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The Dollar Is Dead

mathmeetsmoney.substack.com

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Re: The Dollar Is Dead

#291

Post by mananaysiempre »

ethbr1 wrote: post #226
AnthonyMouse wrote: post #222

Earlier quoted context omitted.

That can't be the explanation because it wasn't present in the US before the government was running huge deficits either.

As in, the US still doesn’t have it. Hence the propensity to sink growing amounts of GDP into paying an ever-heightening stack of middlemen to provide medical care at market prices... instead of simplifying the stack and saving money. The US government created a mandate, then allowed it to metastasize as health care became more technical and expensive, and is now in the business of sticking its fingers in its ears an…

Everyone in that spending pipeline is doing it[1], not just the US government.

[1] https://siderea.dreamwidth.org/1179450.html (very long; you’ll need to get to at least part 2 to see the relevance)

Re: The Dollar Is Dead

#292

Post by lotsofpulp »

hdgvhicv wrote: post #261
lotsofpulp wrote: post #76

Earlier quoted context omitted.

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

It’s not regardless of government intervention. There have been numerous bailouts and interest rates deductions specifically to backstop SP500.

It is a stealth tax that targets the young (or those too poor to be beneficiaries), because leaders need to maintain purchasing power for their voters’ benefits (the vast majority going to the old) and the solvency of taxpayer funded defined benefit pensions.

Re: The Dollar Is Dead

#293

Post by grafmax »

AnthonyMouse wrote: post #137
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…

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.

Re: The Dollar Is Dead

#294

Post by crossroadsguy »

vasco wrote: post #111
ofalkaed wrote: post #9

Is there any other country with both the court system and wealth required to back up being the global reserve currency? I don't think there is and I don't see a viable contender showing up in the near future.

Currency is backed by military, not courts. Courts are also backed by military.

Exactly. I can’t believe there are people on HN who believe the dollar becoming de facto currency had anything to do with USA’s savoury virtues, judicial or otherwise It didn’t “become”, it was forced.

Re: The Dollar Is Dead

#295

Post by myvoiceismypass »

readthenotes1 wrote: post #68
UltraSane wrote: post #30

Earlier quoted context omitted.

Biden is competent and chooses competent people. Trump is NOT competent and hire incompetent people and fires competent people.

The debate performance says otherwise

Trump's debate performance against Kamala was awful too ("concepts of a plan", etc), but he will forever get judged with a different set of criteria by his fans.

Re: The Dollar Is Dead

#296

Post by amai »

Luker88 wrote: post #116

I am reading the book from Ray Dalio, "Principles for Dealing with the Changing World Order". This article seems a little reductive in its analysis, but this is actually a huge topic. I have not finished the book yet, I don't claim to understand all its implications, but I really like it because it analyzes many empires over the centuries, and tries to track multiple determinants for all of them (also a lot of pretty…

Ray Dalio is the shortvisioned guy who thinks Putin and Xi Jingping are great leaders to their countries. He probably would have said the same about Mussolini and Hitler.

Why do we keep listening to amoral fools like him?

Re: The Dollar Is Dead

#297

Post by crossroadsguy »

ivell wrote: post #79
ofalkaed wrote: post #9

Is there any other country with both the court system and wealth required to back up being the global reserve currency? I don't think there is and I don't see a viable contender showing up in the near future.

It need not be a single country. Organizations like BRICS could float it's own currency, and with significant size of the economy of the members, it could pull it off. This is why Trump has been explicitly warning against that.

BRICS word includes India and China. So good luck with that :)

Re: The Dollar Is Dead

#298

Post by DaSHacka »

saubeidl wrote: post #11
ofalkaed wrote: post #9

Is there any other country with both the court system and wealth required to back up being the global reserve currency? I don't think there is and I don't see a viable contender showing up in the near future.

The European Union.

Hah, and people say HNers don't have a sense of humor

Re: The Dollar Is Dead

#299

Post by grafmax »

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…

Raising taxes generally raises money. In some cases it can lead to capital flight but that’s hardly some universal economic rule.

But besides raising capital, taxation reduces wealth inequality, which is itself beneficial as it makes society more democratic. Reducing wealth inequality reduces the concentration of power, which is better for everyone (except for the 1%).

Still, when redistributing wealth, it’s prudent to address the risk of capital flight. It’s not an insurmountable challenge. Policy can address it through: 1) financial controls 2) coordinated international efforts to raise taxes on the wealthy, and 3) harsher measures like nationalization and capital levies.

Re: The Dollar Is Dead

#300

Post by satyrun »

KaiserPro wrote: post #67
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.

> idea that a basket of foreign currencies or "BRIC+" will replace the dollar is absolutely not going to happen No it'll be renminbi, with the euro, if they are lucky as a distant second place.

It might help if I could actually convert to renminbi.

That is kind of a first step. You know, actually being able to convert from one currency to another.

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