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Surely the crash of the US economy has to be soon

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Re: Surely the crash of the US economy has to be soon

#421

Post by refurb »

triceratops wrote: post #314
refurb wrote: post #307

Earlier quoted context omitted.

> Why does the capital have to go anywhere? People just bid less and less for the same assets and prices go down. So the law of supply and demand just magically reverses itself?

No idea what you're talking about. Explain.

Statement: if AI crashes where will the capital go?

Claim: people will just choose to not invest capital at all

Response: that’s the opposite of what we know about supply/demand. When a supply of something (desirable investments), goes down, with demand steady, prices go up

It’s the same thing that happened during zero interest rate environment - huge supply of capital, few places to put it, so it piled into tech which drove up prices

So I guess my answer to “where will the capital go?” is “the next best thing” which drive up prices of that thing

Re: Surely the crash of the US economy has to be soon

#422

Post by 0xDEAFBEAD »

actionfromafar wrote: post #251
m000 wrote: post #233

Earlier quoted context omitted.

Entirely different cases. Russia never relied on the strong rouble for its economy to function. Or having unfettered access to most of the world's markets. So it had some know-how on weathering the storm. But OTOH, if Trump is erratic enough to trigger a world-wide de-dollarization trend, and close down markets that were traditionaly open (e.g. Europe), then US would be facing an unprecedented storm that would be muc…

Have we seen any signs of any limits to erratic behaviour?

Ever heard of the acronym 'TACO'?

Re: Surely the crash of the US economy has to be soon

#424

Post by nl »

robinsoncrusue wrote: post #171

The question is there is no other place for money to go. Liquidity is still in abundance and no other market can capture that liquidity. Eurozone is a total mess, ECB is doing one reckless thing after another which will inevitably lead to Germany leaving Eurozone at some point. Japan market is a joke, Asia and emerging market has huge governance issues. Bond market has penalized the investors and only more pain is in…

> When has any deal with China worked at a strategic advantage for the other side?

Australia did well out of the Australian-China free trade agreement and then won the subsequent (Australian-caused) trade war.

Turns out being able to produce iron ore cheaper than anyone else and having plenty of alternate buyers when China bans imports means the iron ore price just goes up, Australian miners make more money and Chinese manufacturers get annoyed at Chinese trade policies.

Wasn't awesome for Australian lobster fishers though.

Re: Surely the crash of the US economy has to be soon

#425

Post by AnthonyMouse »

maxglute wrote: post #370
cbdevidal wrote: post #273

Earlier quoted context omitted.

There is another type of demand that I rarely see mentioned. Not only does the United States owe trillions of US dollars, other nations do, as well. They hold many trillions worth of loans denominated in US dollars. They must be repaid in US dollars and not in any other currency. And not just to the United States but to other nations, as well. South Africa owes US dollars to Australia, Australia owes US dollars to Br…

>They must be repaid in US dollars IMO this one of those cases where dollars is ultimately benchmark than requirement, IOU/settlement forms can always be restructured/renegotiated if USD is no longer lender of last resort, i.e. alternative payment systems enables take it or leave it deals in medium/long term. USD/reserve status snowballed because US controlled techstack postwar which US leveraged (along with military…

> If alternate techstack/payment systems pops up and reach tipping point, country A can just say to country B who only wants USD (due to alignment or whatever), I don't have enough USD, here's RMB & cips/Brics+ & mbridge basket of equivalent value.

Alternate payment systems aren't even required for this. If other countries are trying to divest US dollars and country B is owed "US dollars" and country A wants to pay in something else, country B would want to accept the something else of equivalent value because it's trying to reduce its US dollar holdings and would just be immediately turning around to resell them anyway.

Conversely, if country B is insisting on US dollars for alignment reasons while other countries don't want them then that's only providing country A with the opportunity to divest its US dollars by using them to pay the debt. Then country B ends up with them, but now what is it supposed to do with them?

