People are worried about America's solvency

root-parent

https://archive.is/L8RM7

thelastgallon

What happens if US becomes insolvent? Is USD going to be inflated? hyperinflated? Will other currencies appreciate or just devalue their own currency by the same percentage to keep up the exports and continue to earn USD for oil?

epsteingpt

No one serious is worried about American solvency. The paper says 50% over the next 10 years, but even most economists misunderstand how the monetary system works. There are so many other issues to worry about at the moment more immediate than solvency.

throw0101d

From 2018, "Sadly, Fiscal Restraint Is No Longer a Core Principle of the GOP": * https://www.cato.org/commentary/sadly-fiscal-restraint-no-lo... When you've lost the Cato Institute… More recently in 2025, "The petrodollar, not GOP fiscal restraint, is what sustains our unsustainable debt": * https://thehill.com/opinion/finance/5465671-republican-fisca... Not that I believe the folks at the top at the GOP really cared about it, ever, going back to (at least) Reagan; it was mostly an excuse to cut taxes on the wealth and cut social programs: * https://archive.is/https://www.nytimes.com/2003/09/14/magazi...

cmiles8

Financial markets work in strange ways. The markets generally respond to US concerns by buying more US treasuries. That’s counter-intuitive but reflects the situation that if things hit the fan they feel loaning the US money is still the safest place for their money. For better or worse there’s unlikely to be a scenario where the US becomes insolvent but it’s not far worse for those outside the US.

refurb

US government solvency is backed by the power to tax and tap into the massive US economy. Considering the US has one of the lower overall tax rates of developed economies, I’m not sure we’ve reached any sort of crisis level

hn9zmdcaou

Well reasoned throughout

OneManHorde

I am sure this is a nice article, but I'm always surprised when something with a hard paywall makes it this high up on HN. Does everybody but me have a Financial Times subscription?

EGreg

This is why UBI is inevitable. There is less and less demand for US treasuries, and Trump’s tariff war has only accelerated it. The GENIUS act gets US a set of entitites that are forced by law to buy US treasuries - stablecoin issuers. It helps the digital dollar be used around the world, and treasuries to still have some demand. That is probably why it is called “genius”. This is the last step before the demand shock. The US will have to stop borrowing and eventually print money to service its sovereign debt. And when they do, they could either send it to banks, corporations, fatcats and pork projects — or they can send it to every American equally. The latter would be a UBI that would trickle up into the economy, with people spending it on their actual needs. It would increase most health outcomes, emotional health as well, raise average effective IQ by 13 points. And then they could tax the corporations and robots, and pay down the debt. As it is, there are literally not enough dollars in existence to pay down that debt. The US will have to print them, or default.

mono442

The US emits two types of scrapes of paper, one of which (bonds) promises the other (the us dollar) and the "experts" somehow think america can actually go bankrupt. That's hilarious.

latentframe

Interesting part is the gap between beliefs and prices => if the investors expect a US debt crisis we expect it to show up somewhere in the term premium real yields dollar or inflation expectations ; those signals can remain muted for a long time

hellisothers

Just finished “Super Sad Love-story” and worrying about this hits hard :grimace:

m101

Here are the numbers for the US, as a percentage of GDP: - Government Debt: 123.0% - Tax Receipts: 17.2% - Spending: 23.1% - Deficit: 5.9% - Interest on Debt: 4.2% So yeah, 1/4 of taxes go to paying interest. To allay the debt concern crowd a bit: gdp numbers are real numbers, so inflation of 3% and growth of 1% = 4% nominal, so that deficit number actually means that next years govt debt as percent of gdp won’t be materially higher. This is the government playbook: create actual inflation of 6% per year, with reported statistic inflation of 3% per year. This means real growth looks like +3% before you need to talk about contractions/recession. All this means that the sovereign crisis is not near and the government steals your savings at 6% per year.