Actually bill clinton paid some of it back (and created 22 million new jobs and an internship).

also the us debt is 38 trillion

Clinton didn’t do much of anything to pay down the total amount of outstanding debt, but he (and Congress!) did have positive effects by balancing the government’s budget. Outstanding US government debt chart from FRED: https://fred.stlouisfed.org/series/GFDEBTN

The budget was balanced and/or a surplus for the years from 1997-2001, which meant a lot less money was borrowed (or fewer bonds were sold, depending on how you want to look at it.)

The percentage of public debt to GDP also fell substantially from 1993-2000, which is a better metric than gross debt levels anyways. Here’s a chart of that from FRED: https://fred.stlouisfed.org/series/GFDEGDQ188S

  > also the us debt is 38 trillion

It's sort of like being given one fine that's $100, and one fine that's $250 billion.

You may as well keep increasing the number of second fine, because in no earthly circumstance will I ever be able to pay it back.

> because in no earthly circumstance will I ever be able to pay it back.

Well at that point, all hell breaks loose - that's the Weimar story all over again.

The minute the US isn't able to project power globally, and the minute the Gulf states shift even a single transaction away from the petrodollar, the USD is finished. At that point, it might not make sense for them to accept the USD or dollar-denominated debt, either because of constant devaluation or the pointlessness of holding onto US Treasuries (because the US won't pay its debt). No one would buy US debt as a safe haven any more, which means the US won't be able to fund its budget.

You’ve been able to buy gulf oil in non-us currency all along. You can buy it in yuan, pounds, euros etc.

Dollar hegemony isn’t because of the petrodollar. It’s the other way around. The oil states throw off huge amounts of profit and oil is such a big market you need the dollars reach to service it.

You can't buy them off the bat from a petrostate. Heck, even China had to enter multi-year special negotiations with Saudi Arabia to even get a batch of oil sold in yuan terms. Gaddafi and Saddam Hussein were the two proponents of selling oil in euros, and look where that led them.

The spot market is different but that's not where most of the world's oil is sold.

> The oil states throw off huge amounts of profit and oil is such a big market you need the dollars reach to service it.

The oil states prefer dollars (and have pegged their currency to the dollar) solely because of a number of historical decisions that enabled dollar hegemony, which made the oil states peg their currency to the dollar and prefer the USD. That's changing now, but only very recently and at a snail's pace.

You can’t trade oil in any currency off the bat. It’s a complex market involving globe spanning logistics and geopolitics.

But I’ve personally traded oil in euros and know people that trade it in pounds daily. The yuan negotiations were complex because China wanted to get the currency controls set right so that it didn’t destabilize their peg while the saudis didn’t want get stuck with the worlds most illiberal currency.

This week India went back to trading for oil in rupees with an American global adversary at the behest of the US president.

The gulf states bargain on security was a boon for them and the states, but again the correlation was reversed. The Americans provided security, a willing and ravenous market for the goods and a stable liberal currency when few others could.

> I’ve personally traded oil in euros and know people that trade it in pounds daily.

Don't equate spot market buying with what countries do for national supply. When countries buys from Petro states, they're not buying on the spot market.

You cannot buy oil from Saudi Aramco in pounds or euros because why not. They will simply laugh you out of the office and tell you to deal with an oil trader (the actual people you're dealing with, on the spot market). But you can actually buy from them directly in USD (which a lot of the aforementioned trading firms like Glencore, Trafigura and even Jane Street actually do).

Your hypothesis then is that if Oman prices a single term contract not in dollars that will _cause_ the end of dollar hegemony rather than be the result of it?

Even though the largest oil producer in the world will continue to price in dollars no matter what. The third largest oil producer was forcibly dedollarized already and the gulf state national producers already sell oil into the spot market outside of dollars today?

You’re missing the magic sauce: every other government is also equally fiscally irresponsible.

Doubt. Western governments sure, but not Asian governments, who are the majority buyers of Middle Eastern oil.

And also not all western governments..

>You may as well keep increasing the number of second fine, because in no earthly circumstance will I ever be able to pay it back.

When that's the case, you'd be surprised what happens when the breaking point comes.

Or do you think countries haven't gone bankrupt before?

mmm..

A better analogy would be this:

You have $100k income, and $800k debt, on which you have to pay ~$40,000 interest every year. That takes up a good chunk of your income. But if the debt doubled, at the same interest rate, you could really be in trouble.

If I pay $40K interest every year on my $100K salary, I’m in trouble. If I owe $80K in interest every year on my $100K salary, the bank is in trouble.

Not if your income was partly “getting loans from the bank” and now the bank won’t lend you money anymore, which is more in line with what the debt means for the us.

Or are they, really?

> (and created 22 million new jobs and an internship)

I appreciate the humor you hid in this aside.

also the U.S. unfunded liabilities is over 100 trillion*

* That was the number that I first heard, but a quick search shows it's estimated anywhere from 80 trillion to 210 trillion dollars.

We pay it back all the time. Our debt exists in the form of Treasury bills and bonds, which are dutifully paid when they mature (anywhere from a month to 30 years later).

The total debt goes up because we keep issuing new bonds. But bondholders are satisfied that we do pay back our debts, so they're willing to loan us more money. They're so confident that we get the lowest interest rates; every other interest rate is pegged to that.

It's important not to be misled by analogy to personal debt. You will die some day; countries do not. If somebody loans you money they have to take into account if you will die before you pay it off. That's not a problem for the country. (Or a company; many corporations also have permanently revolving debt.)

Now, if we ever fail to pay back a debt, that entire house of cards collapses very, very quickly. We're currently at no risk of that; we make enough money to pay our debts as they come due. But a government could decide to fix the "debt problem" by failing to pay them, and that would be so unbelievably bad that it's hard to imagine why politicians even suggest it.

The US government does spent a pretty large amount of its budget paying some of the debt back. More now that there's been multiple brinkmanship games of threatening a default for political points.

The interest on the debt alone, is 1 trillion dollars a year.

And that's at basically the lowest interest you can possibly get a loan.

The U.S. GDP is about 31 trillion, so 3 percent of that isn't bad, as long as we can continue to grow more than that, forever.

Federal Outlays: Interest as Percent of Gross Domestic Product (FYOIGDA188S) https://fred.stlouisfed.org/series/FYOIGDA188S

Although according the the article, the interest payments account for one fifth of revenue, projected to be one quarter in ten years.

The core of the issue is that the new debt isn't taken at low 3% interest right? So the servicing costs are rising faster than the economy is growing.

>as long as we can continue to grow more than that, forever.

"Being chased while on foot by a pack of hungry cheetahs is not that bad, as long as we can keep our distance"

You also have to understand that the foundation of money is debt in the sense that if we paid back all the debt, money wouldn't continue to exist. The sum total of debt exceeds the total quantity of money.

paying off one credit card with another credit card doesnt really pass the threshold of "paying some of the debt back"

it means we gave $8T to someone and slowly pay it.

https://www.youtube.com/watch?v=KLQlOK3AWSs