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United States43596 Posts
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
Literally no. Venezuela can't service its debt because its debt is in dollars which means that the creditors are demanding a specific thing from Venezuela and Venezuela struggles to get dollars. The situation is wholly incomparable to a state that has debt in its own currency. If the debt is owed in your own currency then the creditors cannot demand a specific thing, all they can do is compete with everyone else participating within your economy for however much labour the currency gets them. You'll always have labour within your economy and more currency doesn't entitle them to more labour because the nominal value of the labour is a function of the supply of currency bidding for the same labour pool.
Imagine you were giving out promises of "I'll help you move house if I'm free that day". You can issue as many of those if you like. If a hundred people all pick the same day to move and all of them ask you to help them then that doesn't mean you're going to be having a 2,400 hour long work day, it means that you're going to settle up all of that in the same 24 hour period. It's intrinsically constrained to your available labour.
Now imagine the promise was "I'll pay for movers". That's the difference. That's the problem Greece and Venezuela has.
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By that logic everyone in the EU is using someone else's currency so when France and Germany go bankrupt it will be totally different than when the US goes bankrupt for the exact same reasons, but green instead of rainbow.
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United States43596 Posts
On April 04 2025 02:51 oBlade wrote:
By that logic everyone in the EU is using someone else's currency so when France and Germany go bankrupt it will be totally different than when the US goes bankrupt for the exact same reasons, but green instead of rainbow.
You say "by that logic" as if I'm engaging in rhetoric rather than literally explaining how foreign debt works to you as if you were a child. I'm not trying to persuade you, what I'm saying is just what it is. You can choose not to accept it if you like but it's not some logical trick I came up with, it's a description of how foreign debt works.
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I am very curious about how much patience Trump voters will have waiting for the post tariff la-la-land super economy. Prices will go up, salaries will not keep up, and jobs will be lost.
The world stock markets have said very clearly what they think of this: it is utter BS.
This migh indeed have been a bubble anyway, but tariffs will make it much worse, just like it did during the great depression.
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On April 04 2025 02:51 oBlade wrote:
By that logic everyone in the EU is using someone else's currency so when France and Germany go bankrupt it will be totally different than when the US goes bankrupt for the exact same reasons, but green instead of rainbow. And you don't seem to get that.
The US debt is held in US dollars which the US can print literal infinite amounts of. The US could print a 37 trillion dollar bill and pay of the entire national debt right now if it wanted.
It doesn't matter (for the debt) that it would crash the dollar exchange rate because all the debt is in dollars anyway.
France can't do that because part of France's debt will be held in dollars and France can't print its own dollars.
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On April 04 2025 02:51 oBlade wrote:
By that logic everyone in the EU is using someone else's currency so when France and Germany go bankrupt it will be totally different than when the US goes bankrupt for the exact same reasons, but green instead of rainbow.
The EU uses a system called target to balance trade balances across members afaik.
They‘d all have to go bankrupt at once, possibly. I‘m not a central banker so I can‘t say for sure.
According to a paper it balances each countries‘ national banks interest rate.
A McCain french fry as president would do less damage than Trump is doing atm.
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United States43596 Posts
On April 04 2025 02:58 Gorsameth wrote:Show nested quote +On April 04 2025 02:51 oBlade wrote:
By that logic everyone in the EU is using someone else's currency so when France and Germany go bankrupt it will be totally different than when the US goes bankrupt for the exact same reasons, but green instead of rainbow. And you don't seem to get that. The US debt is held in US dollars which the US can print literal infinite amounts of. The US could print a 37 trillion dollar bill and pay of the entire national debt right now if it wanted. It doesn't matter (for the debt) that it would crash the dollar exchange rate because all the debt is in dollars anyway. France can't do that because part of France's debt will be held in dollars and France can't print its own dollars.
France can't do it because the Euro isn't "I'll help you move if I'm free that day", it's "I'll help you move, or maybe Germany, or Spain, whoever, will help you move if they're free that day". They can't give out that promise freely because it's not their promise to keep.
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On April 04 2025 02:58 Gorsameth wrote:Show nested quote +On April 04 2025 02:51 oBlade wrote:
By that logic everyone in the EU is using someone else's currency so when France and Germany go bankrupt it will be totally different than when the US goes bankrupt for the exact same reasons, but green instead of rainbow. And you don't seem to get that. The US debt is held in US dollars which the US can print literal infinite amounts of. The US could print a 37 trillion dollar bill and pay of the entire national debt right now if it wanted. It doesn't matter (for the debt) that it would crash the dollar exchange rate because all the debt is in dollars anyway. France can't do that because part of France's debt will be held in dollars and France can't print its own dollars.