The real reason those sorts of debts result in stability is that all the countries owed a lot of US dollars are going to do what they can to prevent the US dollar's value from declining.

Re: Surely the crash of the US economy has to be soon

#426

Post by [deleted] »

majormajor wrote: post #330
panarky wrote: post #270

Earlier quoted context omitted.

The international "rules-based order" is a good idea when most nations play by the rules most of the time, and when the most powerful at least pretend to follow the same rules as everyone else. A world order based on rules makes it possible to live at a much higher level of abstraction. Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly jus…

The US has played by different rules, might makes right, in the western hemisphere for a long time. Screwing around with Greenland shit, on the other hand, seems riskier.

[deleted]

Re: Surely the crash of the US economy has to be soon

#427

Post by raincole »

torginus wrote: post #84

I feel like there's some credibility to 'this time it's different' The US economy depends on the country's position of world hegemon - the US dollar is the world's main reserve currency, the US enforces international order and trade rules via its military strength, it dominates technology and culture through 'US defaultism'. I dont think AI even factors in to this. The US economy is priced for global reach - if it ma…

> The looming US debt is also a great question - a lot of economists have argued that since most US debt is good. It's mostly in forms of treasuries purchased in USD that pay in USD - this means the indebtedness creates a huge amount of dollars abroad that foreigners have to then spend on US services, driving demand.

You got it wrong (I'm sure most economists don't get it wrong and you just misread/misquote). USD is the default reserve and settlement medium for many countries. They buy US treasuries mainly to satisfy the demand of USD itself, not to buy goods and services from the US. That's why the US has such a huge trade deficit. The US doesn't point a gunpoint at other countries to force them buy treasuries[0]. It can lend so much money because the other countries want treasuries.

[0]: Ironically the US tends to do the opposite - forcing other countries to buy US goods and close trade gap.

Re: Surely the crash of the US economy has to be soon

#428

Post by dwoldrich »

panarky wrote: post #270
SllX wrote: post #152

Earlier quoted context omitted.

> Should the US become an unfriendly power to the rest of the western world, it will find the demand for its currency plummeting, which I don't want to outline is a big issue. Right now this is much more of a maybe, possibly, eventually, over a long enough time horizon. As of the end of 2025, USD still made up 57% of foreign reserves vs 20% for the Euro and 3% for the Chinese renminbi. Nearly all commodities are stil…

The international "rules-based order" is a good idea when most nations play by the rules most of the time, and when the most powerful at least pretend to follow the same rules as everyone else. A world order based on rules makes it possible to live at a much higher level of abstraction. Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly jus…

[flagged]

Re: Surely the crash of the US economy has to be soon

#429

Post by mjanx123 »

majormajor wrote: post #330
panarky wrote: post #270

Earlier quoted context omitted.

The international "rules-based order" is a good idea when most nations play by the rules most of the time, and when the most powerful at least pretend to follow the same rules as everyone else. A world order based on rules makes it possible to live at a much higher level of abstraction. Abstractions like rule of law, democracy, government currencies and stock exchanges are intangible and imaginary. They're mostly jus…

The US has played by different rules, might makes right, in the western hemisphere for a long time. Screwing around with Greenland shit, on the other hand, seems riskier.

In practice the US could already do whatever it wanted in Greenland/Canada etc. The options for the motivation behind the theatrics I see. 1. Instill fear in the vassals->support for militarization rises there->they become more useable as proxies against RF/China 2. Just another Trump silliness

Re: Surely the crash of the US economy has to be soon

#430

Post by ben_w »

oceanplexian wrote: post #414
mndgs wrote: post #410

Earlier quoted context omitted.

Nonsense. If 27% of GDP is suddenly gone, how US economy could be the largest? (rest of the world can substitute US trade between itself)

The US Economy is 53% larger than the next largest, China, in terms of real GDP (Not fake PPP nonsense). 28T vs 18T.

How is PPP "fake"? Nominal only matters specifically for trade, which in this hypothetical is the thing the USA is expressly failing to do.
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