Hey bud, guess what? The gov don’t hand out a credit score, the banks do.
This entire meme is just OP admitting they don’t know how finance works in the US.
It’s a meme not a dissertation on finance.
From one pedant to another, you’ve gone to far this time.
At least someone has it right
Where did they say the government handed out credit scores? The meme was pointing out a double standard, not saying the government hands out credit scores.
This entire comment is just you admitting you have below average reading comprehension.
Worth pointing out that credit scores are completely detached from the government. They are entirely private industry, that is collecting and selling your financial info without your consent or opt in. If you were born before 2004, then they have also accidentally leaked literally all your personal info to the dark web, with literally 0 consequences.
Nah uh! We forced them to pay an hour’s worth of profits to their own charity!
If you had 34 trillion in debt and a centuries-long history of making on-time payments, you’d have a perfect credit score.
“Bankers hate him! Get an 850 credit score and dictate the terms and interest rate of your own debt using this one simple trick.”
Hey remember that one time where the country’s credit rating got downgraded due to political idiocy?
Pepperidge Farm remembers.
Credit rating also depends on credit to debt ratio. You want to keep it below 35%, so you would need a credit line of $100T or more to have a great rating.
I think sovereign debt would work like an AmEx Platimum with “no fixed limit”, which makes the algorithm ignore utilization.
The US govt basically has a perfect credit score. They have almost infinite payment history and almost infinite available credit.
Don’t forget being the only issuer of the currency you get indebted in. If I could get indebted in a currency I create myself, believe me I would
Articles and posts like this really just exist for conservatives to shout that we need to stop federal spending and cut out “unimportant” things like Dept of Education, as described in Project 2025.
The problem is that debt is good. It enables us to pay for infrastructure projects and services. It doesn’t work like a household budget…not on the scale of international economies…because money “in the bank” is money that’s not in circulation.
When money is not in circulation, it’s not being used to pay for goods and services…it’s just…sitting there being hoarded.
You all complain about Musk hoarding a few hundred billions. Imagine if the debt were in the opposite direction and the government had $34T sitting in the bank doing nothing.
And anyone can buy Treasury debt. In fact, last year it was an AMAZING return on investment for anyone that bought into it and holds into the debt for a few years. One of the safest places anybody could put money to earn a return (behind a HYSA at FDIC insured banks).
What about staying at 0? Why is debt better than no debt AND no surplus?
I’m not a financial expert, so someone who is please step in and correct anything that I say is wrong. I need to learn too.
It’s because the government’s debt is also a surplus. Government debt isn’t like personal debt because the government debt is mostly through selling bonds that the government issues. Most of that debt is owned by American citizens, in one way or another, who buy those bonds. Most of that $34 trillion is money the government owes it’s people, or at least the Americans who hold those bonds.
It’s not really money you owe but it’s money that is owed to you. Well actually the billionaire class who can actually afford to buy these bonds but hey, that’s Capitalism baby.
Fully agreed, the whole “Debt bad! Deficit evil!” trope is just neoliberal propaganda against public expenditure, which translates into a weakening of the welfare state
When money is not in circulation, it’s not being used to pay for goods and services…it’s just…sitting there being hoarded.
This is why I think the velocity of money should be a key economic indicator. Money moving around and doing work is what makes an economy better for everyone. When it starts to pool in the economy it slows down and benefits only a few.
This is another thing I learned from “Making Money”
Yeah, this is just people not understanding how credit scores work, part #57294, lol
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if it makes you feel any better you’d go to prison if you decided to run a ponzi scheme… unless you’re a bank, that is
Wait a bank is a Ponzi scheme
Not literally. I bet the poster notices the overlap between ponzi and fractional reserve lending and doesn’t care about the differences
Which is?
Bank is legal because… reasons…
Lota of differences but the key is: A ponzi scheme pays returns out of future investment. Fractional reserve lending pays returns from interest collected on investments.
