Ha ha, yes that’s why I qualified it with “apparent” certitude. It just seems like everybody else knows more than I do or sees something I don’t
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There is certainty.
If current trend continues, more and more of US will be owned by foreign holders. The annual $1T+ trade deficits is not sustainable.
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Foreign, especially Asian, interests, are all too familiar with opposition from xenophobic USians, when they buy real property. That leaves stocks and Treasuries. Which loops us back to the discussion, over the last week or two, of whether there is an implicit need for the government to run deficits, so there is an ample supply of Treasuries for the foreigners to buy with the dollars they earn by exporting goods to the US.
Steve
About 30% of Treasuries, 25% of corporate debt, and 20% of equities are owned by foreign actors.
It goes without saying (for most, anyway) that with less demand, prices fall (or interest rates rise, in order to attract more buyers). Therefore the appearance of “foreign” money in the US economy is a good thing, not a bad thing.
As a thought exercise, think what would happen if suddenly all that foreign money disappeared overnight. Treasuries would have to massively hike rates to attract more investors, likewise corporate debt, and stock prices would fall given the paucity of buyers.
Be careful what you wish for.
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NO !
The solution is to live within your means and not having to print money and not rely on mercy of others, especially foreign countries.
People are too beholden and addicted to spending and funding it with $Trillions of printed money in extreme.
Government is too bloated. AGI will fix it.
Hopefully
a) Robots work and work for humans
b) Don’t ask for benefits (soc sec, health etc)
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I’m with Divi on this one. The synergy of the trade deficit putting dollars in foreign hands, and the issuance of government and corporate debt, which repatriates those dollars, is fundamentally dangerous, because, as he says, it makes the US dependent on the good will of foreigners to keep the circle yank of liabilities going.
Steve
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I’m with Steve and Divi, both for the reasons the stated but I add one more:
There is a high and recently rapidly escalating probability that the USA and the world screw up diplomatically and whoa whoa whoa oh oops too too late and we collectively idiotically:
LET SLIP THE DOGS OF WAR
Afterwards, (if there is an afterwards), we would need to borrow a ton of money both to win through and then to rebuild. Best show some prudence and not give away more lucre in tax breaks to the wealthy.
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DOGE only found < 1% of spending cuts. And AGI is heavily over-rated.
While your goals might be admirable one has to ask if the current approach is one that can achieve those goals. It can’t. In fact the only thing the current approach can do is simply burn everything to the ground and then try to somehow survive the carnage.
The administration has no clue just how long it will take to rebuild domestic supply chains. They took a long time to move out, it will take a long time to bring back.
Tariffs are taxed paid by us, not the foreigners. Money “flowing into the Treasury” is coming from your wallet and mine, not theirs. You need to understand this.
If you want to tackle the threat of China you do it with allies, and we have told our allies to take a hike. This is what the TPP tried to do, ally us with Asian countries and build trade w/o China. You don’t try to fight the entire world at once.
The GOP has liked to talk for DECADES about being fiscally conservative but numbers do not lie. And this current budget is going to explode our deficit. You want deficits to go down, vote Democrat. Ignore the talking points and campaign bluster.
You might like what Trump says, but what he is doing will not accomplish any of that. I like the idea of lower deficits. Of more domestic production. (I also want freedom from religion, I want rights for women and minorities, I want rule of law and for court orders to be followed, I want to see education valued) But I want to see policies that will actually make that happen.
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You have to look at what is happening instead of what people want to happen. You can fool people into supporting you because it sounds good, it’s a story, but the truth is a lie. When you look at the big beautiful bill you can see the object is not to lower debt. It is to raise it. Otherwise there wouldn’t be a tax cut. They would raise taxes and make higher tax rates at the upper end if they wanted to pay off the debt.
But what they have done is given the very rich a tax break, made the poor pay more for their healthcare, and put tariffs on all of the United States. This is counterproductive because the wealthy and middle class will just stop buying and the poor get hit twice. Watch the money brought in by Tariffs, I expect it to be high at first and then go down as the months go by.
So in Conclusion. We all want lower debt but how they get there is important. If it crushes the poor and increases the money for the 1%, that is not going to be a great outcome.
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The idea is to grow GDP faster than debt. Tariffs helps. DOGE helps.
The Real story is AGI. It will skyrocket the GDP like we have never seen before.
