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The Dollar Is Dead

mathmeetsmoney.substack.com

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Re: The Dollar Is Dead

#261

Post by hdgvhicv »

lotsofpulp wrote: post #76
hdgvhicv wrote: post #58

Earlier quoted context omitted.

Workers will see higher wages as there is more work and fewer people to do the work Everyone will see higher prices as the costs of work increase Interest rates will be low as there’s no other option

The relative rate of change is important, not the absolute change. Politically, asset prices will be inflated quicker than labor prices. You can use SP500 as an easy guage. This is not sustainable forever, of course, but I would bet there are a few more decades it will work.

Over the last 40 years the S&P has consistently increased around 7% a year more than wages regardless of “money printing” or interest rates

Re: The Dollar Is Dead

#262

Post by jdmoreira »

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…

Good luck moving your consumers and real-estate to another country. The only reason it fails its because its not being properly done.

Sure you can move cash away but even that can be taxed with an 'exit' tax.

The only reason it doesn't work is because the will is not there to make it:

1. Unexpected

2. With no baked in loopholes

Re: The Dollar Is Dead

#263

Post by pas »

bawana wrote: post #200
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 IRS taxes americans no matter where they are or where they take their money. The US is only one of two nations in the world with citizenshp based taxation. And if you want to renounce your citizenship, 35% exit tax. The only solution is to make a foreign corporation (Apple keeps its income in Ireland for example) and hide your money there (The City of London does a brisk business setting up corps in their old col…

https://en.m.wikipedia.org/wiki/Foreign_earned_income_exclus...

a tax credit of more than 130K USD ... for most expats this seems like completely negating their US taxe burden, no?

Re: The Dollar Is Dead

#264

Post by pas »

stock_toaster wrote: post #184
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…

> 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. Why can't they tax something that _cant_ be moved elsewhere, like property ownership?

Spain does that

but in general the US tax rate on the middle class is low compared to Europe

Re: The Dollar Is Dead

#265

Post by DrScientist »

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…

> The US will be forced, it will not decide, but be forced, to inflate away its debt. Which means that people who cannot bury their wealth in (non-treasury!) assets will pay off the debt.

There is also the chance of capital flight - and hyper inflation. The debt holders could also lose out remember - if the dollar becomes less valuable then any holdings in the dollar ( including debt ) become less valuable.

Re: The Dollar Is Dead

#266

Post by DrScientist »

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…

> There is no "overspending." There is only undertaxing. The debt is literally just the accumulated difference between spending and taxation.

There is obviously both - as you say it's the difference between two numbers - and sure how you portray that differences is often politicised - just as you are doing now.

Also remember there is borrowing in the equation - it's not just money in the system, but the ability to spend made up money today based on future promises, the with the rich benefitting from the interest on that debt.

ie those with assets benefit twice from a gap between spending and taxation - they get to not pay their way, and also get a nice return on lending the money then didn't pay in tax to pay for the necessary spending!

Re: The Dollar Is Dead

#267

Post by DrScientist »

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…

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 keep running from country to country hollowing it out for ever - eventually there will be nowhere left you can free ride.

Oh and in terms of the charts where you increase a particular tax and revenue goes up in the short term and down later - that's because people adapt - they find new ways to avoid tax ( yep including to pretend to have left the country ).

Just bwcause they run, that's not a reason to stop pursing them.

Re: The Dollar Is Dead

#268

Post by actionfromafar »

lvl155 wrote: post #190
bootsmann wrote: post #176

Earlier quoted context omitted.

Yes thats the point I was trying to make. The strength of the USD derives itself in large parts from the fundamental trust markets have in US institutions not from the strength of its military.

I know what you’re saying but it’s not some fiat blind trust. There’s a big reason why the US can print with impunity. EUR cannot, even though people may trust EU more over the near-term. It’s all tied to military.

The military is one required pillar of US dollar hegemony. It's not a sufficient pillar and the current administration is working hard at destroying other required pillars.

US Treasury bonds will be less attractive, because foreign investors will lose trust in the US economy

Re: The Dollar Is Dead

#269

Post by peterfirefly »

pavlov wrote: post #112
nostromo wrote: post #53

Earlier quoted context omitted.

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.)

EU government debt to GDP ratio is 81.8% with a deficit of 2.9%. 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.

Your last line ruined a good post.

Re: The Dollar Is Dead

#270

Post by peterfirefly »

lossolo wrote: post #158
declan_roberts wrote: post #48

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.

Things like this don’t happen overnight, just like the decline of empires doesn’t happen overnight. Have you heard of the Portuguese real? Or the Spanish real? Maybe the Dutch guilder? They were all global reserve currencies in the past. If you haven’t heard of them, don’t worry, someday, people will ask “Do you know the United States dollar?”

I wonder what the Maria Theresa dollar of the future will be.
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