[flexie]

It's a unique form of American subsidies: You don't have to directly pay your businesses to get a competitive edge. You just don't require companies and individuals to pay any way near enough tax to keep basic government functions like education and healthcare going. Then you solve it by printing more money.

When a less powerful country does that, it bears most or all of the cost itself. When the US does it, much of the inflationary cost is borne by all other countries that use the dollar as a reserve currency. Other countries don't have a reserve currency like the dollar.

[chii]

> Then you solve it by printing more money.

the money isn't printed. It's debt, which is different. The debt is expected to be repaid, with interest.

If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less. By borrowing instead of printing, you don't have this permanent increase in money supply. Of course, there are other ways to increase the money supply, which is to control how much debt actually makes it into the system - but this can be regulated as required by the economy.

> Other countries don't have a reserve currency like the dollar.

the dollar being reserve is not really "forced" upon other countries - it's a choice they made to use USD as their reserve. They do it because other parties trust it. They could use the japanese Yen, or even the chinese yuan. And yet, majority of entities choose to use the USD.

They do it because it's a relatively stable currency. They do it because other people accept it, and they do it because there's some trust that the US won't print money like Venezuela or Zimbabwe.

[laboratorymice]

> If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently.

You have to get your head around the fact that this is an open-ended system, the music never has to stop so long as the sun rises and we stay on this monetary system. The same way people still get "wealthier" from stock market appreciation, even though there is a buyer for each seller, so too does more debt indeed mean a permanent increase in money supply[1].

[1] https://fred.stlouisfed.org/series/MABMM301USM189S

[Ylpertnodi]

>the dollar being reserve is not really "forced" upon other countries - it's a choice they made to use USD as their reserve.

The several countries that tried not to use the usd kinda got penalised, though.

[ThinkBeat]

The money is not printed but that is a technicality. The money is invented out of thin air as needed and spent. (In a rapid succession. ) (QE)

For a lot of it: No loans have been made, no obligations sold, No foreign or domestic entity has handed over "real money" No interest rate has been set.

For other parts the US government has bought its own obligations.

And then there are parts that are actually loans from other entities.

If they wanted, they could mint a few $1 trillion USD coins and whoosh the money exists.

The US is able to do this due to the special status of the USD as a reserve currency and general trust.

Venezuela is not able to do this because they lack the might and power od USD. Nor would Norway.

Under Covid Norway spent "real money" from their piggy bank. The US spent a lot of invented money. (But also, other categories)

https://www.investopedia.com/terms/t/trillion-dollar-coin.as... https://www.investopedia.com/government-stimulus-efforts-to-...

[PeterStuer]

"the dollar being reserve is not really "forced" upon other countries - it's a choice they made to use USD as their reserve"

Try selling your oil in anything but usd and see what happens. It's not a choice if the consequences of making the 'wrong' choice is being invaded, bombed into the stone age and have your country pillaged and its assets handed off to reserve currency alligned corporations.

[flagrant_taco]

> the money isn't printed. It's debt, which is different. The debt is expected to be repaid, with interest

One person's debt is another person's money. Our economic system is built on an expectation of contistent growth, deflation is not an option and those in charge will do everything they can to avoid it.

When the government creates new money it's technically debt, but debt they will never get back and clear off the books. Doing so would reduce the money supply and either cause deflation or reduce GDP, neither are acceptable for the system. They tried quantitative tightening policies to remove some of the debt/money created after the housing crisis, even a small amount of QT hit hard and they very quickly abandoned the idea of allowing those debts to be paid back (or ought back and removed).

[roenxi]

> The debt is expected to be repaid, with interest.

And yet, realistically, the US is almost at the end of a trajectory where they keep borrowing until they can't repay even the interest then default. What scenarios are there now where it makes sense to even try drawing down the principle?

The only question is who is eating the real losses. The ambiguity of that is half the spectacle. Ironically, US taxpayers are in it with the best chance of avoiding that particular burden.

> They do it because other parties trust it.

Speaking of, the Chinese seem to be losing confidence in the dollar, their treasury securities holdings are going down [0] remarkably quickly. They're at around 60% of peak and dropping. Amazingly, the US is still seeing foreign holdings of treasuries going up!

[0] https://ticdata.treasury.gov/resource-center/data-chart-cent...

[georgeplusplus]

>>>If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less.

When banks make a loan they are literally creating new money into existence.

Perhaps you meant Bank Reserves which is the underlying system banks and the fed use and the dollars which is bank customers like you and me use.

[Sharlin]

Government debt is, in general, not expected to be repaid. Ever. Only the interest, and often not even that.

[mejutoco]

> If you actually printed money, which does not have interest to be repaid, then the amount of circulating money would've increased permanently. Therefore, the expectation is that each printed dollar is worth less.

I understand this logic, and I am trying to square it with the following:

When there is instability investors flee to the dollar (like during covid), and the demand for it increases (dollar goes up), also from other countries increasing reserves. So If when the dollar goes up the US prints more dollars, are they really getting into debt? It seems like a different case form other countries.

[glimshe]

Your statement applies to the entirety of the developed world, not only the United States. Please don't tell me that countries like Japan, Germany and France don't get the same sort of subsidy. No matter where you live, it's the poor that bear the cost of deficit spending, which is a worldwide problem.

In poor countries, as you pointed out, deficit spending is a more acute problem, usually felt through currency collapse that mainly hurts the largely poor population.

[Zufriedenheit]

Germany actually has the second highest tax rates of the developed world. [1] Also it is written in our constitution that the budget has to be balanced except in extreme cases like pandemic, natural disaster or war. Our problem is that companies are leaving because of high tax and energy costs. [1] https://de.statista.com/statistik/daten/studie/185987/umfrag...

[olalonde]

Indeed, money printing is a hidden tax on all currency holders. That's partly why Bitcoin is appealing to many people.

[knorker]

Printing more bitcoin is a tax on everyone and their electricity costs, their environment, and the existence of free tier compute.

[mrjin]

I'm wondering how much longer it can play such game. If current trend does not changes, its revenue will soon unable to cover the interests.

[smitty1e]

Revenue hasn't covered costs in decades.

If the BRICS overthrow the U.S. dollar, there will be a come-to-Beevis moment in the U.S.

[6nf]

Inflation fixes that

[laboratorymice]

Fully agree, and it's probably intentional. It's not entirely fair, but I suppose most countries would do the same given the chance. Clearly it's not how you want to get ahead as a country, since all it takes is for the world collectively to decide it no longer wants to bear that cost, and then you can only keep it through force. Inflation becoming a well-understood phenomenon with the general population also threatens it.

If China plays its cards right, the US is going to start having a bad time still this decade. The US should be aggressively trying to reach a more balanced economy. The distribution of not just wealth, but of the ability to generate wealth, leaves the US on very shaky ground.

[maroonblazer]

Despite its many problems, the U.S. still enjoys the largest consumption of any country. People are banging down the door/wall to move here; we don't see people clamoring to emigrate to China. China's demographics spell doom for the foreseeable future.

Not only would China need to play its cards right, it'd need to win the lottery to overtake the U.S.

[tomohawk]

You could raise taxes to 100% and not pay for everything the US is obligated to at this point. It's totally insane. The 2 ways out are to somehow grow the pie bigger to get more revenue while stopping the constant increase in obligations, or to inflate the money and pay off the debt with worthless paper.

It's also the backdrop of the infighting over the Speaker of the House. It's the Speaker who has control over the budget, not the President. If you look, for example, at the R votes against Jordan, it is mostly those on the appropriations and defense committees who want to keep the spending going at any cost.