Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt • Hacker News Board

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#161

Post by lamontcg » Thu, Feb 01, 2024, 4:32 PM UTC

sheepscreek wrote: post #143

neilwilson wrote: post #126

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…

If not interest rates, what would you advise the Fed to use for controlling inflation? 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…

We need more inflation than 2% though. The fact that 211% is too high doesn't mean that 2% isn't too low. And the low inflation expectations leads to low interest rates which reduces the cost of money which is creating our financial sector inflation/bubble.

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#162

Post by rsync » Thu, Feb 01, 2024, 4:34 PM UTC

sheepscreek wrote: post #143

neilwilson wrote: post #126

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…

If not interest rates, what would you advise the Fed to use for controlling inflation? 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…

I am not your parent but…

I believe the prevailing answer to your question (among people who think we shouldn’t use interest rates as our lever) is taxed - specifically, corporate taxes.

I don’t have strong feelings about this one way or another, but I believe that is the answer you will be given.

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#163

Post by nonameiguess » Thu, Feb 01, 2024, 5:05 PM UTC

CygnusX-1 wrote: post #93

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…

I have no idea why you would ask Google Bard about the financial position of the US government. The Treasury department publishes financial statements for public consumption just as law requires. Here you go: https://www.fiscal.treasury.gov/reports-statements/financial...

The last reporting year is 2022 and assets were ~$4.9 trillion and liabilities ~$39 trillion.

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#164

Post by csomar » Thu, Feb 01, 2024, 5:32 PM UTC

no_wizard wrote: post #154

csomar wrote: post #145

Earlier quoted context omitted.

It didn't help the Soviet Union. I think people over-estimate the value of the military in this context. A default will dissolve the military as you can no longer pay its members. The Western world is mostly united behind the US because it's getting free defense (who doesn't want free stuff?). If you remove that, I highly doubt they'll align as much with the US.

The Soviet Union lacked a domestic economy that could keep up with the needs of its population, and there by fell apart internally. I'd argue the US can do the same, but our domestic economy - at least on paper - is more functional the Soviet Unions ever was and can provide for its citizenry and is an important market for nations all over the world. That's a major difference than with the Soviet Union, and a key one.

I do not disagree with that; and that is also what my comment is about (the military is not the economy, it’s the other way around).

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#165

Post by object-a » Thu, Feb 01, 2024, 5:45 PM UTC

sheepscreek wrote: post #143

neilwilson wrote: post #126

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…

If not interest rates, what would you advise the Fed to use for controlling inflation? 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…

The United States is not Argentina. Argentina, unlike the United States, has to finance most of it's debt from external parties in foreign denominated currency.

Argentina has a vibrant economy, but it's export revenues are almost entirely from agricultural products. Since ag prices are volatile, it's harder for Argentina to acquire the foreign currency it needs to pay debts.

> Inflation is a mass psychology phenomenon

Inflation is a supply and demand phenomenon. If inflation is caused by constraints/shocks to supply, then increasing production capacity is a better long term solution than raising interest rates.

> we have these insane “valuations

This is a completely different problem than goods inflation. Stock market valuations can spike at times when inflation is well under control, and may even crash if inflation is too high. There was a long period where we had near-0 interest rates, high valuations, and little-to-no inflation after the 2008 crash

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#166

Post by tfehring » Thu, Feb 01, 2024, 5:51 PM UTC

neilwilson wrote: post #126

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…

Long-term interest rates aren’t set by the Fed, they’re market rates based on the Treasury’s demand for borrowing and investors’ demand for purchasing US government debt. If there were enough demand for zero-interest US government debt to support the Treasury’s borrowing needs, then the interest rate on that debt would already be zero.

I’m curious, how would you advocate for using the labor market directly as a stabilization tool?

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#167

Post by cyanydeez » Thu, Feb 01, 2024, 5:56 PM UTC

neilwilson wrote: post #126

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…

if the US dollar wasn't a reserve currency globally, these statements would be rational.

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#168

Post by Log_out_ » Thu, Feb 01, 2024, 6:07 PM UTC

? And the US is not even borrowing from its citizens. It borrows from the empire currency which the world values high, because the free trade, non mercantilist capitalism world order was the best thing we got so far and nobody offers an reliable alternative.

If the US cities were nuked tomorrow, but harbors and barracks and nerve centers remained, that machine would life on like nothing happened.

China, with its current value system is clear mercantilist and can not replace the machinery with all the ships in the world. Europe can't do free trade, even if Ukraines life in grenades depended on it.

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#169

Post by w0de0 » Thu, Feb 01, 2024, 6:19 PM UTC

boffinAudio wrote: post #123

One bomb dropped every twenty minutes for the last twenty years is a HELL OF A DRUG. You're still paying for it, and your children will be paying for it, and their children will be paying for it. So ask yourselves, Americans: is all this EXPENSIVE MURDER really in your best interest? Your debt is realy only the second worst thing you're allowing to happen to your nation. The first worst thing is the willful rule by w…

Well no WHOEVER they feel culturally inferior. The Belgians, for instance, have yet to be bombed.

Re: Nassim Taleb says the U.S. is in a ‘death spiral’ over government debt

#170

Post by lucas_membrane » Thu, Feb 01, 2024, 6:35 PM UTC

The odd thing is that the federal government's balance sheet does not have to balance, and thus no credible federal balance sheet exists. The total (accounting, market, or replacement) value of all the nationally owned assets is not reported, nor is their annual depreciation. Thus, the net worth of the national government is largely unknown. That is good; if it were reported, many citizens might desire that the government be sold off and the proceeds distributed to the taxpayers as a dividend. Of course, it has already been sold off, but no one was paying attention.

Would it be better if government had to report like a business (as government requires it to report), or if business got to report like the government, or if the reporting rules were just reversed for a while so each could understand the other's problems? I think Taleb is just playing games with us. He knows that modern civilization is not a clear-cut logical proposition, that maybe no one understands how it works and evolves, and perhaps that, whatever form it takes, one of its fundamental requirements is that we maintain an optimum level of confusion. He has found his niche revealing the peculiarities of engines of ignorance that run on knowledge as explained by, e.g., Fortune.