[Pontiac]

"Peace Dividend" 1992-today, reduced military spending to 3.5% of GDP on average, including the War on Terror

There is a bigger issue on the near horizon that will impact the budget more than the Peace Dividend.

The all consuming interest on the national debt. Every year our budget deficit requires more and more borrowing. Every year recently fewer and fewer countries are willing to buy US securities. Recently the cost of borrowing has risen for the US.

Default is looking more likely all the time. Hyper inflation is certainly a possibility.

Every country that has ever used fiat currency eventually fails.

[Wuli]

“Every year recently fewer and fewer countries are willing to buy US securities. “

The trend for less foreign buyers of U.S. debt is not catastrophic. It grew higher to 49% in 2011 and has trended downward closer to what it was in 2002 - about 34%. A strong dollar is one of the reasons - when the yen is worth fewer dollars, the Japanese buy fewer U.S. treasuries, because they become more expensive; same for other countries in a similar situation.

But yes, regardless, the interest on the federal debt is really the biggest current fiscal problem the federal government has at the moment, but as grave as that issue is, the pending deficit of Social Security could make Social Security alone insolvent before anything else.

Where I disagree with Trump’s econ people is that we can produce enough GDP growth, that will produce more federal tax revenue, such that “we can grow our way out of debt”. Feasible if the size of the debt can be offset by a set continuing annual increase in GDP. I think we cannot get to GDP growth to make the theory work in reality.

[blitz128]

Can not argue with you. Name a coild try that does not use fiat currency?

[BroJoeK]

Pontiac: "There is a bigger issue on the near horizon that will impact the budget more than the Peace Dividend.
The all consuming interest on the national debt.
Every year our budget deficit requires more and more borrowing.
Every year recently fewer and fewer countries are willing to buy US securities.
Recently the cost of borrowing has risen for the US.
Default is looking more likely all the time.
Hyper inflation is certainly a possibility.
Every country that has ever used fiat currency eventually fails."

I understand that and agree, up to a point, but consider:

1. For starters, let's remember, every government in history eventually failed.
2. No great nation/republic/empire ever lasted forever.
3. On average, large empires last around 300 years, though a few last much longer while others are relative flashes in the pan.
4. Governments come & go -- when they fail & bankrupt their countries they get overthrown by revolution or invasion.
5. That's why many truly ancient civilizations have very recent governments -- China comes to mind: thousands of years old, but governed by the CCP only since 1948.

In that sense, the US is already one of the world's oldest governments.
The list of current governments older than the US is quite short:

1. San Marino (in Italy) since 301 AD
2. Iceland's Althing parliament since 930 AD
3. England/Britain's parliamentary-monarchical system since 1689
4. USA since 1776.

The UK's empire is particularly instructive:

World of Empires, circa 1900:

• The largest empire in history brought down by, arguably, financial collapse after two catastrophic world wars.
• Those wars, and the resulting decolonization, eliminated a dozen other large empires including:
  • French,
  • German,
  • Russian,
  • Ottoman,
  • Austro-Hungarian,
  • Japanese,
  • Italian,
  • Dutch,
  • Belgian,
  • Others post war

• Britain is the only empire whose government survived uninterrupted.

Here's the current problem:

• Today both the US and UK have run up their national debts from under 50% of GDP before 2000 to now over 100%.

• Those numbers were equally high for the US after the Revolutionary War, for the UK after the Napoleonic Wars and for both after WWII.
  Such levels are temporarily tolerable, if major efforts are made to control and reduce them, but that does not seem to be the case today.

• Even Sec. Scott Bessent's 3-3-3 plan (3% GDP growth, 3% deficit/GDP and 3 million new barrels of oil/day produced) will only marginally improve things.

Bottom line: "Marginal improvement" might be enough but:

100%+ national debt/GDP ratios -- like the US, UK and several other major economies now carry -- are 100% manageable and reducible, if and only if:

• Economic and productivity growth reaches the levels Pres. Trump has set as goals to achieve, i.e., Bessent's 3-3-3 goals,

• Trump's $18 trillion in promised foreign investments arrive as promised,

• 2% inflation, low unemployment and high labor participation rates become normal.

For starters.

In short: US national debt is manageable & reducible, so long as the economy does well.