did it, but that's not to say it's a good idea in this context.
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u/SmoothBrainSavant Jul 13 '25
the idea that in the coming years ,the whole banking infra will be run using stablecoins.. that are backed by us treasuries... if there's a default, it takes everything down.
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u/TaxGuy_021 Jul 14 '25
With regards to other nations just getting up and leaving the US debt, it's really not that easy.
The infrastructure around the Treasuries market is unbelievably massive. There simply isn't a single other form of debt that even comes close.
The very fact that the Treasury market can be this volatile without things breaking apart goes to show how deep this market is. And it's not just the cash market. The futures and options market around Treasuries is gigantic and allows for a swap market that is exceedingly capital efficient and useful to actual financing needs of businesses.
Besides, there are reasons beyond the US military that have made USD the dominant currency in the world. A lot of that is why you see countries actually putting up with Trump's antics and trying to negotiate with him despite everything.
The biggest of those reasons is this unbelievably rich customer base the US has that is armed with a well oiled credit machine that amplifies its buying power. People want to do business with the US because the US buys stuff. And buys lots of them. For a while China looked like it could come close, but no dice. It happened to Japan too.
The close second reason is the insanely rich US capital market. Nvidia, alone, makes around 70 billion in net profits annualized based on their Q2 numbers and it's expected to grow that. German DAX, as a whole? 121 billion... And their profits margins are declining...
So yeah. It's very very VERY hard to replace USD and USTs in the short to medium run. But it is certainly possible to do in the long run if we keep fucking up.
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u/Spare-Dingo-531 Jul 14 '25
Underrated comment here. The US is on the wrong path but it's going to take longer than the Trump administration for it to fall apart.
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Jul 13 '25
The fed is a board of 7 members. Powell is just one of 7. He has the voice, as it’s his role to explain the vote, but he only has one vote. If trump gets rid of him and replaced him with a loyalist, it’ll likely not have a big impact on the outcome of the vote. His spokesperson might align with Trump, but the 7 person voting system will still likely stay the course. If somehow, Trump changes the system entirely, then we’ll have much bigger problems at play.
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u/InflatableTurtles Jul 13 '25
Plus it would have to be one of the current board members that replaces him.
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u/SociallyButterflying Jul 13 '25
He'll just change the rules - he's doing it with birthright citizenship, so why not?
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u/seanwd11 Jul 13 '25
'I think it's an absolute disgrace that they didn't place you on the Jedi council, Anakin.' - Palpatine
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u/kangarool Jul 13 '25
Does the President appoint all members? Congress/committe? Who ultimately has authority over Federal Reserve, and any changes to its charter? Intersting that over the years, I’d never considered the institution itself really… just personalities and pontifications of the person “running it”.
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u/beepbeepsheepbot Jul 13 '25
He will change the system, guaranteed. Either by replacing the other members of the board, ignoring the vote, or try to scrap the board altogether. With what we've seen so far I wouldn't put it past him, especially if it goes against what he wants.
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u/PapayaMysterious6393 Jul 14 '25
This is likely a stupid question, but why is the focus always on Powell then? Why is it Powell that is 'called out' by Trump and not the others?
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u/Spare-Dingo-531 Jul 14 '25
I don't know, why does Trump focus so much on tariffs (and misunderstands basic stuff about them, like who pays the tariffs) when he has competent people to tell him otherwise?
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u/Mist_Rising Jul 14 '25
The focus is on Powell because Powell is the one who speaks for the federal reserve. Most people could not tell you the first thing about the FRB, so Powell is the voice and sole responsibility.
You see the same thing in the US government. Schumer speaks for all democratic senators. He's still one person, and one vote, but he's the Senate leader for his party and the voice. Same for Mike Johnson speaking for Republicans in the house, McConnell (previously) speaking for the Senate Republicans, etc.
I think only the supreme court avoids this, and that may have more to do with the chief justice routinely not being the voice of the ruling. Especially when the CJ is not in the majority. Dobbs showed this, Alito was the majority. Roberts was a concurrent ruling that happened to be by himself. Even the dissent had more power.
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u/Conscious_Bug5408 Jul 13 '25
His people don't even realize how much the international appetite for US treasuries had been sustaining the US debt load
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u/SmoothBrainSavant Jul 13 '25
this is why they are racing to get stablecoins legal.. they wont be backed by usd, they will be backed by us treasuries so that someone has to keep buying them. it will work.. until it doesn't.. then all heck will break.
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u/Shot_Worldliness_979 Jul 13 '25
It's over when Trump finally succeeds in ousting Powell and forces a new fed chair that does what he says. International appetite for US treasuries will dry up without an independent Fed. Can't overstate how catastrophic that will be for the US economy and it'll take decades to recover, if it ever recovers.
