US Interest Burden Hits 28-Year High(bloomberg.com)
bloomberg.com
US Interest Burden Hits 28-Year High
https://www.bloomberg.com/news/articles/2024-10-19/us-interest-burden-hits-28-year-high-escalating-political-risk
10 comments
Reckless spending has consequences and neither major party cares. Not closely related but The Dictator’s Handbook is good reading for understanding politicians and their motivations.
They said Japan would collapse with their spending (which is far more then ours per cap). Not only has that claim been proven false it has been the opposite.
Japan has the highest debt-to-GDP ratio in the world at 262%. The country's debt has been above 100% of its GDP for more than two decades. This is due to a combination of factors, including economic policies and an aging population.
Japan has the highest debt-to-GDP ratio in the world at 262%. The country's debt has been above 100% of its GDP for more than two decades. This is due to a combination of factors, including economic policies and an aging population.
>They said Japan would collapse with their spending
Who exactly is "They"? What did they mean when they said it would "collapse"?
>Not only has that claim been proven false it has been the opposite.
The general claim is that Japanese economy has stagnated with low growth for decades and I don't think that has been proven false. For example, in the last year or two, the Japanese stock market has finally reached the values it had in the late 1980s. I am sure some Japanese economic indicators have done ok, but for example, one indicator of how well people are generally doing is to compare the GDP per capita over a period of time. In Japan, the GDP Per Capita in 1960 was about $500. In 1990 the GDP Per Capita was about $25,800 and in 2023 it was about $33,900. (In comparison, the USA GDP Per Capita in 1990 was about $23,900 and in 2023, it was about $81,700.)
https://www.macrotrends.net/global-metrics/countries/usa/uni...
https://www.macrotrends.net/global-metrics/countries/jpn/jap...
Who exactly is "They"? What did they mean when they said it would "collapse"?
>Not only has that claim been proven false it has been the opposite.
The general claim is that Japanese economy has stagnated with low growth for decades and I don't think that has been proven false. For example, in the last year or two, the Japanese stock market has finally reached the values it had in the late 1980s. I am sure some Japanese economic indicators have done ok, but for example, one indicator of how well people are generally doing is to compare the GDP per capita over a period of time. In Japan, the GDP Per Capita in 1960 was about $500. In 1990 the GDP Per Capita was about $25,800 and in 2023 it was about $33,900. (In comparison, the USA GDP Per Capita in 1990 was about $23,900 and in 2023, it was about $81,700.)
https://www.macrotrends.net/global-metrics/countries/usa/uni...
https://www.macrotrends.net/global-metrics/countries/jpn/jap...
It's not working great for Japan either. Kyoto is practically bankrupt. Inflation unbearable for Japanese citizens. Wages stagnant. With aging population and low birth rates I don't see how or when it gets better anytime soon for them.
As long as debts are issued in their own currencies(Japan in Yens, US in dollars, etc) it doesn't cause any problem because people can swap nominal assets aka paper money(say, JPY) for real assets(gold, oil, rice, chips, etc). Only developed countries have this luxury of having 262% or 500% debt-to-GDP ratio.
Third world countries (say, Sudan, India) can print money like Japan and US, but Saudi doesn't to swap their oil with Sudanese pounds. Now you see where this logic is leading to: as long as real asset holders are happy to part with their real assets for dollars/JPY, debt-to-GDP ration can stay 1000% or 10000%.
Third world countries (say, Sudan, India) can print money like Japan and US, but Saudi doesn't to swap their oil with Sudanese pounds. Now you see where this logic is leading to: as long as real asset holders are happy to part with their real assets for dollars/JPY, debt-to-GDP ration can stay 1000% or 10000%.
This type of thinking is why we are ultimately doomed.
Yen is not the world's reserve currency. It won't matter until it does. Then the consequences are unimaginably devastating when it does.
It will be reflected in the 30 year bond first though. 4.3% is laughable compensation for the risk for my risk preference. That yield is already floored at some not great rate for housing here because of the debt without the Fed stepping in.
Yen is not the world's reserve currency. It won't matter until it does. Then the consequences are unimaginably devastating when it does.
It will be reflected in the 30 year bond first though. 4.3% is laughable compensation for the risk for my risk preference. That yield is already floored at some not great rate for housing here because of the debt without the Fed stepping in.
When the next recession happens, stocks will fall and bonds will rally, causing yields and interest burden to fall. The US recently had a historic opportunity to refinance and lock in long term debt at low rates, but that ship has sailed.