World Politics & State Debt

[August1991]

I feel uncomfortable making opinions about world politics

China is not in debt. Nor is Russia.

The US federal state is enormously in debt. What does this mean?

Many people around the world hold US denominated paper - issued by the US federal government - with a promise. These people expect that the US federal government will honour this promise with somethng real. (For example, people expect their Social Security payment will give them food.)

W)hy?

The US federal government has the power to tax some very rich people.

Yet the US federal government is borrowing (selling bonds) at a rate greater than Americans can generate income.

This is not sustainable.

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If this system fails, you will first know when the US dollar loses value against other currencies.

Among macroeconomic variables, exchange rates are volatile

 

Edited August 26, 2024 by August1991

[August1991]

In Quebec, we have saved in ourselves. We have built our infrastructure.

Norway, it has saved with foreigners - trusting they will be honest.

America? They trust the future is like the past.

[August1991]

Norway has about 6 million people - like Quebec.

The Statens Pensjonsfond has about US 1700 billion - foreign paper.

The Caisse has about US 300 billion - the REM, for example.

[Mathieub]

It's sad that we are in debt. I would be happy to know that we are prosperous.