141–150 of 234 posts
Why compare debt against GDP? For a person, debt to income ratio is important, but I think debt to assets is a better indicator of how likely the debt is likely to be paid off (vs being defaulted.) For the US, if you divide debt ($33T) by assets ($270T), that ratio is just 12%. This ratio will grow into a big problem only in a massively deflationary scenario when the value of all assets goes down a lot while debt sta…
Earlier quoted context omitted.
Comparing debt to GDP is mainstream economics, but it's very much different from the analogy of homeowners debts and their salaries. The proper analogy there would be government revenues, not GDP.
The government doesn't owe the debt, we the people do. We authorized & enabled the government to incur that debt on our behalf.
Then it was government, foreign banks who bought the debt and European Central Bank who was on the hook for restructuring, not citizens or general public.
He's wrong. The US debt is just the amount of savings in US dollars that the non-government sector has accumulated from government spending that hasn't yet been paid back in taxes. In other words it is a component of the money supply that allows people to save safely for the future. The problem is the idea that this saving has to be rewarded in some way. It doesn't. The saving will happen anyway for status and insura…
Please don’t say there’s no need to control inflation. That will wipe out any savings anyone has. Your money will be worth We’ve seen its ill effects time and again.
Argentina has 211% inflation right now. It is a vibrant economy, crippled by inflation. People cannot save. Either spend all you have (it will be worth 1/4th in a year) or buy forex.
(I apologize if the following sounds a bit ranty):
We need to keep in our minds that a lot of economics is human psychology. Inflation is a mass psychology phenomenon. The stock markets work on psychology. Which is why we have these insane “valuations”. Why would anyone think NVIDIA is worth $1.5 Trillion dollars is beyond me. I’ll explain - 1) Traders gotta trade. 2) Investors have got to invest. When despite such high interest rates, people invest in the markets - that’s got to be greed - likely caused by a high inflation recency bias. Still operating as if their money will be worth much less next year.
Also it’s noteworthy that just before 2020, the valuations were 1/4 of what we have now. Has the productivity of the world suddenly increased manifold? No. It was fuelled by two things 1) Near 0 interest rates that forced safe investors to pull their money out of bonds and savings accounts 2) Collapse of office real estate. The second one is on-going, so my guess is a lot of the money in the markets is coming from ex-office real estate investors.
He's wrong. The US debt is just the amount of savings in US dollars that the non-government sector has accumulated from government spending that hasn't yet been paid back in taxes. In other words it is a component of the money supply that allows people to save safely for the future. The problem is the idea that this saving has to be rewarded in some way. It doesn't. The saving will happen anyway for status and insura…
Does this correctly factor in that currently the US is the western worlds de facto military, more or less? Because as long as we hold that position I don’t imagine the US government will be shut out of the debt markets at all. This is part of the problem I wager is there is still enormous incentive to keep the scheme afloat by other nations too
Is the U.S. primary deficit really all that much more than GDP growth? Seems like if we could make it a decade or so without deficit-financed tax cuts (TCJA), new entitlements (Medicare Part D) or some catastrophe requiring massive fiscal stimulus (GFC, Covid), the debt situation should look quite a bit more manageable just on the basis of economic growth. Admittedly “if” is doing a lot of work in that sentence, thou…
Earlier quoted context omitted.
> The fact that "we" don't want to right now has more to do with Republican attitudes towards taxation than anything else. No, it has just as much to do with Democrat attitudes towards spending. You're right that the Republicans are partly to blame. But to balance a budget requires cutting spending as much as, if not more than, increasing revenues. The problem is that ~everyone thinks using their preferred approach (…
Our taxes cover entitlements, military, and debt. That's it. Everything else is coming from the deficit. The Republicans have cut taxes to an unsustainable level. No matter how big or small the rest of the government is, the tax base is too low to support it.
Something like half of every dollar I make gets swallowed up by taxes of some sort, either directly or indirectly (by making products and services more expensive). A good portion of it just to fuck around in foreign countries against my wishes. How much more should they take?
We owe a bit more than 1 year's GDP. Most families that own a house owe substantially more than 1 year's income. Last time we reduced the annual deficit to zero, the usual debt hawks all reversed their position and said "this is terrible". We've demonstrated in my lifetime that we can do this. The fact that "we" don't want to right now has more to do with Republican attitudes towards taxation than anything else. MMT…
MMT basically says "its ok, we can just print more money". How did that work for Venuzuela? Lets see... 1.00 US Dollar = 3,615,588.83 Venezuelan Bolívares. The 6 inch thick stack of currency required to buy a roll of toilet paper would be more efficient than the toilet paper. Printing more money just devalues the work product of everyone before that. Republican attitudes about tax? Surely you jest.
MMT is more like: "printing money is not limited by the things you think it is".
Earlier quoted context omitted.
That's a valid question. He does have videos where he just speaks off top of his head, and I prefer the ones where he has charts and numbers that he speaks to. If you don't believe his charts and numbers, find ones online that you believe. I do think someone who can hold that much minute, dry details in his brain and can cross reference them is going to be smarter than most of us. He does after all consult for major…
Yeah, he sounds very smart and pieces a lot of things together, but in a very assertive way. For example he goes on to talk about how gas is used only in the butadien petrochemical vertical but could displace oil verticals and have competitive advantage over other countries. That's cool as a theory, but really isn't a commoditized market a more likely scenario in a capitalist global economy? If I'm Mr. Gas I'm going…
Zeihan’s thesis is that the global economy is no longer global because the US is no longer interested in being the world police patrolling the shipping lane. That is, “the end of globalization and Bretton Woods.”
Earlier quoted context omitted.
Yes and: The US dollar is worth as much as the US military says it is.
That's not how markets work. And the US military does not control the world either. The US military couldn't even the value of currency in Baghdad.