The same reason you think it is absurd and fake is why others are panicking about the debt.
13% of federal taxes go to paying interest on the debt. That is 13 cents of every tax dollar paid. It is on track to hit 20% in the next 10 years, and that is assuming the US economy and tax revenue keeps growing.
Japan, UK, China, and the Cayman Islands are the largest private holders of US federal debt. [1]
What part of this seems incredible to you? It is indeed a lot of debt spending.
Yes, we sold $1T of Bonds and t-bills. About half were sold to banks and foreign countries. The other half was sold to the social security retirement fund (in exchange for SS tax revenue)
I don't see how my statement was in any way misleading. The Treasury estimates the upper bound of foreign ownership to be $9.1 trillion. The overwhelming majority of Treasury debt is held by domestic interests, whether agencies or organizations or individuals.
For most people, "ourselves" implies the lender and holder are the same, and directly leads to the idea that it is forgivable without someone left holding the bag.
The US federal government absolutely has the ability to forgive, restructure, or write off debt in its capacity as lender. It has frequently done so.
Where do you see limitations on seeking default or forgiveness in its capacity as borrower?
The US did a pseudo default when it left the gold standard and paid gold denominated debts with paper worth significantly less, telling lenders to put their complaints were the sun doesnt shine.
Never in 1 million years did I think that if you saw somebody fish a body out of the Thames, and immediately pull their pants down, this might not be cause for alarm
There are similar biases there about the technological sophistication of what the Americans were up against. The image of a Taliban soldier rarely includes an engineer with a spectrum analyzer on his back to probe US jamming signals, or plasma cannon IEDs, but they were a big part of that conflict.
would a 499 billion cap make you happy? 100 Billion?
It would require substantial punitive taxes and penalties to prevent this accumulation. Would founders and investors still develop in the USA if their upside were curtailed? Would Musk Found spaceX if they were not allowed to profit from it?
Also, it is not as simple as taxing profits. Almost all of this value is simply equity in controlled companies. What is the mechanism here? If you are too successful, the government seizes your company? Dont you think that would be disruptive to investment and growth?
So you were just spitballing things you dont even think will work? Neither of them seem even remotely close to sufficient, either alone or in combination in preventing another Musk. 2% seems irrelevant and he would probably be even richer if prevented from buying twitter due to the ban on collateralized lending.
If we are just spitballing, I think we should charge Billionaires a nickel every time they tie their shoes, and a dime on Sunday.
One option that might actually work is following a more feudal model, where the POTUS/Trump executes or disappears any oligarch that accumulates more than X amount, as assessed by the executive.
My actually preferred option is to simply get the money out of politics.
50% per year might do it, but I think that is well into market distortion territory where there will be consequences. Also remember that at this scale it isn't taking money, it is seizing control of companies.
But yes, we can both agree to defer to the experts and not bother trying to understand or think through the consequences of our policy beliefs.
> Also remember that at this scale it isn't taking money, it is seizing control of companies.
Nah. Zuck has "founder's stock" that gets 10x the voting power. He owns something like 13% of FB but >50% of the voting power.
> But yes, we can both agree to defer to the experts and not bother trying to understand or think through the consequences of our policy beliefs.
"We should have a wealth tax" and "the wealth tax should be set to exactly 3.28%" are very different things. I believe a wealth tax would be beneficial; I also believe that setting the amount of said tax requires some domain experts.
Yeah. No single individual needs that much money. especially in this day and age where politicians are cheap as fuck to buy and the markets will reward any and all regulatory capture in the name of increasing short-term value of stock....while not giving a damn about the long-term ramifications of how it perverts our entire economic system.
>100 Billion?
That would too. Let me ask you - if you had $99 billion USD, would you whine that you don't have $100 billion, or would you, y'know, go out and use the money to enjoy your life and take care of people?
I know which I'd do. Hint: I'd be extremely fucking happy with what I'd have and I'd do all I could to spread the wealth around as far as I could. I wouldn't whine, I'd be overjoyed that I'd have more wealth than all but approximately 30 people on the planet.
The only "work" I'd do at that point is to figure out which diseases could likely be eradicated with enough money, and figure out how to give enough money to get it done. Gates, for all his faults, did pretty much just that. His money kicked malaria's ass.
>Also, it is not as simple as taxing profits. Almost all of this value is simply equity in controlled companies. What is the mechanism here? If you are too successful, the government seizes your company? Dont you think that would be disruptive to investment and growth?
It most certainly is quite easy.
If you have over a certain number in net worth (say, $100 billion), you can't take out loans against your stock portfolio - you have to sell stock or assets. The loans-against-portfolio system was designed to help middle class individuals buy homes, not to help centibillionaires buy $500mm yachts. If you are the sole founder of a multi-trillion dollar organization, your business expenses should cover quite literally anything you could ever need.
The mechanism isn't the government taking away a company, and it's certainly not disruptive to investment nor growth. In fact, as a founder myself, I'd take it as a badge of honor if the government came in and said "hey bro you are now worth a hundred billion dollars, you've won capitalism, go enjoy time with your friends and family". My investors, who invested small amounts of capital at a valuation in the low single digit millions, would be thrilled at a 100 billion dollar exit. That's nearly a 100,000x multiple ROI. If you, say, as an investor, dropped $10,000 on an investment. It gave you a return, after a decade, of 100,000x, or a billion dollars. Your reaction to that would be to complain that the government is discouraging and disrupting growth?
> The loans-against-portfolio system was designed to help middle class individuals buy homes, not to help centibillionaires buy $500mm yachts. If you are the sole founder of a multi-trillion dollar organization, your business expenses should cover quite literally anything you could ever need.
This is nonsense. It wasn't "designed" to help the middle class. Portfolios are clear collateral assets and a natural backstop that doesnt need a "designer". It will arise in any financial system that allows free contracting and doesnt explicitly prohibit it.
> In fact, as a founder myself, I'd take it as a badge of honor if the government came in and said "hey bro you are now worth a hundred billion dollars, you've won capitalism, go enjoy time with your friends and family...".
This is such a contrived example it isnt worth discussing. The realistic outcome is the government taking it and giving you nothing. We aren't discussing the government "buying" anything.
I dont understand why people are so confused and skeptical about this.
Its basically like a mortgage. Buy a house and use it as collateral for the loan
13% of federal taxes go to paying interest on the debt. That is 13 cents of every tax dollar paid. It is on track to hit 20% in the next 10 years, and that is assuming the US economy and tax revenue keeps growing.
Japan, UK, China, and the Cayman Islands are the largest private holders of US federal debt. [1]
What part of this seems incredible to you? It is indeed a lot of debt spending.
https://ticdata.treasury.gov/resource-center/data-chart-cent...