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United States42971 Posts
On April 04 2025 01:21 decafchicken wrote:
We're all arguing like the point of tariffs is to improve america. It's not, it's isolationist/protectionist and the point is to pull us out of the world economy, which is objectively bad for anyone who cares about the economy.
I appreciate you taking the time to explain economics to oblade though.
But Trump has at least got us thinking and asking the big questions again. Questions like "what is the right amount of the foundation that high American standards of living are built on to destroy?" Previous administrations were afraid to ask that question. They'd say things like "wait, what? surely none". They'd refuse to have the debate and brush it off with responses like "are you stupid?" or "what the actual fuck are you talking about".
I may not necessarily approve of Trump opening with "100% of the foundation of American prosperity should be destroyed" but I like that he's got us thinking about these issues again.
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United States42971 Posts
On April 04 2025 01:32 Uldridge wrote:
@Kwark
I remember you making the same argument a while back, with the gold mine, and maybe even castle and all, lol
Yep. It was true a while back, it's true now. There's a reason that other countries all want US issued paper but don't seem to want to buy things with it. They're using it as currency to trade amongst themselves. They're using it as a reserve to underwrite their banking systems. It has intrinsic value to them. It's a crazy state of affairs where the US can get by in the world by issuing IOUs to people who have no intention of ever calling them in because ownership of the IOU provides them benefits but its the foundation of the American global empire.
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On April 03 2025 21:34 Vivax wrote:
The net positive of the situation is that the EU should experience stronger unity and measures might be put into place to lessen US influence here, for example the funding of and public support for right wing extremists and their parties.
Meloni tried a diplomatic approach that Musk and Trump simply aren‘t interested in. They will attempt to cheat and strongarm their way into the continent by all means necessary, even by supporting Russia.
We are caught in a pinch between two jingoists at this point.
Makes the PRC look moderate.
It‘s like that meme with the dude poking something with a stick except it‘s the US poking us like ‚c‘mon, turn fascist‘ or something.
We are so free here it causes physical pain in their citizens.
They‘ll even believe that for every Tesla I torch, Soros sends me a 1k check. Bollocks.
As my godfather used to say, the best things in life are free.
Japan and South Korea is starting up talks with China on economical policy over this. Just an example from outside Europe.
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United States42971 Posts
The US being less popular in China than Japan is pretty funny.
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As long as the world sees it that way, yes. The second you get an alternative - or multiple alternatives -, because of... let's call them reasons, it becomes quite precarious for you. BRICS might be a first indicator towards that, no?
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On April 04 2025 01:36 KwarK wrote:Show nested quote +On April 04 2025 01:32 Uldridge wrote:
@Kwark
I remember you making the same argument a while back, with the gold mine, and maybe even castle and all, lol Yep. It was true a while back, it's true now. There's a reason that other countries all want US issued paper but don't seem to want to buy things with it. They're using it as currency to trade amongst themselves. They're using it as a reserve to underwrite their banking systems. It has intrinsic value to them. It's a crazy state of affairs where the US can get by in the world by issuing IOUs to people who have no intention of ever calling them in because ownership of the IOU provides them benefits but its the foundation of the American global empire.
Is there going to be the same demand for those when the US national debt to GDP ratio is 5000% and sends half its GDP overseas every year and it's been 100 years since the US had a manufacturing base? Is the paper magical by itself or is it that the US riding a wave of something that won't last forever, and other people can print paper too and there's also gold and oil and other commodities?
Now either we can believe the way the US will look in 2100 is a deterministic historical inevitability, or decisions actually affect the future. In which case maybe that should be fixed sooner rather than later when it's easier and still possible.