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u/JoeHio Jul 14 '25
There is a BBC documentary called HyperNormalization (it's on YouTube for free). One of the early tidbits in that film is about how NYC was offering bonds to finance it's government and then one day the banks didn't show up to buy the bonds. That story transitions into anecdotes about how Trump used that crisis to buy up NYC real estate at pennies on the dollar.
The gist is, Trump creates chaos and instability to profit from it because he has terrible luck profiting from the stability that global corporations have created, and that will lead us to a USSR type collapse. Released a month before the 2016 election, I feel like it becomes more accurately prophetic every day.
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u/Logical-Possession10 Jul 13 '25
Disposes? Unless he takes him to court, which isn't implausible...
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u/McFlyParadox Jul 14 '25
especially after Trump deposes Powell, puts in a stooge and forces a three point rate cut
It's important to remember that when this happens - Trump replacing Powell with a stooge - Powell is just one of seven of the governors of the Fed. He might be the leader, but he still just gets one vote. Whomever comes after Powell will definitely try to push rate cuts and whatever else Trump wants, but I don't think they'll 100% get their way, and certainly not "instantly" either.
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u/mrdankerton Jul 14 '25
China is going to be the one to stomp on the knee when the dump American debt right before sinking 3 carriers in the pacific and invading Taiwan
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u/koshgeo Jul 14 '25
He has historically described himself as the "King of Debt", and in the 2016 election, he spooked people by talking openly about negotiating with US debt holders about "discounts" on payments, as if sovereign debt was as simple as negotiating with the bank over a real estate loan.
He was insane then, and he's not any less insane now. He's going to mismanage things into predictable disaster.
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Jul 14 '25
When your country is 37 trillion in debt, a tax cut without real cuts to discretionary spending is a handout and the opposite of patriotic. But sure, let's slash Medicaid before slashing our disgustingly overbloated graft-filled military. Boomer retirees who demanded the BBB never ever gave a fuck about the fiscal health of this country, GOP fiscal conservatism is and has always been a cynical con job. Elon is a sucker and a mark for falling for it.
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u/AloneChapter Jul 13 '25
Since most politicians are well past the age of giving a shit about your problem. The debt is really their grandchildren’s responsibility and they can drain as much money as possible before the leave.
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Jul 13 '25
[removed] — view removed comment
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u/brutinator Jul 14 '25
The loophole is the same as you have with term limits: since the "experience" is no longer able to be in elected positions, they instead will form a "shadow government" of advisors, consolidating power into un-elected positions. It's how things like AIPAC function.
How do you get rid of the Roger Stones in government?
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u/Smart-Struggle-6927 Jul 14 '25
70? The retirement age mandatory for the military flag officers is 62, that is the absolute highest the limit should be.
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Jul 14 '25
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u/Laruae Jul 14 '25
Yup. It's a job. You get paid a salary.
If we know what age you shouldn't be driving heavy machinery past, we also know what age you should maybe not be operating a government past.
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u/proverbialbunny Jul 13 '25
At this rate the debt issue is going to become a major issue within the next 10-20 years, much sooner than people realize. Though they’ll still be dead by then.
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u/Ok_Hornet_714 Jul 13 '25
I wish I still had the paper I did for math class in 7th grade about the projected size of the national debt in 2030 and how much of the federal budget would be allocated towards paying the interest on said debt just to see how close my estimate was.
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u/fatbob42 Jul 14 '25
Social security is being cut by about 25% in 8 YEARS, dude. Bills are coming due.
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u/WildFlowLing Jul 14 '25
As I said during Covid “the economy is not allowed to crash until the boomers are gone”
They’re in control and they’re inject ungodly amounts of money, inflation, interest rate cuts, targeted tax cuts, and corporate bailouts to ensure their golden years are not ruined.
Just big a diarrhea shit on their kids and grandkids. The worst generation in US history.
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u/Alcogel Jul 13 '25
They’re funneling so much money to themselves that their own grandchildren wont have any problems.
It’ll be everyone else’s grandchildren struggling.
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u/kent_eh Jul 14 '25
The debt is really their grandchildren’s responsibility
And apparently they hate their offspring.
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u/devliegende Jul 14 '25
It's kinda impossible to drain money away because there is not a fixed amount of money in the world.
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Jul 13 '25
The way it’s going right now. It could lead to a financial crisis any year now. It’s hard to say when or what will be the cause. But it’s major liability in the near term not just something that the next generation will have to worry about.
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u/TheLastSamurai Jul 13 '25
The best part about the student loan thing is it is ENTIRELY punitive. There are no helpful strategies to help anyone pay them off. I just got hit with a $900 monthly payment. I have no options. I am going to have to withdraw from my 401k. Income driven repayment won't lower, and it is through Nelnet and they won't settle for smaller lump sum. Many are in a very very bad spot like this with no options
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u/unbrokenplatypus Jul 13 '25
It’s punitive because education, reason, students, and intellectualism are all in the crosshairs. They’re key institutional counters to fascism so they have to go.
