I don't actually think this interpretation is correct. ZIRP was the government printing money and buying bonds off the market. I think it had more to do with velocity of money, which ordinarily would have been corrected through a recession, but the government prevented that, which will create a much bigger recession at some point in the future.

"Capital" gets tax privileges to encourage investing, because investing creates things, consumption destroys things. We want more of the former than the latter.

> 5-year treasuries were paying 7-9% with inflation in the 2-4% range

One crucial difference: the US wasn't $40T in debt, and it wasn't pulling trillion dollar deficits. In 1998 the US federal government actually had a surplus! Even 9% interest wasn't going to wreck the Federal budget when the overall amount of debt to be serviced was so much lower.

Everything is relative to size. If your older brother lends you a dollar at 100% daily interest, you can still throw a balled-up Jackson at him a couple days later and walk away clean. But ask anyone who agreed to a crazy 20% interest rate on their car loan what it did to their personal finances, and all you'll hear is horror stories. 9% on $40T would be suicide.

Apart from a brief period (which also had higher inflation) yields were more like 6% in thr 90s.

Yields depend the most on the central bank interest rate. The interest rates are still quite low compared to the past.

The debtor inflating the debt away is a soft default, even if not a mechanical "true" default of not making a payment.

Yields will rise and reallocation will occur to hedge against this inflation via debasement risk, as investors will manage against inflation adjusted real return versus other investment opportunities.

No, that risk always existed. When the Communists took over Russia, they did not bother to honor all of the Tsarist debts. A country is not like a company. Sovereign default is always a choice. That is what it means to be sovereign.

There have been over 70 incidents of overt domestic default since 1800. The United States defaulted in 1790, when a portion of the interest it owed was deferred for 10 years, and technically defaulted again in 1933 when it abrogated the gold clause.

> vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly

I wish you luck. Endless promises and short term thinking are the main things the system incentivizes. Each politician is temporarily renting their seat, paid for by other people. Each bureaucrat is studiously, steadfastly avoiding learning anything that threatens their continued employment, which is paid for by other people.

Eliminate candidates who promise to lower taxes (slows down debt repayment substantially) and those who promise new or expanded services. Who's left? "I'll tax you a little more and not spend that money" is a tough pitch, even if it would be helpful for the debt.

I think Clinton was the last us president to balance the budget and start reducing the deficit so I guess see what he did.

“Promise endlessly” is an oft touted criticism of social safety net programs, when the reality is that reducing vast tranches of corporate welfare is typically more than enough to solve budget shortfalls.

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?

Maybe we should consider the possibility that there is no such candidate, or if there is, they cannot compete against the 'populists'. What then?

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?

Who could you vote for, in any democracy, that would fit this?

Also, how many voters would have the wherewithal to identify such a person?

Japan is closer to 130% debt-to-gdp. The 200% number is based on gross debt and ignores some other mitigating factors for shock value.

Japan’s debt is mostly held local unlike some other countries.

Maybe it's time some people to update their understanding of the "Japan 200%+ debt" slogan that is mindlessly repeated.

https://www.hbs.edu/faculty/Pages/item.aspx?num=68142

Accounting for the asset holding, Japan's net debt is even lower than UK/US.

>The key lies in the Japanese public sector’s operation of a de facto sovereign wealth fund. Unlike countries such as Norway and Saudi Arabia, which fund such vehicles with national savings from natural resources, Japan finances its investments largely through domestic borrowing at very low floating interest rates

.... >In the case of Japan, evaluating fiscal positions solely through the lens of gross government debt can present a highly distorted picture of the overall fiscal health of the country.

More likely they are going to "monetize" the debt. Aka print yen to pay it off.

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?

These people do not exists. If a politician ran on such a platform, they would never get elected.

The fact is in modern democracies like in the EU or in the US there are simply too many people who rely on the status quo directly or indirectly.

Its almost comical, in France politicians have run, got elected and have swept the debt problem under the rug for the last 40 years, then they leave office and suddenly decide that the debt is a massive problem but that there was nothing they could do about while in office so they never did anything but now they speak about it.

And they all do it. Left, right, center, it's all the same.

> Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?

Conservatives:

    +-------------------------+----------------------------------------+
    | President Name          | Deficit Increase (+) or Decrease (-)   |
    +-------------------------+----------------------------------------+
    | Donald Trump (2nd term) |                                    N/A |
    | Donald Trump (1st term) |                                 +11.1% |
    | George W. Bush          |                                  +4.3% |
    | George H. W. Bush       |                                  +1.8% |
    | Ronald Reagan           |                                  +0.5% |
    | Gerald Ford             |                                  +0.8% |
    | Richard Nixon           |                                  +0.7% |
    | Dwight D. Eisenhower    |                                  -1.8% |
    +-------------------------+----------------------------------------+

    +-------------------------+----------------------------------------+
    | President Name          | Deficit Increase (+) or Decrease (-)   |
    +-------------------------+----------------------------------------+
    | Joe Biden               |                                  -5.7% |
    | Barack Obama            |                                  -6.7% |
    | Bill Clinton            |                                  -6.1% |
    | Jimmy Carter            |                                  -0.1% |
    | Lyndon B. Johnson       |                                  +1.9% |
    +-------------------------+----------------------------------------+

you don't think what they promise is important?

Just seems like one of those weird ambiguities.

japan is an empire, longest one too, you can't vote for that LMAO

Could you be a bit more specific about what you think "Bretton Woods III" is?

What could possibly go wrong.

Nobody has ever tried this before!

Printing money causes inflation and inflation causes increasing interest rates. It is possible to enter a positive-feedback cycle, and has happened to countries before.

I'm not predicting that this will happen, but we do need to take the debt seriously and not assume we will be able to just print money to get rid of it.

I feel like there is an inside joke here, so I apologize if I am being a bit spectrum-y taking it at face value.

Every sovereign can print money and repay lenders, but doing so cause an inflationary cycle. When it looks like that is inevitable, borrowing rates start spiralling, so you have to print more money, and soon you are Zimbabwe.

Like the US is catastrophically indebted -- both parties have been negligent on this, though one party has been much, much worse than the other -- and right now there's a certain defeated malaise about 40T in debt. The last time bond rates were this high the country had only $6T in debt, and even that was considered a catastrophic level, and bond rate trends are...not looking good for those want government funds leftover after servicing the debt.

"Oh but we'll just grow the economy..."

The debt has grown by 6.5x, and the GDP has grown by 2.8x since 2002. The math just isn't mathing. And remember that bond prices were historically low, and if there was ever a time to pay down the debt....

Nope, $2T deficit, "hide in the ballroom bunker and hold the world hostage with the nuclear launch button" projects, and now a hilarious $1.3T bribe to voters. Utterly busted. It is astonishing that it took this long for the world's lenders to chuckle and say nah.

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