Two things:
- if you owe the bank $34,000, it’s your problem; if you owe the bank $34,000,000,000,000, it’s the bank’s problem.
- its a big club, and you’re not in it.
That’s a lot of zeros, when written like that
Yes, and it is the correct number of zeros to use. I find it helps to put things into scope. “Trillion” is an abstract magnitude to most people. Writing it out numerically makes it clear how absolutely enormous the number is.
Well, since the billionaire class doesn’t pay it’s fair share of the tax burden, that money has to come from somewhere.
This is a popular thought, but even if we take 100% from the billionaires it pays for almost one year for the US.
While I understand what assumption you’re running under no one said for only billionaires to pay. The idea is progressive tax brackets the less you make the less you pay percentage wise. We also need less loopholes for the people that can buy lawyers and manipulate their funds to get out of paying what they should. There is no reason companies and the extremely wealthy should be paying an effectively less tax percentage than the diminishing lower middle class.
It’s not about only billionaires paying, it’s about them not being a magical money source. A higher rate might feel better, but it’s not solving government revenue problems.
It will not suddenly balance the budget but it is funding that will either reduce the deficit, or reduce the burden on poorer people. We can’t fix decades of poor decisions with one good decision, it’s simply a good decision we can make now that will help.
Now imagine if we had taken 30-40% from billionaires every single year… hmm…
We could have a couple year of almost not having a deficit.
And it’s rising at $1 trillion per 100 days in interest.
Whats really neat is that modern credit score systems are only 40-50 years old
And what’s sad are the number of people that act like credit scores are a force of nature we just have to accept
-1000 social credit for questioning government
Ugh… Here we go again with the social credit… It’s been debunked so many times that it’s not even funny anymore. You can ask any Chinese person about it and they don’t even know what it is because it’s really not a thing. Financial credit scores on the other hand…
Hey, buddy
Ever heard of a joke?
Yeah, it might have been funny the first time 10 years ago, but repeating the same joke over and over again, often makes it annoying and unfunny, as is the case with your comment, especially when it’s not even accurate.
Well, 39 people disagreed
Try a buttplug. May help you stop being such a tightass
Plenty of idiots around to upvote your shit, no doubt.
Yawn
We ain’t China…. Yet
Aww hell nahh if they ever do that I’m out of here going to another universe see ya
A social credit score would only harm the bad people
Who decides what’s bad and what’s ok?
The same system which makes laws
You mean the system that makes it illegal to have an abortion or to marry the person you love if they happen to be the same sex as you? Sign me up then cause, yeah, only bad people suffer in that system
Sounds like you don’t like laws and rules in general
Countries can print money. If the debt is denominated in your own currency you will never not be able to pay them.
This.
More people need to understand that the debt of a sovereign nation isn’t analogous to that of a household.
Public sector debt is private sector surplus.
The current American debt is more than the current GDP. That would be fine, if we were paying it down, but it’s growing faster than ever.
It would also be fine if it was healthy debt. Debt taken to improve infrastructure in meaningful ways, improve education, shit, even a war debt to create an old school tributary state (economically speaking).
And it would all be fine if everyone in the room were adults, and there wasn’t a significant portion of America actively and willfully trying to cause governmental collapse.
The American citizen, on average, will spend $37,000 in the next decade to pay the interest on that debt, $12.4 trillion in total.
All without universal healthcare mind you. Or, on average, a reasonable retirement age.
You need to start asking yourself whether the people who keep assuring you not to worry your pretty little head about the APR on your loans, and they are ultimately partly your loans as a citizen, are actually acting in your interest.
Your comment stems from a fundamental misunderstanding of public institutions and how money works.
It doesn’t matter that the debt is higher than the GDP if it’s debt in the currency that the state creates. Japan has a debt of 250% of the GDP and it’s always going to pay for it. Why? Because it’s in Yen, and the Japanese public sector is the ONLY institution in the world capable of creating Yen. If they wanted, the Japanese central bank could quite literally perform 100 keystrokes on a keyboard, and repay all debt early tomorrow, at a cost of exactly 0 yen to the taxpayer.