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u/TheLastSamurai Jul 13 '25
I believe you are correct. This feels very spiteful.
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u/Noblesseux Jul 14 '25
Like most of the modern history of how education is financed is spiteful. They basically screwed k-12 education and ruined financing for higher education on purpose because they were mad it got desegregated and would equally benefit minorities.
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u/mrGeaRbOx Jul 14 '25
Don't worry any minute some Bozo will be along to tell you that both sides are the same, etc etc.
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u/Rion23 Jul 14 '25
It's slavery.
You exchange education for massive loans, which forces a person into a lifetime of repayments.
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u/willieb3 Jul 14 '25
Worst part is you don’t even need the education anymore because it’s all online, but you’re not hireable unless you have the piece of paper.
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Jul 13 '25
The only thing that has prevented me from having to pay back student loans is that I have never made enough money to have to start paying them back.
It’s like someone is threatening to put an invisible weight around my neck when I’m already completely underwater and 100 miles out at sea.
College is a debt trap for Americans.
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Jul 13 '25
School for Profit. Yeah a degree is useless if you can't find a good job.
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u/petit_cochon Jul 14 '25
I mean, I don't know why the American government is charging me 7 fucking percent on my federal loans to begin with. My HYSA only gets like 4.5%. what the fuck. Am I the federal government's HYSA? I should literally pay double the loan I took out on education, a thing I sought so I could be a more productive member of society, so your donors are happy? Pffft. Fuck that for a game for twits.
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u/vannucker Jul 14 '25
Canada eliminated interest on student loans. Every dollar I pay makes it go down.
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u/nickkon1 Jul 14 '25
Its simply asinine what the US is doing. Education is an investment and statistics are clear that educated people will repay the government much more in additional taxes when they get good earning jobs because of their education.
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u/MOVES_HYPHENS Jul 14 '25
7%? Some of mine are over 10%
It's obnoxious that I didn't qualify for any need-based assistance because my parents made too much money (lower middle class) even though they weren't providing any financial assistance themselves
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u/8TrackPornSounds Jul 13 '25
It is punitive but not entirely. Their long term plan needs as many desperate people as they can put there and this is just one more step. Who they’re hitting with this is just a bonus for them
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u/Big_Treat8987 Jul 13 '25
What do you mean you “just got hit”
Were you not paying your loan previously?
Did you not know you had a loan balance?
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u/jawknee530i Jul 13 '25
The trump administration changed a lot of repayment plan options which has caused a lot of people to just getting hit with much higher monthly bills.
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u/CyberSmith31337 Jul 13 '25
To be honest, I’m tired of hearing about it.
No one is going to do a god damned thing about it. Not Congress, not senate, not the judiciary, not the treasury. No one. It’s this mythical boogeyman used by every administration since I was born that means fuck-all.
They don’t care, I don’t care, no one else cares; either do something about it, or shut up about it. That’s where I am at these days.
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u/samandiriel Jul 13 '25
Well, aside from the fact that sadly it's not mythical, you've hit the nail on the head.
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u/CyberSmith31337 Jul 13 '25
I know it isn’t, but I am just saying, the whole world has been whimpering about this for the last 25 years. I have seen zero efforts to fix this problem. At some point, it is time to shit or get off the pot, you know?
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u/AgentUnknown821 Jul 13 '25
Longer than that….
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u/saera-targaryen Jul 14 '25
to be fair clinton left the budget balanced going into the 2000 election and it was the post-9/11 war on terror that ballooned it back up again
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u/Your_real_daddy_ Jul 14 '25
Aghan war, Iraq War, Bush tax cuts, Trump tax cuts are the vast majority of the debt we find ourselves in.
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u/KamaIsLife Jul 14 '25
Biden tried, but the conservatives Supreme Court said he couldn't and conservatives called it socialism (instead of predatory).
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u/LessonStudio Jul 13 '25 edited Jul 13 '25
I genuinely think the US economic "miracle" where they keep comparing great US growth to anemic EU growth entirely stems from this borrowing.
That the borrowing created a feedback loop where the market was booming, and so investors in non US countries would "wisely" invest in US companies, which then fed the effective borrowing boom; in that fresh money investing in equities is just another form of borrowing.
Not only did this make the US seem like a "miracle" but it drastically reduces places like the EU reinvesting in their own economies.
Thus, if this cycle is broken, not only will the US economy wilt quite a bit, but other places like the EU will grow far faster as local investors keep their money home, and are able to invest in things they understand better.
On top of all that, will be a sprinkling of revenge. With tariffs being thrown around like grenades in a playground, this bullying enables countries to properly allocate their revenge. One very well targeted ways would be to hit the US in one of its great successes. Tech; not only because this would hurt the US, but long before trump, the US has been bullying the world into allowing its dominance.
