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The Dollar Is Dead

mathmeetsmoney.substack.com

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Re: The Dollar Is Dead

#331

Post by ksherlock »

greyface- wrote: post #285
Workaccount2 wrote: post #29

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…

> (non-treasury!) assets What about TIPS and I bonds?

Those are based on what the government says the inflation rate is, not on what the inflation rate is. The CPI is published by the BLS. Did you know that? Erika McEntarfer probably knew that.

Re: The Dollar Is Dead

#332

Post by Etherlord87 »

DrScientist wrote: post #267
nostromo wrote: post #101

Earlier quoted context omitted.

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…

Explain to me the benefit of attracting the wealthy if they don't pay tax? Come to our country - have our police and courts and soldiers protect you wealth - all for free. Oh - and because you are not paying tax - can I borrow some of that wealth please so I can pay for the stuff I'm providing for you free - I'll give you a healthy return. The rich benefit the most from civilisation - and it costs - you can't just ke…

> Explain to me the benefit of attracting the wealthy if they don't pay tax?

You've fallen victim to the false dichotomy. I don't see anyone argue the wealthy shouldn't pay any tax at all.

This renders the 2nd paragraph wrong. And then 3rd paragraph wrong too.

> you can't just keep running from country to country hollowing it out for ever - eventually there will be nowhere left you can free ride.

Depends how much time it takes to run from one country to another, and what you mean by "for ever" - if it takes you a year to move from one country to another and you live for 100 years, you need 100 countries. Pardon my humorous remark, I know this is not the point; but the actual argument is easier to counter: we don't have a single government for the Earth. We don't have a united dominating force to unify taxes in one civilization and sanction or isolate from the other civilizations for hosting the rich.

IMO the education is poor, producing stupid societies electing the governments which are incompetent, corrupt and largely sympathizing with the rich.

Re: The Dollar Is Dead

#333

Post by nullc »

cosmic_cheese wrote: post #125
hilsdev wrote: post #92

Earlier quoted context omitted.

Why is the default to tax more and not spend less? Is there really no limit to the amount of spending the government should do? You see no possible use of resources that would be wasteful?

Problem is, there’s a lot of needs that private industry will not fill (or cannot be trusted to fill well). We’ve seen this play out repeatedly. If you want a functioning society, a certain degree of government spending is unavoidable. Now there is something to be said for making sure that spending is effective, but this must be engaged with in good faith; that is, changes should be made with a scalpel after gatherin…

FY2024 federal spend 6.75 trillion. FY2019 was 4.4 trillion. FY2009 was 3.1 trillion. Twice the growth in half the time.

Was there so much more that private industry "will not fill" in 2024 vs 2009? How about vs 1999? (1.7 trillion budget). We can't attribute the difference to inflation: the US government's inflation calculator says 1.7 trillion in 1999 is 3.3 trillion today.

No one is arguing that the federal government doesn't need to spend some money. But this truth has no relevance to the absurd out of control spending we're witnessing today.

Re: The Dollar Is Dead

#334

Post by junto »

phillipcarter wrote: post #109

I feel like there was a lot of analysis of signals in this blog, but at the end is the only thing that matters: The dollar has power if and only if belief in the vast US institutions holds. I would extend that to go beyond our government, as the US private sector and cultural outputs are also incredibly powerful in this world.

This is very true. I have confidence in a car driver that has many years of experience, acts consistently and rationally, does not overly hesitate and is confident in their capabilities. I do not trust a driver that appears drunk at the wheel. I would argue that the Fed is the last bastion of sanity in the madhouse. When that goes and no longer acts impartially, the drunk driver is the default.

Re: The Dollar Is Dead

#335

Post by regnull »

mattwilsonn888 wrote: post #324
regnull wrote: post #131

I think this argument suffers from the same problem as many arguments of similar kind. It goes like this: if A then B. If B then C. If C then D. It all makes sense. Every single one of these steps makes sense. Except, if you have a chain with five steps and every one of them has a 90% likelihood, the whole chain has only 60% likelihood. And it’s probably less the 90% for each step, in reality. So, you can come up wit…

Why is 90% for each step such an insurmountable probability? Maybe it's completely unreasonable for you to assume the causation for each step isn't on the order of 99%. Your argument is too abstract to be a relevant rebuttal.