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On April 04 2025 01:47 oBlade wrote:Show nested quote +On April 04 2025 01:36 KwarK wrote:On April 04 2025 01:32 Uldridge wrote:
@Kwark
I remember you making the same argument a while back, with the gold mine, and maybe even castle and all, lol Yep. It was true a while back, it's true now. There's a reason that other countries all want US issued paper but don't seem to want to buy things with it. They're using it as currency to trade amongst themselves. They're using it as a reserve to underwrite their banking systems. It has intrinsic value to them. It's a crazy state of affairs where the US can get by in the world by issuing IOUs to people who have no intention of ever calling them in because ownership of the IOU provides them benefits but its the foundation of the American global empire. Is there going to be the same demand for those when the US national debt to GDP ratio is 5000% and sends half its GDP overseas every year and it's been 100 years since the US had a manufacturing base? Is the paper magical by itself or is it that the US riding a wave of something that won't last forever, and other people can print paper too and there's also gold and oil and other commodities? Now either we can believe the way the US will look in 2100 is a deterministic historical inevitability, or decisions actually affect the future. In which case maybe that should be fixed sooner rather than later when it's easier and still possible. Crashing the US economy isn't going to improve your GDP to debt ratio...
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You gotta break some eggs to make an omelet, Gorsameth.
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I'm surprised no one has mentioned / reminded us that it's one market... American owners, owns plenty of manufacturing that makes use of the cheap labor outside of the us. So really, there's a good chance that Americans are merely shooting, ahem "tariffing" themselves.
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United States42971 Posts
On April 04 2025 01:47 oBlade wrote:Show nested quote +On April 04 2025 01:36 KwarK wrote:On April 04 2025 01:32 Uldridge wrote:
@Kwark
I remember you making the same argument a while back, with the gold mine, and maybe even castle and all, lol Yep. It was true a while back, it's true now. There's a reason that other countries all want US issued paper but don't seem to want to buy things with it. They're using it as currency to trade amongst themselves. They're using it as a reserve to underwrite their banking systems. It has intrinsic value to them. It's a crazy state of affairs where the US can get by in the world by issuing IOUs to people who have no intention of ever calling them in because ownership of the IOU provides them benefits but its the foundation of the American global empire. Is there going to be the same demand for those when the US national debt to GDP ratio is 5000% and sends half its GDP overseas every year and it's been 100 years since the US had a manufacturing base? Is the paper magical by itself or is it that the US riding a wave of something that won't last forever, and other people can print paper too and there's also gold and oil and other commodities? Now either we can believe the way the US will look in 2100 is a deterministic historical inevitability, or decisions actually affect the future. In which case maybe that should be fixed sooner rather than later when it's easier and still possible.
1. Gold is no longer used as currency and yet people still treat it as precious. There's a lot of stickiness to existing systems, even when they don't make any sense anymore.
2. That scenario isn't a problem.
2A. If the US sending more and more paper overseas each year then who cares, it's paper, it's not real. If, in a given year, the US spends half of its budget servicing debt then that doesn't mean that half of all of the stuff went abroad, especially when they're still taking the interest and using it to buy more US debt. You didn't actually send them anything. They just doubled down on giving you real goods in exchange for nothing. That's where the US is at now, it isn't really spending value servicing the debt, the debt in nominal terms is just growing.
2B. If you owe the bank a million dollars that's a you problem. If you owe the bank a billion dollars that's a them problem. The US has made all participants in the global economy implicit stakeholders in the health of the US economy. If the Chinese people have spent decades forgoing luxuries so that they can send all of their valuable goods to America in exchange for American debt then the last thing they want to do is blow up the value of US debt. That's their retirement. They worked and saved and went without things in order to get that, they've got skin in the game now. When the buyer asks China how China would like to be paid then China is going to say "US debt please" because if you've got all your savings tied up in US debt then the last thing you want is for it no longer to be used as a default for settlement.
2C. The debt isn't specific, it doesn't entitle you to any specific goods. It entitles you to whatever US labour you can get for the paper. In the scenario that the world is overflowing with paper and everyone decides they want to cash it in Americans aren't going to suddenly become slaves to the Chinese, they'll become incredibly well paid (in US dollar terms) workers in a factory that makes goods for export which is exactly what Trump is insisting his goal is. Your worst case scenario where the whole house of cards comes crashing down is also your desired end state and yet somehow you're too dense to recognize that.
