State of the U.S. Treasury in early 2025

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I think the only way to get the debt paid is to pay with inflation. We had 17 years of zero or near zero rates. Our mortgage is 2 3/8%. That isn’t sustainable. Perhaps there is a way to repay $36T but I don’t see it unless you inflate. Any others smarter than me with other ideas ?
I doubt I'm smarter than you, but any time I was ever in debt (and it's been a while) I stopped spending money on stuff I wanted but could live without and used the excess to pay off debt. If I had to borrow for something, I just did without. Pretty simple.
 
Rant not aimed at you, rembrandt.:flowers::flowers:

I simply never understood the issue that a penny costs more than a penny to make. A penny is not a store of wealth like a gold or silver coin. It's made to transfer wealth physically - unlike using zeros and ones as in much of today's transfer of wealth.

Pennies, for all intents and purposes are indescribable. 100 year old pennies are still mostly useable. Their per use cost must be infinitesimally small. So if they cost 50 cents to make, the only argument is whether they are useful or not. A case can be made that they are no longer useful. (I don't buy that, but I understand the argument).


Sorry. End of rant.
If they cost signficantly more to make than their value in commerce then they will be melted down for the copper (and other metal content). Yes, I know it is illegal (and I wouldn't do it), but given enough profit - somebody will.

FWIW, here is the regulation making melting of pennies (and nickels) illegal: Federal Register :: Request Access

ETA: Bad money drives out good, aka Gresham's law. Now that I know pennies are worth 2 cents (in metal value), would it not make sense to hoard them while they are still available? Similar to what I should have done (had I been wise and not just a child) when silver was taken out of US currency in 1965?
 
I don't fully understand the mechanics of how inflation reduces the debt. Is it something like increasing the money supply to repay the debt with inflated dollars? How does the government increase the money supply without increasing spending/debt?

Step one is to reduce the spending down to revenue levels.
Inflated dollars pay off nominal debt with "money" that is worth less than the borrowed money. We do it all the time with our mortgages. That's why we have to pay interest - the money we pay back isn't worth as much so the bank charges enough interest to make it worth their while.
 
If they cost signficantly more to make than their value in commerce then they will be melted down for the copper (and other metal content). Yes, I know it is illegal (and I wouldn't do it), but given enough profit - somebody will.

FWIW, here is the regulation making melting of pennies (and nickels) illegal: Federal Register :: Request Access
Ironically, a dollar bill costs as much as a penny to make - and it only lasts a few years before it has to be burned and replaced. Currency and coins are just a cost (to gummint) of doing business.
 
Right, the government charges interest too. So to say that the only way to pay it is with inflation just means to pay off the debt (with interest):confused: Why isn't that obvious? Am I missing something here?
 
Right, the government charges interest too. So to say that the only way to pay it is with inflation just means to pay off the debt (with interest):confused: Why isn't that obvious? Am I missing something here?
The difference is that the gummint loans the money to itself, in effect. It prints money backed by "air" to pay some of its debts. The gummint does pay interest to those it borrows from and the FED does charge interest to banks, of course. But for all the money the gummint takes in, it still spends more. So, paying off its debt with cheaper (less valuable dollars) w*rks well for gummint. Unfortunately, it means the dollars WE get are also worth less. So the only way we can come out is to (wait for it) borrow "good dollars" and pay off with inflated dollars and hope the interest rates don't to go too high. Around and around we go. It's the only game in town and the best you can hope for is to be a winner at a losers game.

Way too much simplification, I know.
 
What's the old saying? When you're in a hole, at least stop digging.
And that would suggest that you start to reduce the annual deficits, each of which add to the national debt. I'm skeptical that will happen. We'll have an idea of how serious Washington is about deficit reduction in a few weeks.
 
If they cost signficantly more to make than their value in commerce then they will be melted down for the copper (and other metal content). Yes, I know it is illegal (and I wouldn't do it), but given enough profit - somebody will.

...

Cost to make has little to do with melt value. Pennies are 97.5% zinc and only 2.5% copper. ChatGPT tells me melt value is 0.73 cents - minus your labor, materials and energy - you know, cost to melt. Nobody is melting post-1982 pennies for metal value.

And I'm not opposed to ending the penny.
 
And that would suggest that you start to reduce the annual deficits, each of which add to the national debt. I'm skeptical that will happen. We'll have an idea of how serious Washington is about deficit reduction in a few weeks.
We'll see if anyone even really WANTS to cut spending. I doubt it, judging by the current clatter on TV.
 
The difference is that the gummint loans the money to itself, in effect. It prints money backed by "air" to pay some of its debts. ...

Money is backed by the power of taxation. Also the fact that the US owns literally half the land in the Western US. Not that deficit spending is a good idea.
 
Two ways to reduce deficits: 1) spend less; 2) tax more. I think we'll need both.
Probably true, but I'd like to START with spending less and THEN see where we end up. YMMV
 
Cost to make has little to do with melt value. Pennies are 97.5% zinc and only 2.5% copper. ChatGPT tells me melt value is 0.73 cents - minus your labor, materials and energy - you know, cost to melt. Nobody is melting post-1982 pennies for metal value.

