Sort of yes and no. I don’t think indefinite spending was ever on the cards.

But if other countries tried to maintain the levels of US deficit / debt, they were given far less lenience from investors, in pressure / yields. This was because US was seen as, on the whole, fiscally responsible, very productive, and safer from shocks - to the point that when the US mortgage crisis exploded, the safe haven for assets was… the US.

As these assumptions are challenged, the US is waking up to what the European old economies experienced following 2008. Increasingly yields, increasing costs of borrowing etc.

If you’re reliably printing good GDP growth, higher level of debt may be good as it gives you more leverage, and drives more growth in turn. But leverage is a multiplier and it isn’t free, so if the engine sputters, you might find yourself falling out of the car at a greater speed…

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mono442 4 hours ago | parent [-]

A debt crisis like in eurozone countries in 2008 is very unlikely to happen in the US. For it to happen, it would require the fed working against the us government.

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rich_sasha 2 hours ago | parent [-]

Well, the US clearly has far, far more rope than Greece or Italy. Question is, is that a buffer, or a perfect noose in the making.

The Fed seems already constrained by the administration to not raise rates. Yields went up anyway. US primary deficit is huge and so debt to GDP is accelerating from different angles - interest, increased spending, increased yield demand based off uncontrolled inflation expectations etc.

In fact I suspect that the mega-pivot to AI is an attempt to solve the problem by massively inflating GDP, so that the debt doesn’t matter - ie radically grow the economy. It remains to be seen if it pays off and solves US’s problems.

At the end of the day, the US cannot escape from the forces that drowned Greece - inflation, investor confidence, debt spiral. It’s totally avoidable, but the US seems determined to race full speed ahead at it. Let’s see if Trump can play chicken with economics.

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pjc50 an hour ago | parent [-]

It's basically the Liz Truss situation, except the UK could actually remove her after just one budget because the Conservative party weren't fully on board with her level of brainworms. Whereas the US's two legislative houses are 100% supportive of this.

	▲	disgruntledphd2 44 minutes ago \| parent [-]
		> Whereas the US's two legislative houses are 100% supportive of this. I think that it's more likely that many of them just like their jobs, and Trump has a history of orchestrating primary challenges against people who disagree with them. Now, one could additionally argue that this is only possible because of their frankly insane gerrymandering, and one would be correct, so maybe it is ultimately their fault.