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On April 04 2025 01:48 Gorsameth wrote:Show nested quote +On April 04 2025 01:47 oBlade wrote:On April 04 2025 01:36 KwarK wrote:On April 04 2025 01:32 Uldridge wrote:
@Kwark
I remember you making the same argument a while back, with the gold mine, and maybe even castle and all, lol Yep. It was true a while back, it's true now. There's a reason that other countries all want US issued paper but don't seem to want to buy things with it. They're using it as currency to trade amongst themselves. They're using it as a reserve to underwrite their banking systems. It has intrinsic value to them. It's a crazy state of affairs where the US can get by in the world by issuing IOUs to people who have no intention of ever calling them in because ownership of the IOU provides them benefits but its the foundation of the American global empire. Is there going to be the same demand for those when the US national debt to GDP ratio is 5000% and sends half its GDP overseas every year and it's been 100 years since the US had a manufacturing base? Is the paper magical by itself or is it that the US riding a wave of something that won't last forever, and other people can print paper too and there's also gold and oil and other commodities? Now either we can believe the way the US will look in 2100 is a deterministic historical inevitability, or decisions actually affect the future. In which case maybe that should be fixed sooner rather than later when it's easier and still possible. Crashing the US economy isn't going to improve your GDP to debt ratio...
Nobody wants to crash "the US economy." Obviously. Your point eludes me. The stock market is not the economy. Was that it? Crashes do happen on the timescales of a country's existence. Inevitably. "Crashing" the housing market results in affordable housing, for example. Like how China had no choice but to tank its unsustainable housing speculation. What was the alternative? Bubble another 500% before crashing? These are not one line issues if you actually want to understand them. Obviously the world is not the stonks meme guy that everything just goes straight up forever. It never was, and isn't now just because we happen to have had the luck to have been born in plenty. Europe has the exact same issues now and on the horizon and arguably more precarious because they have specific dependencies on the New World and in many cases their fate is more tied to foreign capital than the US's fate is.
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I‘m afraid the stock market is the economy lol.
Trump opened his policy book, did a Ctrl-A and clicked on a hive.
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Your tariffing everything. Your importing wood, aluminium, steel? all that goes up. Every chip you import whether its for a toaster, a car or a fridge, the price is going up.
The engine block in your all American car? that doesn't come from America, its price is going up. Your wheel hubs, your transmission? all that is coming from somewhere else. All those are going up.
What do you think that is going to do to the economy? Practically every industry at some point in the long chain of production and supply is going to get hit, because America is not a fully self sufficient enclosed eco system, and your throwing a tariff on everything.
You think everyone telling you that this is going to cause a recession in the coming months is just hating on Trump for being such a genius outplaying them?
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United States42971 Posts
On April 04 2025 02:15 Vivax wrote:
I‘m afraid the stock market is the economy lol.
It isn't. Oblade is right about that at least. The stock market is the projected value of an entire company if we were to imagine that all shares could be sold at the last value traded for any share, nothing more. It's a metric, and not a very good one (because the assumption involved isn't great). But it can be applied consistently at least, you can compare the value of the companies today with their value yesterday and work out directionally what is going on and if you happen to own any of the company then it may have some relevance to you. But if you don't own any of that company then it'll have no real relevance to you beyond possible secondary irrational actors.
Come on, you lived through COVID and the subsequent stock market bubble as the rich got pumped full of cash and had nowhere else to dump it. You should be able to remember that the result of all those lost manhours from quarantines and a million dead and huge economic and supply chain disruptions somehow resulted in "line go up".
Nobody but Trump should struggle with this one. If the stock market is the economy then clearly what the economy needs is more pandemics and fewer workers.
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On April 04 2025 01:52 Uldridge wrote:
You gotta break some eggs to make an omelet, Gorsameth.
You and your fancy European food.
Americans can't afford luxury items like eggs these days.
