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

fortune.com

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

#51

Post by jackcosgrove »

nocoiner wrote: post #19

Is the U.S. primary deficit really all that much more than GDP growth? Seems like if we could make it a decade or so without deficit-financed tax cuts (TCJA), new entitlements (Medicare Part D) or some catastrophe requiring massive fiscal stimulus (GFC, Covid), the debt situation should look quite a bit more manageable just on the basis of economic growth. Admittedly “if” is doing a lot of work in that sentence, thou…

Demographics present an intractable problem that no amount of fiscal rectitude can fix. The old age dependency ratios we're going to see in the future guarantee deficits.

The bickering over the discretionary budget is a sideshow compared to what's happening with Medicare/Medicaid and to a lesser extent Social Security.

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

#52

Post by happytiger »

jalapenos wrote: post #38
happytiger wrote: post #13

Let’s answer this man with his own damn quote : > History is useful for the thrill of knowing the past, and for the narrative (indeed), provided it remains a harmless narrative. One should learn under severe caution. History is certainly not a place to theorize or derive general knowledge, nor is it meant to help in the future, without some caution. We can get negative confirmation from history, which is invaluable,…

Isn't he just saying it's inevitable from what's observable? E.g. approaching the point where servicing the debt itself becomes untenable? There's nothing historical or predictive involved that I can see. If a group of people are telling you again and again, for decades, that "we're just not ever going to even slow down the pace we're wracking up unrepayable debt, no matter what", isn't it just a case of take them at…

The “who correctly called the 2008 financial crisis” in the headline supports nonsensical predictionism, even if the supporting article is entirely different.

Also bear in mind there’s a quote from the author for prediction as well though it is more than a tad offensive to modern sensibilities:

> “If one puts an infinite number of monkeys in front of typewriters, and lets them clap away, there is a certainty that one of them will come out with an exact version of the 'Iliad.”

The idea that somehow we should put more credence on a man speaking on the future of the markets and is calling for a “miracle” who is famous for writing a book about unpredictable events is just hilarious, and my point.

Who else should we take our advice from about the most predictable events of history? Steven Hawking from the grave? Perhaps a successful advice columnist?

Let us not get lost in the obviousness of the prediction or the durability of the prediction of bears when we can enjoy the stupidity of the media presenting an author of a book about unpredictability as some kind of novel expert in the inevitability of the collapse of the western financial system due to unsustainable debts. It’s rich and delicious irony and, especially combined with all of the famous things this man has said that are the opposite of linear predictability being more common than we realize is, as I said earlier, just utterly hilarious.

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

#53

Post by Stealthisbook »

He doesn't seem to recognize that the government debt is backed by not only the entire productive capacity of the nation, but also the willingness of creditors to tank the world denominated currency. It's possible that some political fights could temporarily sway the market but it would take a broader societal collapse to actually kill the dollar.

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

#54

Post by Stealthisbook »

jalapenos wrote: post #38
happytiger wrote: post #13

Let’s answer this man with his own damn quote : > History is useful for the thrill of knowing the past, and for the narrative (indeed), provided it remains a harmless narrative. One should learn under severe caution. History is certainly not a place to theorize or derive general knowledge, nor is it meant to help in the future, without some caution. We can get negative confirmation from history, which is invaluable,…

Isn't he just saying it's inevitable from what's observable? E.g. approaching the point where servicing the debt itself becomes untenable? There's nothing historical or predictive involved that I can see. If a group of people are telling you again and again, for decades, that "we're just not ever going to even slow down the pace we're wracking up unrepayable debt, no matter what", isn't it just a case of take them at…

Servicing the debt is an entirely political act. If the US government wants to pay its bills, it does. The alternative is unlikely, but interesting-what if the US just says no? What enforcement mechanism is there? The biggest trade partner, biggest military, and cultural hegemon says "what are you gonna do about it?" and you do what?

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

#55

Post by fragmede »

The fentanyl drug addiction crisis and the TikTok digital addiction crisis are more of a problem than government debt, from where I'm standing. there's also the housing crisis to consider, as well as the job market. government debt death spiral isn't a thing. fentanyl is.