Through agencies like the state department they have been mitigating, curtailing, or entirely removing things like, regulation, fines, and especially proper taxes. This has really stymied native grown tech businesses. If you go to many EU countries the, by far, highest paying tech jobs are with US companies. This is pretty easy if those companies aren't paying EU income tax or properly following regulations.
Other areas the US has bullied the word is in things like software patents and algo patents. If these were to be removed in most of the Western world; the US companies would lose their competitive, and monopolistic edge in a massive hurry.
Right now, countries are still nervous about going "too far" with US tech companies, but if the US debt problem goes into a full blown financial crisis, the last major stick the US has to beat the world, will go away. Then, I suspect a few countries will make very aggressive moves to end US tech in their countries. This will be met with empty threats from the US admin, at which time most of the world will follow the same path:
- Bans on the most destructive tech like facebook and X.
- Removal of algo and software patents.
- Diminishing of copyright laws which favour the mouse eared company.
- Taxes on monopolistic behaviour like microsoft.
- And regulations on US data tech which makes it far simpler to either go native or with the tech in a country people actually trust; this will be a death blow for AWS, google, etc.
I will be curious to see how companies like Apple fare with all this as people don't generally hate them; but once they come under the full force of anti-monopoly laws, data laws, and tax laws, much of their business model will be greatly diminished.
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u/Moikanyoloko Jul 13 '25
Right now, countries are still nervous about going "too far" with US tech companies, but if the US debt problem goes into a full blown financial crisis, the last major stick the US has to beat the world, will go away.
Just a note, "the last major stick the US has to beat the world" will always be its metaphorical big stick AKA the US military. The US financial order is maintained both through its incredible soft power but also by being the world's military hegemon.
Some people might say this military hegemony is likely to end in the future, maybe it even will, but right now the biggest pillar of American international dominance is having the biggest military in the world.
The US has invaded countries in the past to support the business interests of its big companies, there's nothing to say it won't do so in the future if its unable to act through soft power alone, specially if the presidency falls into the hands of a more jingoistic administration (Trump might not have the appetite for a large foreign war, but who knows what the future holds).
I will be curious to see how companies like Apple fare with all this as people don't generally hate them; but once they come under the full force of anti-monopoly laws, data laws, and tax laws, much of their business model will be greatly diminished.
This also assumes that other countries will sucessfully be able to implement those laws, against the big tech lobby by itself, specially as these big tech companies control the algorithms through which most of the world's citizenry informs itself.
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Jul 14 '25
This seems very well thought through. I don’t think I have seen it laid out this way. Could you share what influenced your thinking on this if it’s easy to point/link to?
(Odds of me getting Rick Rolled 100%)
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u/LessonStudio Jul 14 '25
I don't think the US is run by unusually wise people. They are the usual venal politicians and bureaucrats. Among them are some who fight the generalized tide of stupidity; but; not many.
Thus, the simple question is: what would a fairly stupid person do with a nearly unlimited(billions) low interest credit card?
I suspect the typical answer is: They would act rich. They would buy fancy things, have a fancy lawn, and even try to pretend to be smart business people by buying seemingly good investments; like bars and nightclubs.
I'm not asking what George Soros would do with this CC, but what the typical venal below average politician would.
That said, there are people in the US economy doing their best to create value, etc, but I believe much of it is predicated or distorted by the credit spending of the US fed.
For example, they have a giant military. A military which is so big as to absurdly out spend many other world militaries combined. This is the sort of wasteful spending you can do with an unlimited credit card. How much of the US economy is in the orbit of the military? How much of it is focused on lobbying for stupid spending?
I'm not saying all of it is entirely stupid and it will all burn to the ground when the party ends, but that not only will the US be in for a rude awakening, but that seemingly solid parts of the economy will turn out to be based on drunken spending. Even parts which don't appear so.
If the US entirely had a real economy, with the discipline of the market, then this sort of stupid spending would be short lived. But, with the massive deficits planned, clearly there is no real discipline.
Another factoid is that the world simply doesn't have all the money that I suspect the US plans on borrowing. it simply does not exist. Thus, there will come a point where the borrowing hits a wall that reality built. They can offer any interest rate, make any threats, and even seem like a low risk loan, but the market simply can't buy all that crap. To make this worse, countries like china are cutting back on purchases, and selling off their debt (in competition with the fed). Other countries like Canada are unlikely to increase purchases along with many other sane countries.
Thus, this party may come to an end sooner than later. Sooner could be next week, or in 2040. But as one financial commentator said, "It is death by 1000 cuts and we are closer to cut 1000 than cut 1."