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On April 04 2025 02:24 KwarK wrote:Show nested quote +On April 04 2025 02:15 Vivax wrote:
I‘m afraid the stock market is the economy lol. It isn't. Oblade is right about that at least. The stock market is the projected value of an entire company if we were to imagine that all shares could be sold at the last value traded for any share, nothing more. It's a metric, and not a very good one (because the assumption involved isn't great). But it can be applied consistently at least, you can compare the value of the companies today with their value yesterday and work out directionally what is going on and if you happen to own any of the company then it may have some relevance to you. But if you don't own any of that company then it'll have no real relevance to you beyond possible secondary irrational actors. Come on, you lived through COVID and the subsequent stock market bubble as the rich got pumped full of cash and had nowhere else to dump it. You should be able to remember that the result of all those lost manhours from quarantines and a million dead and huge economic and supply chain disruptions somehow resulted in "line go up". Nobody but Trump should struggle with this one. If the stock market is the economy then clearly what the economy needs is more pandemics and fewer workers.
The last part is more or less what I meant with consumers competing with corporations. Bad news for the worker/consumer was good news for stock prices. The government guaranteed tbtf businesses anyway.
I‘m assuming that those stock valuations are going to matter to the business model of several banks that should be struggling to get a hold of as much cash as possible at the moment, interest rates spike, bankruptcies etc.
Bailed out again using national debt, perhaps.
Great read so far. I‘m just a layman but it‘s very interesting.
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On April 04 2025 02:00 KwarK wrote:Show nested quote +On April 04 2025 01:47 oBlade wrote:On April 04 2025 01:36 KwarK wrote:On April 04 2025 01:32 Uldridge wrote:
@Kwark
I remember you making the same argument a while back, with the gold mine, and maybe even castle and all, lol Yep. It was true a while back, it's true now. There's a reason that other countries all want US issued paper but don't seem to want to buy things with it. They're using it as currency to trade amongst themselves. They're using it as a reserve to underwrite their banking systems. It has intrinsic value to them. It's a crazy state of affairs where the US can get by in the world by issuing IOUs to people who have no intention of ever calling them in because ownership of the IOU provides them benefits but its the foundation of the American global empire. Is there going to be the same demand for those when the US national debt to GDP ratio is 5000% and sends half its GDP overseas every year and it's been 100 years since the US had a manufacturing base? Is the paper magical by itself or is it that the US riding a wave of something that won't last forever, and other people can print paper too and there's also gold and oil and other commodities? Now either we can believe the way the US will look in 2100 is a deterministic historical inevitability, or decisions actually affect the future. In which case maybe that should be fixed sooner rather than later when it's easier and still possible. 1. Gold is no longer used as currency and yet people still treat it as precious. There's a lot of stickiness to existing systems, even when they don't make any sense anymore.
...Gold is valuable. So is oil.
On April 04 2025 02:00 KwarK wrote:
2. That scenario isn't a problem.
2A. If the US sending more and more paper overseas each year then who cares, it's paper, it's not real. If, in a given year, the US spends half of its budget servicing debt then that doesn't mean that half of all of the stuff went abroad, especially when they're still taking the interest and using it to buy more US debt. You didn't actually send them anything. They just doubled down on giving you real goods in exchange for nothing. That's where the US is at now, it isn't really spending value servicing the debt, the debt in nominal terms is just growing.
"sends half its GDP overseas every year" meant a trade deficit equivalent to 50% of GDP, not federal budget interest payments costing half of GDP.
It was a simple example of imagine both the federal debt and annual trade deficit trend up under your no big deal nothing happened last year so nothing will happen next year and even if it did it would actually be good thesis.
When you mention debt payments though, yes, that's important to remember when debt is huge, interest payments themselves become a huge expenditure.
On April 04 2025 02:00 KwarK wrote:
2B. If you owe the bank a million dollars that's a you problem. If you owe the bank a billion dollars that's a them problem. The US has made all participants in the global economy implicit stakeholders in the health of the US economy. If the Chinese people have spent decades forgoing luxuries so that they can send all of their valuable goods to America in exchange for American debt then the last thing they want to do is blow up the value of US debt. That's their retirement. They worked and saved and went without things in order to get that, they've got skin in the game now.
