The famous quote from Hemingway’s book The Sun Also Rises, has been a favourite of economists for decades.
It’s the answer given when one of the characters is asked how he went bankrupt.
In the USA, they’re still at the “gradually” stage as the nation’s debt has been downgraded again, to the great distress of the Biden Administration, who point out that the downgrade was only by one agency, Fitch, and was done in the absence of the usual shit-fights over giant spending bills or a debt-ceiling showdown, which is what has triggered previous downgrades.
Yes, morons, that is the point of “gradually and then suddenly”. Things you got away with in earlier times because they were ignored, become more important. And soon those ordinary “little” things, like the giant automatically growing machines of Medicare and Social Security, or even small increases in the spending over which Congress does have annual discretion, like Defense, will become front and centre:
Consider that around three-quarters of Treasurys must be rolled over within five years. Say you added just 1 percentage point to the average interest rate in the CBO’s forecast and kept every other number unchanged. That would result in an additional $3.5 trillion in federal debt by 2033. The government’s annual interest bill alone would then be about $2 trillion. For perspective, individual income taxes are set to bring in only $2.5 trillion this year.
Sure, income tax revenue alone will likely hit $3.5 trillion by 2033, but again, that’s not the point. Sooner or later, the growth in debt and interest payments will pass tax revenues because they’re increasing faster.
I’ve been wondering for some time if the US can hit $50 trillion in debt by 2030. Most people reckon that’s not possible but when you’ve got a $3.5 trillion head start from just 1% on one measurement, with the certainty of at least one economic downturn between now and then, and given the fact that every ten-year debt forecast since 2000 has undershot by at least 50%, I reckong $33 to $50 by 2030 is not a stretch.
No Minister 