Taxes aren’t the way a state funds itself. Again, the state creates its own currency, why would it need tax collection to get that currency if it can create it at will at a keyboard’s stroke? Taxes serve many purposes, such as forcing people to use your currency in the private sector (they will need that currency to pay for the taxes so it’s the one they will use), such as disincentivizing certain behaviours (tax on tobacco for example), or such as reducing inequality (progressive income taxes), or also importantly, removing money from the private sector to reduce or prevent inflation. But the one thing taxes don’t do is funding the state budget, since the state’s budget is unlimited in theory. There are practical limits, but availability of currency really isn’t one of them.
The American citizen won’t spend a single dollar paying back state debt, in fact it’s exactly the opposite. The state creates the currency with which it pays back the debt, and it’s private citizens and corporations who the state owes the interest rate to. If you buy a bond for $1000 at an interest rate or 3%, next year you’ll have $1030. The state, through debt, literally creates money for the private sector. It makes people and companies wealthier. Taxes make people and companies poorer, but taxes and debt are completely unrelated to one another, since the state really doesn’t need taxes to pay the debt.
I fully agree with your analysis of the poor usage of the state budget and people not getting the welfare state they deserve by right, but that’s not something that has to do with debt, it has to do with the government representatives not acting for the benefit of the majority but a select elite of capitalist owners. Debt is purely a financial tool that serves purposes such as creating money, or controlling the interest rates of the country so that people and companies will take more or fewer loans, which has an effect in the economy.
Thank you for typing up the reply I hadn’t gotten to yet.
You the real MVP
Always, my friend <3
Your misunderstandings stem from being gullible, lol.
ThE aMeRiCan PeOPlE wOnT sPeND a DImE
Public sector debt is private sector surplus.
Yes! This is the very essence of our monetary system that nobody seems to understand.
The other person who responded to me made a very all written post but it gets a core assumption completely wrong.
They seemed to think that tax revenue in some way has to happen for spending to happen. That’s why they think GDP has anything to do with our ability to service debt. But the federal government creates money ex nihilo.
Money has to be created before it can be destroyed through taxation. Spending and back stopping creation of money by private banks through the reserve system comes first. You can’t destroy something you haven’t created.
It’s sad, really. Economists and politicians have blinded everyone with what I think of as “the money delusion”.
It doesn’t matter if the money can be “gathered up” to be spent on things we need. We do not rely on the money of the wealthy. What matters is actual, real resources and services we can provide.
The national “debt” is a misnomer. That’s the amount of dollars left in circulation that have not been destroyed through taxation, as well as the “dollars” that pay interest which we call bonds.
I’m glad to see at least a handful of other people who understand. Fight the good fight, fellow human.
They seemed to think that tax revenue in some way has to happen for spending to happen.
Noo!
But the federal government creates money ex nihilo.
Yes!
Money has to be created before it can be destroyed through taxation.
Yes!!
We do not rely on the money of the wealthy. What matters is actual, real resources and services we can provide.
Yes, yes and yes!! ❤️
Thanks for your concise explanation of MMT! I wouldn’t be able to phrase it this well. ❤️
I get your point, but they cant just “print” currency so we could actually not be able to pay when people/countries stop buying the bonds or lose faith in the system.
No, that is not true. That states sell bonds is a self-imposed rule.
As long as a state collects its taxes in its own currency there will be demand for that currency.
What happens when they run out of people to sell bonds to and they run out of money to tax?
Then stop selling bonds and start investing directly (build schools, repair bridges, pay your employees, etc.).
Countries don’t have to take the detour through state bonds because they can make money out of thin air. State bonds are a self-imposed and there’s no law of nature that mandates using them.
How do they make money out of thin air?