Looks like we're at a point where your argument is the US is too big to fail and my argument is in the future the US will not be so big that it can't fail. My experience is everything can fail. Enron can fail. Madoff can fail. Banks can fail but for being bailed out by the government. The government can fail but for being bailed out by the world? Maybe. But I see no precedent for it or proof of it.
On April 04 2025 02:00 KwarK wrote:
2C. The debt isn't specific, it doesn't entitle you to any specific goods. It entitles you to whatever US labour you can get for the paper. In the scenario that the world is overflowing with paper and everyone decides they want to cash it in Americans aren't going to suddenly become slaves to the Chinese, they'll become incredibly well paid (in US dollar terms) workers in a factory that makes goods for export which is exactly what Trump is insisting his goal is. Your worse case scenario where the whole house of cards comes crashing down is also your desired end state and yet somehow you're too dense to recognize that.
You are overstating the power, or significance, of the end-state US in the example.
During the decades of capital extraction via trade deficits, reinvestment in the US becomes less favorable. Far less. Because the naive microcosm model that the whole world economy is just the two groups we've set up, is not true. Foreign investors have other options for investing their capital, other consumers to sell their products to, other manufacturers to buy from and other currencies and markets to store their capital in. They will have gone to China. To ASEAN. To the EU. To OAS. To the Arab League.
It would not be up up up up up up up of triple-A rated credit the whole time and then wile-e-coyote cliff. It would be up for a while and then a slow and eventually faster and accelerating deterioration. The US would not be the #1 anything when it has crashed except military spending as a percent of GDP probably. It wouldn't be the #1 reserve currency or financial market or GDP or GDP per capita or any of those. Those would have long disappeared. The national debt would not be 5000% of GDP just because GDP and national debt were both increasing, but national debt at a higher rate. The GDP would have been decreasing since long ago.
This is why Greece and Venezuela are not cash-rich export powerhouses and aren't going to be.
On April 04 2025 02:21 Gorsameth wrote:
You think everyone telling you that this is going to cause a recession in the coming months is just hating on Trump for being such a genius outplaying them?
1) "This" can absolutely cause, or contribute to, a recession.
2) Recessions happen. They have to happen. They happen anyways. I know cankicking is fun but I am interested in the long term health of my country.
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United States42971 Posts
On April 04 2025 02:39 oBlade wrote:
When you mention debt payments though, yes, that's important to remember when debt is huge, interest payments themselves become a huge expenditure.
No, they really don't. When you owe a lot of paper then they ask you to give them even more paper. Like okay, but it's paper. Not even that anymore really, it's 1s and 0s in a ledger that represent the idea of paper. Nothing is physically being sent and yet you seem to think it'll cripple the country to send that nothing.
On April 04 2025 02:39 oBlade wrote:
This is why Greece and Venezuela are not cash-rich export powerhouses and aren't going to be.
Greece and Venezuela owe debt in someone else's currency and it's weird that you think you can use them as examples without knowing that. They're also not good proxies for the United States because they're pretty different situations.
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On April 04 2025 02:44 KwarK wrote:Show nested quote +On April 04 2025 02:39 oBlade wrote:
This is why Greece and Venezuela are not cash-rich export powerhouses and aren't going to be. Greece and Venezuela owe debt in someone else's currency and it's weird that you think you can use them as examples without knowing that. They're also not good proxies for the United States because they're pretty different situations.
Give it time, I'm sure we'll be at Greece and Venezuela's level before long
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On April 04 2025 02:45 Zambrah wrote:Show nested quote +On April 04 2025 02:44 KwarK wrote:On April 04 2025 02:39 oBlade wrote:
This is why Greece and Venezuela are not cash-rich export powerhouses and aren't going to be. Greece and Venezuela owe debt in someone else's currency and it's weird that you think you can use them as examples without knowing that. They're also not good proxies for the United States because they're pretty different situations. Give it time, I'm sure we'll be at Greece and Venezuela's level before long
As long as you owe your own currency, you got no problem. You can produce infinite amounts of that.
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EPT
