111–120 of 367 posts
Is there any other country with both the court system and wealth required to back up being the global reserve currency? I don't think there is and I don't see a viable contender showing up in the near future.
The country is getting forced by markets into realizing pain for overspending, and only congress can manage this pain. Manage the pain, not remove it is key here. Manage it. Conrgess is totally inept and ridiculously politicized, so it's unlikely they will do anything except make the problem worse. That leaves only the natural fall out of refusing to acknowledge a financial injury before going out on the field to pla…
The issue is that all governments are in roughly the same situation, so there is no alternative other than maybe gold. The US doesn't need to be great or even good, it just needs to be better than the alternatives. The issues facing China and the EU make America's spending problem look mild. (And I agree by the way: America has a massive spending problem.)
US current debt to GDP is 124%, and Trump’s big beautiful bill is projected to increase the deficit to 7% next year.
America has long benefited from a more dynamic and attractive labor market than Europe, but the current administration is actively trying destroy that advantage by driving out the immigrants that were fueling it.
People blamed covid to much for the global economic turmoil. But we don't have covid this time. We do have the same guy in the White House again though...
[flagged]
Earlier quoted context omitted.
My friends in Taiwan think they will be invaded before 2030 so we’ll see
There's been a spike in news articles on the invasion the last couple of weeks. Given that the US appears to not hold on to any alliances or assurances, and ~~incontinent~~ incompetent in chief is on the helm, it seems that they've the perfect opportunity. Europe's busy with Russia, US is busy with itself, so honestly, why not?
Earlier quoted context omitted.
There is no "overspending." There is only undertaxing. The debt is literally just the accumulated difference between spending and taxation. If extreme wealth was taxed, the debt would be zero. The point isn't even to "pay for spending" but to enforce a functional social contract, and to limit the political and democratic distortions created by extreme inequality. "Markets" should not have a veto on policy in a democr…
Europe has repeatedly tried to soak the rich, and the results are always the same: the rich move their wealth somewhere else and you end up breaking even or even reducing your tax revenue. France: https://www.theguardian.com/world/2014/dec/31/france-drops-7... UK: https://obr.uk/box/effect-of-the-additional-rate-of-income-t... Sweden: https://eml.berkeley.edu/~saez/course/seimAEJ17wealth.pdf It's interesting to note…
This article seems a little reductive in its analysis, but this is actually a huge topic.
I have not finished the book yet, I don't claim to understand all its implications, but I really like it because it analyzes many empires over the centuries, and tries to track multiple determinants for all of them (also a lot of pretty graphs).
Very, very recommended book if you are interested in this topic.
Dalio analysis agrees that today China power is rising and the USA is weakening (duh). It is a slow progress, and the financial aspect is merely the last determinant to show this. Dalio however does not talk much about the future, aside from the obvious initial decline of the USA.
Many point to China as the next big empire, however it might not become it as China does not seem to be too interested in becoming the world money reserve (Dalio uses this as a necessary definition for an "empire"). Also while China has imported many ideas and culture from our world, the language and culture gap remains huge even today, and that inevitably limits influence and power.
These couple of things might allow for a longer time before the big change of power, and even let the west come up again.
What I love about the book is how clear the situation is even without pointing to specific, detailed situations, political or financial decisions.
The decline did not start yesterday, or just 4 or 5 years ago either. Education, competitiveness, inequality, even military paint a clear trajectory. It takes time. Dalio tentatively gives an average of 250 years between rise and fall of an empire, and we seem to have passed the peak decade or two ago.
I'm European, and it's also very clear how Europe will definitely not be the next power, either. Too fragmented, no cohesion, etc.
You can find a few graphs of the book on the web, it should give you a clear idea of the kind of analysis.
Earlier quoted context omitted.
My friends in Taiwan think they will be invaded before 2030 so we’ll see
If the PRC were to do it, I would imagine you would try to do it under the Trump administration as he is anti-interventionist and sees the world as a series of regional fiefdoms led by the strongest regional player--Asia, to him, is China's region. This is in sharp contrast to every prior US administration and with the Biden administration in particular coming out with the strongest rhetoric regarding any potential i…
Those around the president have been pretty clear that the US will defend Taiwan until the US is capable of its own supply of leading edge semi conductors. Taiwan is very easy to defend with the harsh ocean separating them, especially since North Korea gives the US an excuse to plant massive amounts of long range missiles in SK.
There are no surprises when attacks start in the era of real time world video satellites.
Earlier quoted context omitted.
There is no "overspending." There is only undertaxing. The debt is literally just the accumulated difference between spending and taxation. If extreme wealth was taxed, the debt would be zero. The point isn't even to "pay for spending" but to enforce a functional social contract, and to limit the political and democratic distortions created by extreme inequality. "Markets" should not have a veto on policy in a democr…
Yeah, but for taxation you need state capacity to enforce it which was chainsawed/DOGED away.
The idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen. If the dollar goes down it takes the entire world with it. Nobody is insulated from the risk of a dedollarization.
> idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen No it'll be renminbi, with the euro, if they are lucky as a distant second place.
USD strength comes from military. Just as it was the case with all other currencies in the past. Do you see anyone challenging the US in a conflict? China won’t even invade Taiwan because they are afraid. ‘Nuff said.
The dollar has lost 15% vis-a-vis the euro this year, how does your theory explain this?
"But what about the stuff that the factories import, to produce anything?" one might ask. Well, Trump wants no such imports - he wants the people selling stuff to the US, to relocate to the US.
Note: I'm not in favor for what Trump tries to do, but it explains why there's so little concern for the dropping dollar.