France's debt is in euros because it is in the EU and nobody has their "own" currency, but it's also not somebody else's because that's how sharing works.
If the US printed $37 trillion it would destroy the economy and cause a cataclysmic depression.
The ability to print your own currency therefore not a strong hedge against runaway debt spending. The goal isn't "it's okay because at some point in the future we can technically make this bank payment on paper." The goal is keep the country together.
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oh now destroying the economy matters. I thought it didn't just minutes ago...
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On April 04 2025 03:10 Gorsameth wrote:
oh now destroying the economy matters. I thought it didn't just minutes ago...
A 20% drop in stocks of a bullshit tech bubble is not the same as a $37 trillion inflationpocalypse.
Risk of the former, now, is better than the latter (which would be much more than $37 trillion) later.
"Doctor I thought you were supposed to HEAL the patient? Why did you CUT him with a scalpel during surgery? Checkmate."
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United States43596 Posts
On April 04 2025 03:09 oBlade wrote:Show nested quote +On April 04 2025 02:58 Gorsameth wrote:On April 04 2025 02:51 oBlade wrote:
By that logic everyone in the EU is using someone else's currency so when France and Germany go bankrupt it will be totally different than when the US goes bankrupt for the exact same reasons, but green instead of rainbow. And you don't seem to get that. The US debt is held in US dollars which the US can print literal infinite amounts of. The US could print a 37 trillion dollar bill and pay of the entire national debt right now if it wanted. It doesn't matter (for the debt) that it would crash the dollar exchange rate because all the debt is in dollars anyway. France can't do that because part of France's debt will be held in dollars and France can't print its own dollars. France's debt is in euros because it is in the EU and nobody has their "own" currency, but it's also not somebody else's because that's how sharing works. If the US printed $37 trillion it would destroy the economy and cause a cataclysmic depression. The ability to print your own currency therefore not a strong hedge against runaway debt spending. The goal isn't "it's okay because at some point in the future we can technically make this bank payment on paper." The goal is keep the country together.
Go back to the "I'll help you move if I have time" example and think about it some more. There's an intrinsic constraint, you only have 24 hours in a day. If multiple people try to cash in their promises on the same day then all that happens is a bidding war between the promise holders where whoever holds the most promises gets your help because what you have promised is something that you control and that is constrained.
The same applies to the US dollar when the debtor is the United States. People can come to the US and demand labour but they can't demand specific amounts of goods or hours, they get whatever the US dollar gets them. The US labour pool is sufficient to meet the demand of everyone cashing in their debt at the same time in full because the real world value of the debt is floating. It is by definition always going to be enough because the value of the coupons can't exceed the total pool of things they can be used for.
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On April 04 2025 02:04 oBlade wrote:Show nested quote +On April 04 2025 01:48 Gorsameth wrote: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.
Counterpoint: The trump administration DOES want to crash the "US Economy"
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On April 04 2025 02:49 KwarK wrote:Show nested quote +On April 04 2025 02:45 Zambrah wrote: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 Literally no. Venezuela can't service its debt because its debt is in dollars which means that the creditors are demanding a specific thing from Venezuela and Venezuela struggles to get dollars. The situation is wholly incomparable to a state that has debt in its own currency. If the debt is owed in your own currency then the creditors cannot demand a specific thing, all they can do is compete with everyone else participating within your economy for however much labour the currency gets them. You'll always have labour within your economy and more currency doesn't entitle them to more labour because the nominal value of the labour is a function of the supply of currency bidding for the same labour pool. Imagine you were giving out promises of "I'll help you move house if I'm free that day". You can issue as many of those if you like. If a hundred people all pick the same day to move and all of them ask you to help them then that doesn't mean you're going to be having a 2,400 hour long work day, it means that you're going to settle up all of that in the same 24 hour period. It's intrinsically constrained to your available labour. Now imagine the promise was "I'll pay for movers". That's the difference. That's the problem Greece and Venezuela has.
I was speaking more in a We'll Be On Their General Global/Economic Level way more than in any economically specific way.
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United States43596 Posts
On April 04 2025 03:26 decafchicken wrote:Show nested quote +On April 04 2025 02:04 oBlade wrote:On April 04 2025 01:48 Gorsameth wrote: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. Counterpoint: The trump administration DOES want to crash the "US Economy"
You're just saying that because of all of the evidence.
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On April 04 2025 03:35 KwarK wrote:Show nested quote +On April 04 2025 03:26 decafchicken wrote:On April 04 2025 02:04 oBlade wrote:On April 04 2025 01:48 Gorsameth wrote: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. Counterpoint: The trump administration DOES want to crash the "US Economy" You're just saying that because of all of the evidence.
