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The Dollar Is Dead

mathmeetsmoney.substack.com

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Re: The Dollar Is Dead

#301

Post by peoplefromibiza »

berdario wrote: post #259
kelseyfrog wrote: post #248

Earlier quoted context omitted.

Capitalism isn't meant to do anything. We have a system of laws that undergird the economic system - the legal protection of private property being the main one. Private property requires a monopoly of violence to enforce. When capitalism colonizes a legal system, it necessarily creates the incentives for the legal system to adopt laws to maintain itself. If for some reason private property was not legally enforceabl…

> Capitalism isn't meant to do anything. It was probably meant in the manner of: "the purpose of a system, is what it does"... I.e. regardless of how it evolved (system of laws written with good intent, or system of laws organically grown out of corruption and lobbying...) what capitalism does now is its purpose, and we shouldn't expect it to be meant to do anything different. > capitalism [...] necessarily creates t…

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Re: The Dollar Is Dead

#302

Post by DaSHacka »

tobias3 wrote: post #153
cuuupid wrote: post #75

Earlier quoted context omitted.

What will you buy instead? The point is that the dollar is strong not purely because the American economy has been (and continues to be) the largest on the planet, but also because it is not currently possible to topple the US since its global activities are tied strongly to its military. The only realistic options that exist at the moment are going back to the gold standard (not viable for most countries) or shiftin…

When Trump was elected, I clicked the sell button on the US treasuries and the buy button on the European ones. Was pretty easy. It will be more costly for the people doing this later, of course.

Actually less, if like the long-term trend holds

Re: The Dollar Is Dead

#303

Post by ethbr1 »

daft_pink wrote: post #235
ethbr1 wrote: post #231

Earlier quoted context omitted.

Eh. That was only true before the price hikes caused by those ultra low rates. If everyone has access to ultra low rates, housing supply prices rapidly increase to match demand, and you reach a new equilibrium (albeit with higher price:income multiples). So it’s not papering over anything — it just goosed housing prices higher.

I think increasing housing values succeeded in solving the banking crisis that was created by the erosion of banking capital when they foreclosed on properties that were worth less than the loan value, because the banks lent money without downpayment to subprime borrowers. Now we're currently papering over the resulting sky high asset values by allowing inflation to erode the relative value of the sky high real estat…

> Now we're currently papering over the resulting sky high asset values by allowing inflation to erode the relative value of the sky high real estate.

That will only be true if inflation in non-housing accelerates and housing prices stay constant, which seems unlikely in a supply-constrained market.

In any high-inflation scenario, real assets are likely to be highly attractive. Where else? Bonds, death. Equities, only if the economy keeps humming while inflation persists. Gold, bad price appreciation.

Re: The Dollar Is Dead

#304

Post by yladiz »

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.

That’s not really true, or at best reductive. The Eurozone does not have a military yet has a very valuable and relatively stable currency. Yes, various counties in the zone do have strong militaries, but it’s not the same as the body backing the currency having one.

Re: The Dollar Is Dead

#306

Post by abcd_f »

xg15 wrote: post #126
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 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.

* corollary

Re: The Dollar Is Dead

#307

Post by tnel77 »

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.

This is quite the take.

Do you run your household as “there is no ‘overspending.’ There is only under-earning.”

Re: The Dollar Is Dead

#308

Post by 93po »

tobias3 wrote: post #153
cuuupid wrote: post #75

Earlier quoted context omitted.

What will you buy instead? The point is that the dollar is strong not purely because the American economy has been (and continues to be) the largest on the planet, but also because it is not currently possible to topple the US since its global activities are tied strongly to its military. The only realistic options that exist at the moment are going back to the gold standard (not viable for most countries) or shiftin…

When Trump was elected, I clicked the sell button on the US treasuries and the buy button on the European ones. Was pretty easy. It will be more costly for the people doing this later, of course.

treasuries are overwhelmingly impacted by federal reserve policy, not sure why you think trump would have much to do with it. if you compare US vs european treasuries since 2016 it's sort of a wash - the european ones are barely outperforming US ones, but the US ones consistently had better yields. and the big impact on US treasuries was interest rate changes, something trump has no say in

Re: The Dollar Is Dead

#309

Post by eric_cc »

starmole wrote: post #164

This article is initially very well written and convincing. And it started to stress me out a little bit! Am I at great risk for having most of my wealth tied to the dollar? But taking a step back: It is making very strong predictions for a future state of what I would consider a chaotic system. As the author identifies as a Physicist and not a Psychic, why is there no mention of uncertainty? No mention of how you wo…

> Am I at great risk for having most of my wealth tied to the dollar?

You are guaranteed to fail, no question.

The dollar is a corrupted unit of value that is meant to pump assets and exert global control. Look at any dollar buying power chart to see what your future looks like - a never ending chart down.

Re: The Dollar Is Dead

#310

Post by EGG_CREAM »

grafmax wrote: post #299
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…

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…

Something to point out also is that more equality is actually better even for the 1%. They are just too short-term-focused and greedy to see that. There is nothing they can get today that they wouldn’t be able to get tomorrow if we taxed them appropriately. In return, they would live in a more stable and safe society, a less brittle economy, and wouldn’t be as reviled socially. But they are just too focused on their net worth to see that.
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