Tech CEOs are deploying Billions.
Explain to me how Tariffs make GDP grow faster? Explain to me how Doge makes GDP grow faster?
We do not know if they are yet. In Trumps first term we heard the same story and nothing came of it. In fact manufacturing jobs went down. That is why I said , it’s a story, but the truth is a lie.
IF debt goes up, GDP goes down are you going to admit that you were lied to or try to snow everyone that we all are doing great? We already know that the tax cut is going to increase the deficit 4 trillion dollars and we know in the last term it increased the debt also.
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Only if you tax the GDP does it help the debt. And the GOP has shown, over and over again, it does not want to tax. Except through tariffs of course. But if we are trying to increase the DOMESTIC gross product that means less imports to tax.
DOGE has show it impacts federal spending by less than 1%. This is negligible. You have been fed a lie about the savings and continue to believe it. There is what Musk claims, and then there is reality. The two are not connected.
One way to help the debt issue is to stop issuing tax cuts to the richest and largest corporations and billionaires, don’t you agree? And we have a spending bill that is going to, from what I have seen, add $4T to the debt.
From the WSJ: The Stark Math on the GOP Tax Plan: It Doesn’t Cut the Deficit
https://www.wsj.com/politics/policy/tax-plan-budget-national-debt-analysis-e9822072
While all of us here are in agreement that reducing the debt to something more reasonable is a goal we need to achieve, most of us here cannot understand why you think current administration polices have any chance of achieving that. Some would even say they have no intention of doing so in the first place.
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Tariffs bring in much needed revenue ($15 - $20B / month) to the Govt.
This money is used to lower tax (15%) to corporations and middle class. Corporations build in US (instead of China) and employ more people in US*.
More GDP. More tax revenue.
Lower debt, lower trade deficit, lower interest (interest is $1Trillion a year).
Rinse and repeat.
This is a supply side economics lie, divi.
The “tariff” revenue is coming out of your pocket. Out of my pocket.
Lowering taxes, especially on corporations, has NEVER created more jobs, never increased wages and benefits, never resulted in more tax revenue for the government. This is all voodoo economic thinking that started with Reagan.
You are buying into policies that are going to make things worse for you. Not better.
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But the money increases the amount of tax paid by corporations and the middle class. You’re just replacing funds raised by income taxes with funds raised by sales taxes - which isn’t going to have a material impact on GDP.
And you can’t have both material tariff payments and material reshoring of corporations to the U.S. When they reshore, they stop paying tariffs. That’s the point of the reshoring.
And when they do that, you end up with a reduced level of GDP, since consumers now have to pay more for those goods and therefore have less money to pay for other goods and services. Remember, these are products that are more expensive to produce in the U.S. than abroad - so if you put the tariff barrier in, they’ll move here, but they’ll go up in price. So you get higher prices and no tariff revenue.
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First you have to know how GDP is calculated.
The US calculates its Gross Domestic Product (GDP) using the expenditure approach, which involves adding up all the spending on final goods and services within the country. This approach considers four key components: consumer spending, business investment, government spending, and net exports.
So now that we know how it is calculated we can see what we are doing.
Tariffs are going to cause consumer spending to decrease because prices are going up.
Business investment is possible we will have to see if that actually happens.
Government spending is going down because of DOGE.
Exports I would think are going down because of the trade wars. We will see
So if GDP shrinks are you going to finally admit that Trump failed or gloss over it?
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GDP is going to soar. The real story is AGI. Tariffs are a side show.
It can’t soar, I just showed you how it was calculated. It is like all the DOGE cuts that didn’t come to fruition. It is all smoke and mirrors. The way to get GDP to soar is to produce more and sell it across the world but that isn’t going to happen when you made all your trade partners mad. Even now small business’s are getting hurt because people like me are pulling back because we want to wait and see.
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There is zero proof AGI is going to happen all that fast or that it will live up to expectations. But bear in mind, it’s also been said it is going to be a destroyer of jobs. So much so that many in tech are talking about the need for Universal Basic Income.
Are you in favor of UBI?
So you are placing your bet on an unproven technology that is going to destroy jobs.
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I am terrified of that.
Higher taxes on the middle class will have an effect on the GDP. Higher taxes on corporates that they are not writing off against will have an effect. It lowers the number of factories they build.