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The Dollar Is Dead

mathmeetsmoney.substack.com

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Re: The Dollar Is Dead

#121

Post by mcphage »

p_ing wrote: post #90
abeppu wrote: post #62

Nit: Is anyone else annoyed by the trend of people using block quote formatting to emphasize their own topic sentences rather than to quote from another source? In addition to being visually annoying, to me it highlights that the author habitually doesn't interact with whatever literature exists (i.e. if they sometimes needed to quote a paragraph from another author, they wouldn't use block quote formatting in this w…

You see it on reddit quite a bit. I wonder where the author learned that style of writing from; certainly no institution that could teach one to properly write to an established literary style. It's super annoying. There's no reason to bold the chosen text, or any text in this post. I mean, it's on substack ffs. Worse is when authors use emojis in titles or text. Maybe we can blame tiktok brain rot or just gen-z in g…

Magazines do it a lot.

Re: The Dollar Is Dead

#122

Post by sparrish »

bix6 wrote: post #46

“The Dollar is Dead. Long live whatever comes next.” So what will come next? It can’t be gold because we already tried that. I don’t see the West letting BRICS have it. Crypto seems too polarizing.

Why can't it be gold again?

It was working pretty well for thousands of years.

Re: The Dollar Is Dead

#123

Post by qingcharles »

A_D_E_P_T wrote: post #44
treetalker wrote: post #15

Earlier quoted context omitted.

As a counterpoint, confidence in US courts (particularly the federal courts) is rapidly declining — both among the public and among those who operate within the court systems.

As somebody who has been involved in civil actions in Federal Court, I can assure you that it deserves zero confidence and is basically pay-to-win. (Unless two billion-dollar-plus corporations are involved.) This is largely, but not only, on account of discovery taking years and costing unbounded sums of money, plus monetary penalties for not complying with expensive discovery.

I would second this. I would add that the federal court system is far ahead of the state courts, in that the federal trial courts at least put out reasonably well-written decisions on hearings, whereas the county courts generally just hand-wave everything in emotional verbal rulings.

Re: The Dollar Is Dead

#124

Post by 827a »

compiler-guy wrote: post #40

NPR’s Planet Money had a podcast about this a few months ago. I see several assertions and claims that it deals with made here without any evidence or discussion as to why. TLDR: Yes the dollar is weakening as a reserve currency. But the decline has been long and slow and it is not clear what, if anything, will replace it. https://www.npr.org/2025/05/09/1250191994/reserve-currency-d...

But, but, if I say "it'll happen slowly and then all at once" it must be true, because its a pithy, fun phrase that sounds smart!

Re: The Dollar Is Dead

#125

Post by cosmic_cheese »

hilsdev wrote: post #92
TheOtherHobbes wrote: post #78

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…

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 gathering plenty of data supporting the change in question. Proclaiming ineffectiveness without data to ground the claim and then using that as an excuse to make broad cuts is a great way to make any dysfunction even worse.

Re: The Dollar Is Dead

#126

Post by xg15 »

nostromo wrote: post #101
TheOtherHobbes wrote: post #78

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…

The corrolay of this would be that as soon as money enters a "rich-only" ecosystem, it's essentially gone forever for the wider population. I don't see how this would be a desirable outcome.

Re: The Dollar Is Dead

#128

Post by medvezhenok »

hilsdev wrote: post #92
TheOtherHobbes wrote: post #78

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…

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?

It's because of the effects of technological progress on wealth accumulation.

Tech allows winner-takes-all effects in many different markets (and runaway situations where labor cannot catch up at all) - you either have to have very strong antitrust (which is still not possible in some places), or basically strong redistribution (i.e. taxation of wealth in order to redistribute) to maintain a reasonable (note: not equal, but a reasonable degree of inequality - closer to the model that existed from the 1940s-1970s) distribution of wealth in society.

Re: The Dollar Is Dead

#129

Post by nostromo »

toomuchtodo wrote: post #86
nostromo wrote: post #81

Earlier quoted context omitted.

If you think the US has a debt problem, the Eurozone is much worse. At least America has economic growth along with debt growth. The EU has slightly less debt but zero economic growth and almost zero population growth (and negative organic population growth). Africa's GDP is tiny and will not a serious contender for any sort of reserve currency status for many decades. I can't imagine a wave of automation will do any…

Growth is over globally except India and Africa due to demographics [1]. Developed countries and unions will compete for the last of the world’s young, prime age workers over the next century. Financial stability will be a function of who manages this situation to the best of their circumstances. Can you attract and retain these workers and leverage that for economic success? If so, that’s where investment will flow…

Having billions of low-skill "prime age workers" is not a good thing in the AI era. Africa's population surge is a liability as much as it is a benefit, especially considering they already have to import a large portion of their food supplies. Africa is 20% of world population but just 2% of world GDP... Maybe they will turn into China at some point, but I wouldn't bet on it yet.

Re: The Dollar Is Dead

#130

Post by alphazard »

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…

I'm not even sure if this is a serious post, but it indicates a significant misunderstanding.

There is an asymmetry between a government's revenue and its expenses. Revenue can increase arbitrarily if the government is allowed to take out unlimited debt. The amount a government can tax is limited first by the size of its country's economy. There is a maximum amount of revenue you can collect via taxation, and after a certain point increasing taxation decreases revenue. Countries also exist in the context of the rest of the world and there is a market for business. If the tax rate is not competitive businesses and people will leave, although this is over a longer time horizon.

In terms of the possibilities overspending is far more likely than undertaxing because you can spend an infinite amount, but you can only undershoot your optimal tax rate by a finite amount. Both are probably happening right now. The amount that the US government is undertaxing compared to its theoretical optimum might not even balance the current budget.

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