It’s a generic argument that can be applied to a whole class of claims. I see smart people falling into this trap all the time. Someone is making a claim by presenting a series of steps that seem quite reasonable. You then are left in a position where you can either: a) accept the overall conclusion, or b) attack the individual reasoning steps. All I’m doing is pointing out a possibility that your reasoning steps can be entirely plausible while your conclusion is completely wrong.

Re: The Dollar Is Dead

#336

Post by marcosdumay »

ethbr1 wrote: post #210
stego-tech wrote: post #188

Earlier quoted context omitted.

That's because, as a singular planetary species, that story is a myth. The rich only maintain wealth by exploiting people against each other, thus deterring actions against the rich who likely caused the issue in the first place. Lack of housing because it's a profitable investment class that rises in value due to lack of supply? Obviously it's the fault of NIMBYs alone and not political policy pushed by lobbying gro…

The way to resolve it would be to form a first-world block and negotiate equal terms for treating extreme wealth. Penalized by group action against defectors. Which is to say something like this should come from the WTO, or not at all. Anything less has too great incentives for defection.

That would be good and all...

But do you have actual evidence that we need it? (Instead of just "nice to have".) Because everybody just repeats that without evidence, like the OP.

There are plenty of reasons to expect the OP's prediction not to hold. I don't know how things play out in practice, and I don't think I've ever seen anybody that knows it.

Re: The Dollar Is Dead

#337

Post by presto8 »

crooked-v wrote: post #115
nostromo wrote: post #101

Earlier quoted context omitted.

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…

The US is a long way away from trying to "soak" anyone. We have a top rate on long-term capital gains of 20%.

With NIIT, it's an additional 3.8% on top of that (for the highest income filers). So 23.8%.

https://www.irs.gov/newsroom/questions-and-answers-on-the-ne...

Re: The Dollar Is Dead

#338

Post by insane_dreamer »

> By 2040, the U.S. dollar will no longer be the global reserve currency.

I would argue "no longer be the _primary_ global reserve currency", but go on, I'm listening ...

> It might not even be the default unit of exchange for Americans back home.

This isn't a serious article; I don't have the time to read it.

Re: The Dollar Is Dead

#339

Post by AnthonyMouse »

grafmax wrote: post #293
AnthonyMouse wrote: post #137

Earlier quoted context omitted.

Federal receipts as a percent of GDP: https://fred.stlouisfed.org/series/FYFRGDA188S Basically unchanged for 70+ years, and far lower historically. Meanwhile significant growth in real GDP per capita and therefore real government receipts per capita. The change isn't that the government is collecting less money. They get more than ever. But growth in government spending has outstripped it, and it has been getting wor…

> The change isn't that the government is collecting less money. The government is collecting less spending relative to taxes. A deficit is a difference between the two. Logically addressing either side would improve the deficit. However the ruling class prefers hoarding wealth, financing wars, and cutting social programs.

Whether you measure it as nominal dollars, real dollars or real dollars per capita, the US government's tax revenue has only increased over time, so the only explanation for why there are huge deficits now and not before is that its spending has increased by even more. Moreover, a major proportion of that spending increase did go to social programs, and the top 50% of incomes pay 97.7% of the federal taxes.

The actual problem is that even a lot of the "social programs" don't ultimately go to the poor. They require specific services that divert the money to contractors or landlords, or go to affluent retirees who don't really need the money. And, of course, the defense budget is entirely out of hand as well -- but why should we extract more from the economy to fund things that ought not to be funded?

Re: The Dollar Is Dead

#340

Post by sershe »

TheOtherHobbes wrote: post #78
Workaccount2 wrote: post #29

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…

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…

"If extreme wealth was taxed, the debt would be zero"

Do you have numbers for that? Even ignoring the issues with lots of wealth being paper wealth that cannot be translated into any kind of realized gains, and any 2nd order effects, the wealth (stock, can be depleted once) is not even in the same ballpark esp. given the deficit (flow, keeps happening).

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