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

#56

Post by nocoiner »

jackcosgrove wrote: post #51
nocoiner wrote: post #19

Is the U.S. primary deficit really all that much more than GDP growth? Seems like if we could make it a decade or so without deficit-financed tax cuts (TCJA), new entitlements (Medicare Part D) or some catastrophe requiring massive fiscal stimulus (GFC, Covid), the debt situation should look quite a bit more manageable just on the basis of economic growth. Admittedly “if” is doing a lot of work in that sentence, thou…

Demographics present an intractable problem that no amount of fiscal rectitude can fix. The old age dependency ratios we're going to see in the future guarantee deficits. The bickering over the discretionary budget is a sideshow compared to what's happening with Medicare/Medicaid and to a lesser extent Social Security.

Health care spending has been basically flat in terms of GDP for the past decade. The doom and gloom of the early part of this century is, so far, not coming to pass, and so it’s not clear at all right now that Medicare/Medicaid is a crisis. The solution to Social Security solvency is pretty straightforward forward - when the trust fund runs out around 2035-2040, either cut benefits by 25% or raise taxes by ~1% of GDP, and it’s solvent for the next century. At that point, it’s merely a political question as to which option is more palatable to the politicians. Of course the most painless way to solve the issue would be to do something about it today, but, well, you know.

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

#57

Post by AlbertCory »

happytiger wrote: post #13

Let’s answer this man with his own damn quote : > History is useful for the thrill of knowing the past, and for the narrative (indeed), provided it remains a harmless narrative. One should learn under severe caution. History is certainly not a place to theorize or derive general knowledge, nor is it meant to help in the future, without some caution. We can get negative confirmation from history, which is invaluable,…

You seem to have a personal thing about Taleb ("his own damn quote", "this gentleman has made a career from a book about the unpredictability of events").

Taking the 2nd one first: he's written at least five books, and they're about much more than "unpredictability of events." Have you actually read any of them?

As for his own damn quote: a debt crisis is a matter of financial arithmetic, not "a flickering roadside Psychic sign."

If indeed the US tacitly admitted that it was never going to pay its debts, then the interest rates would rise. You don't have to be psychic to predict that.

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

#58

Post by matthewaveryusa »

berserk1010 wrote: post #33
PaulDavisThe1st wrote: post #16

We owe a bit more than 1 year's GDP. Most families that own a house owe substantially more than 1 year's income. Last time we reduced the annual deficit to zero, the usual debt hawks all reversed their position and said "this is terrible". We've demonstrated in my lifetime that we can do this. The fact that "we" don't want to right now has more to do with Republican attitudes towards taxation than anything else. MMT…

Take a look at Zeihan's video where he shows in a graph how US debt level compares to other major economies. https://youtu.be/mcZPOuI-vcU?t=939 . US is in the middle of the pack. US is going to be ok. Also, watch until 20:38. You will see how screwed up some countries are when it comes to debt.

I started watching and couldn't stop until the end. Now the only question I have is how much should I believe Zeihan? He makes a lot of bold assertions, what's his track record?

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

#59

Post by AlbertCory »

happytiger wrote: post #52
jalapenos wrote: post #38

Earlier quoted context omitted.

Isn't he just saying it's inevitable from what's observable? E.g. approaching the point where servicing the debt itself becomes untenable? There's nothing historical or predictive involved that I can see. If a group of people are telling you again and again, for decades, that "we're just not ever going to even slow down the pace we're wracking up unrepayable debt, no matter what", isn't it just a case of take them at…

The “who correctly called the 2008 financial crisis” in the headline supports nonsensical predictionism, even if the supporting article is entirely different. Also bear in mind there’s a quote from the author for prediction as well though it is more than a tad offensive to modern sensibilities: > “If one puts an infinite number of monkeys in front of typewriters, and lets them clap away, there is a certainty that one…

There it is again. You really hate him, don't you? What things that weren't conventional wisdom have you ever done?

"predictionism" -- is that a word you just invented? What does it mean?

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

#60

Post by AlbertCory »

happytiger wrote: post #37
astrodust wrote: post #30

Earlier quoted context omitted.

The real black swan event was him coming up with the concept of black swan events. Everything else he's done has been increasingly ridiculous.

“My major hobby is teasing people who take themselves and the quality of their knowledge too seriously.” “But it remains the case that you know what is wrong with a lot more confidence than you know what is right.” “Unlike a well-defined, precise game like Russian roulette, where the risks are visible to anyone capable of multiplying and dividing by six, one does not observe the barrel of reality.” — three quotes by…

I suppose you think the ridiculousness of those is self-evident. Sorry, no, you need to explain.
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