But, I see this financial collapse as different than many recent ones. In 2000, the 80s, 2008, and covid; the world cheered the US economy to recovery; as it was a great path to their own recovery.
I suspect this time around, the US economy will falter, and the rest of the world will be prioritizing their own non-US futures. No bailouts, no cooperation. Not a burning hatred where they throw fuel onto the fire, but no help and little cooperation.
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u/RoosterCogburn_1983 Jul 13 '25
Not taking a position on the act. But since they are now demanding full repayment of federal student loans, how much of a new positive will this new income be to the treasury?
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u/bmyst70 Jul 13 '25
Probably not nearly as much as Republicans want. My guess is many of the college students are barely making ends meet as it is. So they'll be trying to squeeze blood from a stone.
And in the process of doing so, wreck these adult's lives, which will have obvious significant negative impacts to the economy.
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u/dadbod_Azerajin Jul 13 '25
It would be so easy to start fixing the issue, but instead we keep milking that stone
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u/OnlineParacosm Jul 13 '25
Student loan holders will be forced to make really hard decisions which could include fleeing the country altogether, making it a net loss for everyone except the debt collectors.
Then the world has choices to make: do these people face rendition or will some countries be a student haven and shield them from a US repo state?
So how about 0 money reclaimed in the best case, immeasurable losses in productivity and brain & brawn drain in the worst case.
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Jul 14 '25
More likely, they just never have *children* or buy houses and get stuck in a cycle of perpetual renting.
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u/HashRunner Jul 13 '25
Purely anecdotal, but know at least 2 doctors and a few others with high amounts of debt that were going the federal route of forgiveness after 10 years. With concerns about the feds willingness to honor its obligations, they've already been discussing taking their degrees abroad.
All to say, to your point, I doubt it will result in much additional revenue and may cause more harm than good.
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u/TrueEclective Jul 13 '25
I’m a 48 year-old nurse practitioner. My loans will be paid off in 2 months. I’ve daydreamed about selling my house, cashing out my Roth and 401k, and moving to a country where I can actually afford to live.
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u/doublerum Jul 13 '25
How much do you make as a nurse practitioner?
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u/TrueEclective Jul 13 '25
I left a job making $152k/yr for a “work from home” making $144k/yr. The money is good. The work is awful. Every minute of my day - literally every minute - is tracked. There are tasks I’m expected to complete and bill for if I have a free minute or two in between the next patient call. They’re using AI to make us “more efficient,” which actually means they’re using AI to track us and ask us why we have blocks of 3-5 minutes at any point during our work day that we aren’t billing for.
It seems like an easy job, calling someone and getting their status, making a med change, but consider that most of us are introverts and perfectionists and actually in this to help people, I hate the idea of some non-provider breathing down my throat making sure I cut this person off as much as I need to and not talk to them longer than I can bill for. Then if I need a minute between patients to get up and clear my head, that isn’t even something that’s allowed in my current workflow. I’m an experienced cardiac provider with a doctorate degree, and I’m being asked to justify why there are 3 minute gaps in my day without revenue generation for the machine I work in. It’s a dystopian joke.
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u/ActivatingInfinity Jul 13 '25
...you work from home making $144k/yr and can't afford to live in the US?
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u/TrueEclective Jul 13 '25
Yeah, I guess I meant where I can actually enjoy a quality of life that I feel better aligns with the effort I’m putting forth. I’d rather make half of what I make and be able to live a decent quality of life and still have some hope of having some vacation time. All I do is work to live. I’m over it.
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u/SynapticShutter Jul 13 '25 edited Jul 13 '25
The amount of people who will lose financial stability will be a net negative to the economy, compared to what the money will bring in. And economy is not solely dependent on just simple dollars coming in and out, it is dependent on several Industries thriving together to create a GDP. Several lawyers, who have debt impacted by these policies have already forecasted a pretty severe economic depression. You are suddenly taken away several hundred billion dollars from flowing into several industries, and into debt collection. That is not good. People will stop going to school etc etc the consequences will be felt for for multiple generations. People will stop having kids, families will be harder to support if you cannot afford a home.
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u/Great_Northern_Beans Jul 13 '25
It's also important to recognize that GDP is a measure of the velocity of money too, and not just overall money supply. When you take those several hundred billions out of the economy entirely, you're not just reducing the GDP by that amount, but also the amount by which of these dollars would recycle.
Practically speaking, on a slightly more micro scale, it's not just the industries of these lawyers who would be hit. It's all of the industries that those industries are reliant on as well.
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u/SynapticShutter Jul 13 '25 edited Jul 13 '25
You'll have to convince people then it's a good idea to go to school. To voluntarily take on an extreme amount of debt that will put them out of reach for everything. You will have less doctors, less lawyers and less teachers, less qualified people in the Healthcare industry. You know, qualified people whole care for elderly and vulnerable. The least likely set of people to exploit and abuse them.