And I'm not opposed to ending the penny.
Yeah, and the pre'82 pennies are disappearing too - just like the pre '59 already have.

I'm gonna keep a stash of pennies and when a merchant wants to "round up" I'll give 'em the 3 or 4 pennies. Rounding down is on them. :cool:
 
The difference is that the gummint loans the money to itself, in effect. It prints money backed by "air" to pay some of its debts. The gummint does pay interest to those it borrows from and the FED does charge interest to banks, of course. But for all the money the gummint takes in, it still spends more. So, paying off its debt with cheaper (less valuable dollars) w*rks well for gummint. Unfortunately, it means the dollars WE get are also worth less. So the only way we can come out is to (wait for it) borrow "good dollars" and pay off with inflated dollars and hope the interest rates don't to go too high. Around and around we go. It's the only game in town and the best you can hope for is to be a winner at a losers game.

Way too much simplification, I know.
I guess I'm still learning the lingo around here... I'm certainly in the camp that "inflating our way out of the debt" is not a viable solution... this sounds more like just spinning the wheels with one trillion in interest payments each year.

Stop/slow the spending, and some tax reform.

I'll just add that when congress doesn't direct spending on specific programs, then the executive gets to prioritize within the departments, and it goes both ways every four or eight years.

Oh, and I sure won't miss the penny.
 
I guess I'm still learning the lingo around here... I'm certainly in the camp that "inflating our way out of the debt" is not a viable solution... this sounds more like just spinning the wheels with one trillion in interest payments each year.

Stop/slow the spending, and some tax reform.

I'll just add that when congress doesn't direct spending on specific programs, then the executive gets to prioritize within the departments, and it goes both ways every four or eight years.

Oh, and I sure won't miss the penny.
By the way, I don't LIKE inflating away the debt either. It's just "the way it's done" in gummint.

And my vote is to KEEP the penny! :cool:
 
We need to seriously inflate the value of copper and then use the existing stash of pennies to pay off the national debt.
Let's not do that. We have enough problems with tweakers stealing copper wire and AC condensers. A few years back, they cost (IIRC) millions of dollars damage on our third Freeway lighting system for a few hundred dollars of copper wire. Couldn't stop it until some guy fried himself stealing wire. I shouldn't say this, but it seemed sorta poetic justice. (No, not really.) :blush:
 
I don't fully understand the mechanics of how inflation reduces the debt. Is it something like increasing the money supply to repay the debt with inflated dollars? How does the government increase the money supply without increasing spending/debt?

Step one is to reduce the spending down to revenue levels.
I would agree that first is to stop digging that hole.
 
I could most certainly live without the pennies. For one, most transactions are digital so we’re only talking about cash transactions. Second, many times I leave my change. Many of my cash transactions are at places I tip, like restaurants and food counters like the bakery. I frequently just let them keep the change. I can’t imagine I’ll even notice any other rounding that eliminates the penny. I’ve noticed that my coin jug doesn’t seem to fill up anything like it use to and I haven’t done a Coinstar run in at least a couple years. Probably even since before COVID.
 
Personally I would be orders of magnitude more concerned about Medicare/Social Security over US Treasuries; and, I am not particularly concerned about the former, which is to say I am not, from an actionable standpoint, concerned at all for the latter.
 
In my case, my interest in keeping the penny may trace back to my days being relatively poor. I recall having a penny in my pocket and trying to decide whether to "blow" it on penny candy or save it toward a 10 cent comic book.

NOT getting my full change back (rounding or whatever it's called) is anathema to me. I've seen people literally throw their pennies on the floor or the ground after a purchase. Heh, heh, I pick them up. I'm sure a psychiatrist or psychologist would have a field day with my behavior.
 
I think the average comic book cost about $5 now. The penny is irrelevant. However, if I see one on the ground, I would pick it up. Though it’s likely I’d never spend it.
 
... I'm not opposed to ending the penny.
+1 but it should be a decision made by society as a whole through our representatives and not dictated by a single person who didn't get over 50% of the popular vote. So suspend production of pennies temporarily, tee it up to Congress and have them decide and then proceed as decided by Congress. It doesn't need to be a partisan issue.
 
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I'd be OK with them getting rid of the nickels and dimes too. I know it would be inflationary but you can't even play video games for a quarter now.
 
...I'll just add that when congress doesn't direct spending on specific programs, then the executive gets to prioritize within the departments, and it goes both ways every four or eight years. ...
That's not really the way it works. Congress appropriates money to be spent on certain programs pretty specifically. I think the most vexing current problem is that right, wrong or indifferent, Congress has appropriated what shall be spent on certain programs and the administration is saying that it doesn't like what Congress decided and therefore will fail to execute what Congress decided, effectively trying to create a line item veto through inaction.

One court has said that the administration can't do that. I'm sure it will be appealed and will eventually be decided by SCOTUS.
 
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