Serious question? Money today is nothing more than a number in an account. When a country needs more of its own currency, it can increase it’s account by that amount.
No they cant, that is illegal. You could say they will change the law so that they can do that, but that is not possible (in america) at this time.
But you do have to pay that shit back … forever. And printing money leads to currency devaluation, makes everything else more expensive
Even if you don’t think the debt itself is unmanageable, you start having problems like
The economist ewww. The limits to how much money you can print is defined by the productive capacity of your country. If you print more money to increase productive capacity then it’s generally not a problem. The debt is simply an accounting fiction at that point.
Credit scores require you to get some kind of debt. This is because it’s not a score of your financial health. It’s a score of how reliably you repay your debt.
I’m not even one trillion in debt
Are you immortal? Do you have an income vastly higher than the servicing cost of that debt? Do you owe the large a majority of that debt to yourself? Are you able to, if push came to shove, tell your external creditors to go fuck themselves and dare them to so much as try to collect on the debt you don’t feel like paying? If you can’t answer “yes” to all these questions, you aren’t the US and have a debt situation that has absolutely nothing in common with the US debt.
Do not forget that you are also the very entity that hands out the currency you hold your debt in.
It’s like Dwight printing IOUs for Schrutebucks
Wait till you learn about how the stock market works. Everyone with a share actually just holds an IOU in the DTCC.
It’s all built on bullshit
I remember users on another platform went into full rage mode when I said the stock market was just legalized gambling, telling me how SAFE!!! IT IS IF YOU DO YOUR RESEARCH!!!>
Okay. Black Friday and Too Big to Fail only happened in my dreams.
US debt is currently higher than their GDP. Even if they could leverage the entire country into only paying debt (they can’t), it would take over a year to pay off. At the current average interest rate of ~3%, that’s enough to pay for the entirety of NASA’s budget five times over.
The last time US debt was greater than their GDP was the second world war.
Ignoring, for a moment, the inherent and fundamental differences between an individual and a state…
…in my late 20s and early 30s I bought a new car.
At the time, that car cost more than I had in my accounts plus my other possessions at the time. In fairness, my annual income was more than the total cost of the car, buuuut I also was carrying tens of thousands of dollars of student loan debt as well, meaning my overall total debt was significantly higher than my annual income, or my “personal GDP” if you will.
Yet when I applied for my car loan, it came through with easy approval and I even qualified for the best possible interest rate.
Why? Because I’ve always paid on my debts adequately and promptly.
Nobody bats an eye when a couple buys a house that costs more than what they can cover with their combined income in one year. Why? Because that’s an arbitrary and unrealistic yard stick of comparison and nobody expects them to pay off a house in a year. They’re able to buy their house and live in it immediately, and pay for it incrementally, over time, as they earn over the coming years because of debt. And the bank is willing to lend the money because they’ll make money in the long run through interest.
Similarly, it’s unreasonable to imply that the US shouldn’t carry more debt than it’s GDP because the two metrics aren’t directly linked in any way. And since the US has excellent credit worthiness, that debt is far safer than the bank’s loan to the homebuyers. And the US gains access to borrowed funds by setting it’s own interest rates through the Fed, which tells lenders exactly how much they’ll make in interest if they let the US government borrow some of their money.
And since the US is a safer bet than homebuyers, that’s why home interest rates are higher than the rate at the Fed: if they were equal, banks would never lend to homebuyers since they could get the same return by lending to the government. So instead, they set their own, higher rates for homebuyers, to account for the higher risk of lending to a party who has a much higher likelihood of default.
The government is 100k in debt on my behalf
…or, since the federal reserve creates money, they could do quite literally 100 strokes on a keyboard at the FED and repay the debt. A state doesn’t fund itself through taxes, taxes serve many purposes but funding a state isn’t one of them.
They said service the debt, not pay off the whole thing. For an analogy, your whole mortgage being less than your annual salary isn’t a requirement; your monthly mortgage payment being a fraction of your monthly salary is.
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