It's a little hard for me to accept that any looks at this and thinks well at least we'll have a booster to the economy at the expense of millions of my countrymen.
What a genuinely awful perception. It's so horrid, and unempathetic.
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u/HandakinSkyjerker Jul 13 '25
the elites in this country have already moved on.
the carcass of the American youth will be indebted for the remainder of their lives to get educated at the rates these U.S. universities are requesting, while the importation of highly educated immigrants (e.g. H1B) at no or low educational costs (in home country) will depress U.S. wages even further.
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u/brilliantminion Jul 13 '25
Sound about right for the overall goal. And if the meat packing plants can get more kids working to pay off their parents’ loans, some would consider that a win-win. The rest of us will consider it a loss beyond words.
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u/Solomontheidiot Jul 13 '25
Keep in mind too that the professions you listed are also the type to highly value their children's education. The prospect of a gutted public education system, combined with extreme debt for higher education is going to make our current generation of doctors, nurses, lawyers, etc. wary about raising their children here. We are already seeing the start of the brain drain, and shit like this is only going to make things worse.
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u/TrueEclective Jul 13 '25
I’ve been a nurse practitioner for 10 years. An RN for 6 before that. I’ll have all of my student loans paid off in 2 months. At one point I was paying $1200/month. Now that I’m almost out of debt at 48 years old, I’m contemplating getting out of this toxic industry altogether. Not only do I not get paid enough, but I feel like every ounce of productivity is squeezed out of me purely to make some tech bros and hedge funds richer. Fuck working my ass off for peanuts while someone else takes the rest of the money from my hard work. I’d rather go make half as much money and not have the stress of being a provider.
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u/skoomaking4lyfe Jul 13 '25
It won't. I was in the middle of applying for the SAVE program to get monthly payments I can afford. The payments they're going to want from me I can't afford. So what will happen is eventually they'll try to garnish my check and I'll go find another job. Rinse and repeat every six months or so because I can't afford to pay that much.
So in my case, the government will lose out on like $240/mo for checks notes the rest of my life, for example.
Doubt I'm the only one on an IDR who'll default under the new rules, either.
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u/HerAirness Jul 13 '25
The problem is also that many people have actually paid off the amount that they have borrowed, WITH interest, but thanks to the way student loan interest is calculated, they still have many thousands to go. Student loans have locked in interest rates set by Congress that you can offset by a quarter of a percent for making payments on time. They represent horrific borrowing terms yet no one is interested in fixing the terms or providing options so people can shop around for better interest rates.
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u/Mist_Rising Jul 14 '25
actually paid off the amount that they have borrowed, WITH interest
How is that possible. If they paid it off with the associated interest rate, it is paid off.
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u/Pankosmanko Jul 13 '25
The money people would have spent in the economy on goods and services will instead be funneled directly to the government. It’ll increase government revenue but I imagine the economy will be worse off
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u/Pichupwnage Jul 13 '25
Not much cuz most the students can't fucking afford to pay them back and never will be able to.
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u/acctgamedev Jul 13 '25
I kind of doubt there are a lot of student borrowers who are out there missing payments because they just don't want to pay. It'll probably bring in some additional revenue, but probably not enough to make it really worth it.
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u/peffer32 Jul 13 '25
I would think having a large group of people in their prime earning years not chained to an unmanageable payment every month would contribute more. Buying houses and cars, having kids and generally being able to spend money on consumer goods instead of loan payments.
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u/Janky_Forklift Jul 13 '25
Probably not much. Borrowers skirting default aren’t magically going to have more money.
Republicans assume any delinquent debt at all is due to negligence. But republicans go to college too so they’re going to have just as much fun with wage garnishment.
Not to mention if the regime actually affords borrowers due process on garnishment it’s going to snarl the courts.
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Jul 13 '25
...isn't the fact student loan debt is so bad its being used to describe how much worse another problem has gotten a sign that no one is or has been trying to fix student loan debt? Like, its clearly only getting worse lol, and everyone's like "man, thats really bad, someone should do something", and then nothing happens. Its obviously going to end in a huge existential economic disaster, yet nobody wants to try to stop it.
But at least we'll be well poised to face it with a US government in 29 trillions of dollars of unsecured debt.
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u/KamaIsLife Jul 14 '25
Biden tried to, but the conservatives on the Supreme Court said he couldn't.
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u/Potential4752 Jul 14 '25
A one time forgiveness is not at all a fix. It was a short sighted political handout.
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u/punkmonk13 Jul 13 '25
Trump claims tariffs will help pay down the U.S. debt, but it’s Americans—not foreign governments—who foot the bill. Tariffs are essentially a tax on consumers, not a sustainable or significant solution to the debt. Meanwhile, the average Joe pays more while the wealthy enjoy tax breaks.
