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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

#71

Post by owlstuffing »

jalapenos wrote: post #49
dmckeon wrote: post #5

Congress-people have few incentives to restrain or reduce the national debt. There is plenty of talk, but little action. The event horizon may be distant, but the pull is inexorable. What could possibly solve this? Could we give representatives and senators bonuses for spending less and taxing more?

It's a solved problem - the gold standard. The only thing that makes the current situation tenable is being able to print money. Put simply, the government doesn't actually view it as a problem. If you have an unlimited credit card you never have to repay, that's not a problem for you but for everyone else. Bit of an unfortunate omission from the US constitution really. That's the only way they'd have kept it - other…

Right. . . however the problems with fiat currency are unavoidable and end in collapse.

Considering the petrodollar, its time is near. Oil is quickly becoming a negotiable commodity between nations. Following the current trajectory, the USD will lose its global hegemony in 5-10 years. War will expedite that pace.

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

#72

Post by dkjaudyeqooe »

PaulDavisThe1st wrote: post #65
nickff wrote: post #24

Earlier quoted context omitted.

Comparing a government's debt to its GDP is like comparing a couple's debt to their employers' total revenues. The country's government doesn't own all its residents' property, and is usually unable take their income streams. MMT says a lot of things, but people only seem to follow it when convenient.

The debt is owed by us, the American people. Thus we compare to the total (economic) resources available to us, the American people.

That's not true, it's not like if the US defaults you become personally liable.

We're more like shareholders, and they are never debtors.

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

#73

Post by fuzzfactor »

monetus wrote: post #25

"You want to know what will happen in the future, ask a crystal ball, not me. I'm an economist" - Richard Wolff

It could be more worthwhile getting advice from a psychic rather than a professional economist though.

With a psychic more people know you need to take it with a grain of salt.

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

#74

Post by happytiger »

AlbertCory wrote: post #60
happytiger wrote: post #37

Earlier quoted context omitted.

“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.

Ok.

1) The author is taking his own knowledge too seriously.

2) He is also boldly speaking about a subject not in his wheelhouse but with firm confidence (against his own advice).

3) He is also speaking about a reality in which everything is (ironically) obvious and well discussed as if it were novel.

There is a vast ocean of difference between critique of an intellectual and actual criticism I fear may be lost on this forum. We are allowed (encouraged?) by Western intellectual tradition to point out when leading intellectuals gaffaw, and it was considered in most of history not only noble but necessary to do so; a way to keep public discourse honest and prevent banal hypocracy from rising to popularity.

I am discouraged by the number of people demanding explanation or making accusations of personal attack (!).

Come on now. Lets not be so naive that we cannot criticise stupid statements from public figures. I

In the face of the information control systems that permiate the modern landscapes, each of us should probably be going out of our way to support thinking different from our own rather than the opposite: 1984 beckons.

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

#75

Post by edgyquant »

Stealthisbook wrote: post #54
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…

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?

It’s more than everyone stops trusting they can loan money to the US government and the entire worlds financial system comes crashing down.

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

#76

Post by slowhand09 »

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…

MMT basically says "its ok, we can just print more money". How did that work for Venuzuela? Lets see... 1.00 US Dollar = 3,615,588.83 Venezuelan Bolívares. The 6 inch thick stack of currency required to buy a roll of toilet paper would be more efficient than the toilet paper. Printing more money just devalues the work product of everyone before that. Republican attitudes about tax? Surely you jest.

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

#77

Post by foofie »

happytiger wrote: post #69
Stealthisbook wrote: post #54

Earlier quoted context omitted.

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?

This really is one of the most interesting questions. Obviously, a loss of global prestige and reserve currency abandonment could be the result, but if there’s no other country to step in that has that prestige or offers a replacement… What aee the requirements of debt to suppory a global order? Is it the rise of debt thats the issue or the loss of faith in the global order that that debt represents ? People who unde…

> Obviously, a loss of global prestige and reserve currency abandonment could be the result, but if there’s no other country to step in that has that prestige or offers a replacement…

I don't think the role of the US dolar as a reserve currency is put into question with a hypothetical default.

The typical impact of a default is that lenders are stiffed out of the money they lended. Some might go bankrupt as a result, but the only consequence to the US government is a hypothetical inability to get further loans at lower rates. This might be problematic for the US if the US federal government still runs a deficit.

Now, there is the question of what would this "inability" mean.

When Greece defaulted on its sovereign debt, their credit rating tanked and the global financial market hiked interest rates for Greek debt to the point they reached double digits. That lead the Greek government to beg the EU and IMF for emergency loans, which were accompanied by fiscal policy changes. I doubt the US would follow a similar pattern, mainly because the IMF does not have funds of this hypothetical magnitude.

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

#79

Post by medvezhenok »

nocoiner wrote: post #56
jackcosgrove wrote: post #51

Earlier quoted context omitted.

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 GD…

The oldest boomers (born 1945) have not turned 80 yet. The medical problems still lie ahead. Majority of healthcare spend is in the last 5-10 years of life.

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

#80

Post by not_really »

panarky wrote: post #28
dmckeon wrote: post #5

Congress-people have few incentives to restrain or reduce the national debt. There is plenty of talk, but little action. The event horizon may be distant, but the pull is inexorable. What could possibly solve this? Could we give representatives and senators bonuses for spending less and taxing more?

The clue that this guy is a right-wing crank is that he blames the problem on "Congress extending the debt limit". The root cause of the problem happens long before the meaningless semiannual debt limit ritual. The root cause is that Congress approved more spending, while also approving tax cuts, so that the spending isn't funded by tax revenue. The whole debt limit fiasco doesn't fix this fundamental problem. The de…

> The clue that this guy is a right-wing crank

Stopped reading after seeing a clue that this guy is a far-left extremist.

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