A US senator seems to think it's exactly what they want to do.
https://bsky.app/profile/chrismurphyct.bsky.social/post/3lluxkmx7wc2m
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On April 04 2025 03:00 Vivax wrote:Show nested quote +On April 04 2025 02:51 oBlade wrote:
By that logic everyone in the EU is using someone else's currency so when France and Germany go bankrupt it will be totally different than when the US goes bankrupt for the exact same reasons, but green instead of rainbow. The EU uses a system called target to balance trade balances across members afaik. They‘d all have to go bankrupt at once, possibly. I‘m not a central banker so I can‘t say for sure. According to a paper it balances each countries‘ national banks interest rate. A McCain french fry as president would do less damage than Trump is doing atm.
If they appointed McCain in January 2025, he would do a better job than Trump and he's dead.
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On April 04 2025 04:50 maybenexttime wrote:Show nested quote +On April 04 2025 03:00 Vivax wrote:On April 04 2025 02:51 oBlade wrote:
By that logic everyone in the EU is using someone else's currency so when France and Germany go bankrupt it will be totally different than when the US goes bankrupt for the exact same reasons, but green instead of rainbow. The EU uses a system called target to balance trade balances across members afaik. They‘d all have to go bankrupt at once, possibly. I‘m not a central banker so I can‘t say for sure. According to a paper it balances each countries‘ national banks interest rate. A McCain french fry as president would do less damage than Trump is doing atm. If they appointed McCain in January 2025, he would do a better job than Trump and he's dead.
I did say I would vote for a rock over Trump if the election was in my country.
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On April 04 2025 03:49 CuddlyCuteKitten wrote:Show nested quote +On April 04 2025 03:35 KwarK wrote:On April 04 2025 03:26 decafchicken wrote:On April 04 2025 02:04 oBlade wrote:On April 04 2025 01:48 Gorsameth wrote: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. Counterpoint: The trump administration DOES want to crash the "US Economy" You're just saying that because of all of the evidence. A US senator seems to think it's exactly what they want to do. https://bsky.app/profile/chrismurphyct.bsky.social/post/3lluxkmx7wc2m
LibHorizons: I don't like buy the idea that Trump is playing 4d chess, but he seems to be whoopin Democrats ass in checkers. Just one losing fork after another.
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I'm a big fan of the "lets just elect the dog so the council has to figure things out" strategy for small town issues but we may need to do some work to scale that up to the executive branch. Its certainly not an impossible ask.
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On April 03 2025 23:04 oBlade wrote:
The US runs around a $1 trillion trade deficit with the world. It's around 3-5% of GDP, although as a pure value it appears larger because of the size of the US economy. But also because a trillion dollars is actually a lot. A tariff - whoever pays it, is a tax essentially on capital leaving the country. The less capital leaves, the more it stays in the economy, and because it's a tax, at the same time the more that capital leaving is taxed, the less you have to tax capital moving around inside your own economy, which encourages it to move around.
Furthermore, foreigners own about $8 trillion in treasury bonds that they buy with the capital they extracted from the US. Or about 30% of treasury bonds. The interest they earn from treasury bonds is then paid for with taxes collected from the tax base of the United States (consumers and citizens) by a government which continually operates at $1-2 trillion budget deficits. Meaning the US government is turning its citizens into indentured servants of foreign capital, foreign capital that also relies on the same citizens' perpetual dependence as consumers.
If Trump's tariff bomb results in an interest rates spike and a stock crashcorrection, the result, roughly, is domestic capital rotating from high risk, volatile stocks, and reallocating into bonds and onshoring business and manufacturing by investing into the US economy to keep their capital from becoming worthless to inflation.
There is also the chance that the country of Wall Street itself is such an independently powerful and enormous entity, that international and multipolar dependence on it as a global secondary capital market may actually prop it up from negative repercussions of US trade policy, if such a thing is conceivable.
Lack of US manufacturing in key sectors is both an economic and national security issue obviously, but the broader issue of a general trade deficit with the world, which again the US runs the largest of any country (which again by percent doesn't look like much but a trillion dollars isn't a rounding error in any framework). Trump's use of a bludgeon here does not preclude the scalpel in other specific goals like guaranteeing domestic pharmaceutical or chip production, or backing US auto companies.
This is a fascinating and historic play and I love when Trump actually does things for the simple fact it gets people thinking and talking about ideas again.
There is no way to guess the elasticity without actually doing the policy, and then we will know how much people/companies will just absorb and pay the difference, vs. what sectors will have what levels of demand shift. That's why months ago on the campaign trail you have wildly divergent papers and studies predicting the effects. This isn't really done at this scale in this century so it's not clear.
So this is over when the world simply applies counter tariffs, making manufacturing leaving the US because they can't sell to anybody?
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EPT