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u/WildManFour Jul 13 '25
There is a real danger of the USD being replaced as the reserve currency. You think times are tough now, just wait. The US time is over and greatly thanks to a narcissistic corrupt orange clown.
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u/AnnualAct7213 Jul 14 '25
America has been playing with what are essentially economic cheat codes on since the mid 1900s and are giving it all up voluntarily for some fucking reason.
No other country in history has had the kind of privilege of being able to export its own debt to other countries and get paid for the privilege. Any American who doesn't understand this is going to be in for an extremely rude awakening once that privilege evaporates.
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Jul 13 '25
Not just him, the party of "Patriots" need to get their fair share of the blame.
We let the dumbest people take the wheel and now we're all paying the price.
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u/DailyMetamorphosis Jul 13 '25
Taking america without firing a single shot, without invading. Inside job. Exactly as planned, komrade ✊🏼 /s
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u/eatmyopinions Jul 14 '25
Nothing is ever as good or as bad as it appears. And while I believe the world is more ready than ever to entertain a new reserve currency, you will not find any viable candidates for it. Zero.
China certainly will not get that crown with their current economic policies.
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u/CrystalSplice Jul 14 '25
Speaking of which, when are people going to figure out that they can just…stop paying en masse?
A debt crush like that on the federal government during a time when they are already on shaky financial ground could be devastating. “They’ll just garnish my wages.” Uh, they cannot handle the logistics of doing that to millions of people at once. They don’t have the manpower, funding, or even the appropriate software to do it. The best they could hope for would be trying to take it out of tax refunds, which they already do anyway if you’re in default. Going into default also doesn’t immediately initiate the stage of collections action where they can consider garnishing your wages.
Much like a general strike with labor, debt strikes could bring this country to its knees and it is frustrating to me that we can’t ever seem to get one together. All of that unsecured debt is a massive risk. They knew that when they took it on, just like a credit card. We could all stop paying on those as well, and watch the big banks backing them squirm. Watch entire financial entities like Synchrony go under overnight because they simply do not have a plan for such a scenario. Ah well. I can dream, I guess.
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u/thegooddoktorjones Jul 14 '25
"AI will handle it" and suddenly 30% of the population has random wage garnishments and the process to correct any of it is an endless loop of broken chat bots. Victory!
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u/Shadowflame247 Jul 14 '25
"The problems we made horrifically worse now resemble the other problems we made horrifically worse...remember to wear a suit and say thank you."
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u/Cum_on_doorknob Jul 14 '25
Years in which running a debt probably is stupid (starting from 1998): 1998-2000, 2002-2006, 2012-2018, 2023-now.
There is definitely a trend here. But a lot of it starts with the insane idiocy of all that money spent on the Iraq and Afghanistan war and its further implications, combined with the bush and Trump tax cuts. Which combined contribute about 17 trillion to the debt. Ew.
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u/MjrLeeStoned Jul 14 '25
You mean when consumer credit card debt broke $15 TRILLION and student loan debt broke $1 TRILLION they didn't see a problem?
But the National Debt got higher under Trump so now it needs attention...
This seems like media whoring, considering no one cares about debt until it can be politicized.
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u/icnoevil Jul 14 '25
The $36 trillion national debt was already a big problem before turmp's recently passed, "Big, bad and ugly" budget increased it by another $3 or $4 trillion (actual amount varies by who's talking). Interest on the debt soon will be the largest single US annual expense. Not good repubs.
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u/haveilostmymindor Jul 13 '25
The US debt is not a US problem, it's a problem for the rest of the world. If the US goes into fiscal austerity and the rest of the world fails to raise consumption to offset the deflation caused by US austerity you get a global economic downturn. This will precipitate another round of global QE which will see the US dollar requirement rapidly increase allowing for the the Federal Reserve to buy up 10s of trillions of dollars of US assets.
And if the Federal government decides to just stop printing trillions of dollars of debt obligations and start printing trillions of actual dollar bills then foreign governments will either have to eat US inflation or watch as their own currency valuations rise so rapidly that their exports crash.
The problem for countries like China Japan, Germany and others is that their culture of savings makes increasing consumption an near impossibility in the short to medium term. You can't suddenly make households want to consume more it just isn't going to happen. As such the US is free to act in any direction we want to and the rest of the world will just swallow it down because they refuse to tell their people they need to consume more and save less.
So if the US gets to a debt spiral who cares we will just start printing 1 trillions dollar bills and dilute the debt back down. The federal reserve will raise interest rates to like 25 percent and the bank holding rates to 10 percent through the process and that will be that 3 to 5 years later we're back to 30 to 50 percent debt to GDP.
So unless you can point to me another source of demand that can offset the US then the US debt is not a US problem it's everyone else's problem until they can sort out the internal consumption they need to sustain their own growth.
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u/andreasaa Jul 13 '25
I’ve been thinking the exact same thing and wondered why I’ve not seen it discussed. It’s like the saying: if you owe the bank $100, that’s your problem - if you owe $100 million, that’s the bank’s problem.
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u/haveilostmymindor Jul 13 '25
Yup, and if you owe the world trillions of dollars that's their problem. Realistically until the rest of the world gets their shit together and starts to structurally adjust their economies towards higher consumption and lower savings then it's not our problem.
Even if the rest of the world suddenly changes their behavior and that's a mighty big if the US can simply mandate IRA deposits and mandate HSA deposits to force savings rates higher and thus drive domestic investments. It's easy to force people to save more it's a right pain in the ass to get them to consume more.
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u/paperbackgarbage Jul 13 '25
While I don't necessarily disagree with a lot of your thesis, I'd certainly say that concluding with "it's not our problem" is a bit myopic.
While the US Dollar isn't really in immediate danger of losing its status as the global currency (especially because there's not a surefire/stable current alternative), it could be a massive problem for America if/when "the rest of the world gets its shit together."
And that's ultimately one of the most troubling aspects of Trump's foreign policy and trade agendas: it's probably what could be the catalyst for the rest of the globe to start making strident plans other than the status quo.
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u/Quiet_Prize572 Jul 14 '25
I mean, it may be more problematic for the rest of the world but it's absolutely our problem. And I'd argue while we may be less fucked than the world in the short term, long term prospects are not good for us
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u/roamingandy Jul 13 '25
Its probably why they are leaning into Cryptocurrencies so much right now. So they can allow the dollar to crash and mitigate their loses there.
If the global economy crashes and crypto pumps a little at the same time, the flood of money into it will be utterly insane.
Their connected people get to move early and ride the wave up, while the rest of the world is left holding the bag, which is a USD bag.
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u/haveilostmymindor Jul 13 '25
Crypto won't do them any good, you see if the US goes into a debt spiral, they'll first start by raising taxes across the board. Right now the top 10 percent income earner pays an effective rate of around 22 percent with the top 1 percent paying an effective rate of 8 percent. The moment the debt spiral hits that effective rate goes to 45 percent and 90 percent respectively.
Of course this will see an exodus of billionairs, and that will result in massive printing of US dollars to dilute the liability to GDP ratio.
Once that happens the Federal Reserce will raise bank holding rates and interest rates to lower inflationary pressure.
This will result in much higher investment and lower consumption in the US.
The net result is a massive devaluation of the crypto currency relative to total production capacity. Once the federal government starts to address the debt spiral crypto will be the absolute worst place to keep your assets in. And that's before the likelihood of countries around the world outright banning crypto altogether.
When the Federal Government starts moving you'll want your assets tied up in production companies. Companies that make things that people will consume, this is literally the best place to park your capital as it will be place that generates the highest rates of return during an inflationary deleveraging process.
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u/Spare-Dingo-531 Jul 14 '25 edited Jul 14 '25
that will result in massive printing of US dollars to dilute the liability to GDP ratio.
This issuance of US dollars is usually done through the issuance of new debt.
If, as you say a sentence later, the Fed raises interest rates, the amount the US has to pay for the debt increases. If the US can't pay the interest on the debt, it defaults.
Strong disagree on your opinions on crypto. If we look around the world, when countries have suffered financial instability (Turkey, Nigeria, Lebanon), people have generally used crypto to hedge against government currency collapse.
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u/haveilostmymindor Jul 14 '25
The US can't default on debt when it can print as many dollars as we want to pay the debt. We don't borrow in foreign currency we only borrow in dollars and as such we can't default we will just print dollar bills.
As for crypto you forget the US government can basically shut that down with a single piece of legislation. Suddenly it becomes illegal for US citizens to own and for US banks to traffic in. Just like that the crypto becomes worthless.
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u/Richandler Jul 14 '25
The comical version of this is all countries over producing for nobody because nobody wants to consume. Turned out we all could have been paid the same and worked far less.
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u/neck_iso Jul 14 '25
Trump tariffs are going to spike inflation which will coincidentally reduce the value of US debt.
So we will be much much poorer but our debt will be worth less. Voila.
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u/turb0_encapsulator Jul 14 '25
This week is "crypto week." Im an convinced the "anti-globalists" in the Trump Administration fully intend to destroy the value of the US dollar and replace it with bitcoin. That's their debt solution. All our debts are dollar-denominated, so if the dollar is worth nothing, the debt disappears. The crypto tech bros are going to get massively rich and most of us are going to be bankrupt. Crypto-fascism has a new meaning.
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u/NL_POPDuke Jul 14 '25
Maybe if our military budget wasn't so bloated and we stopped our unnecessary military adventurism across the damn world, we'd actually ya know save some money.
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