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Dollars, Deficits, Debt And Wars
If it's deficit and debt doomsaying you're after, I'm not your guy.
Regular readers are well apprised of my position on US government financing. The US can't go "broke," nor are there "limits" on government spending, nor does Washington need to "borrow" dollars from China (or anybody else) and no, the US government doesn't "need" your tax dollars.
The US government is the sole legal issuer of genuine US dollars. As such, there's no need to "source" them from anywhere -- the US government is th
Dollars can’t buy immortality (yet). Also, I’m inclined to agree with Elon on the biggest threat to humanity (and thus the dollar based system we rely on): AI. To me, that’s what is most likely to lead to immortality as well as the unseating of the dollar as king.
The odds of an act of god large enough to unseat humanity are pretty slim on a human timescale. As for autocracy, I still see that as very low possibility and it may not necessarily lead to a decline in the dollar either. The alternatives to the dollar might still be worse.
All in all, I’m still pretty optimistic about the future, but we are about to enter a period where evidence and truth will become even harder to discern and the sheer volume of misinformation and disinformation will be ratcheted up by an order of magnitude.
I do wonder what will happen to the idea of “truth” if video/audio evidence and eyewitness evidence are no longer reliable. If George Santos can get elected in today’s climate, what’s going to happen when politicians can use generative AI to fabricate videos of their opponents or themselves with ease? Voters already struggle with a basic grasp of what’s real and what isn’t and readily latch onto anything that makes their guy or gal look good or whatever mud gets slung at their opponent.
Remember…”No currency is born a reserve currency, it becomes it.”…
One of your best. Right on.
You should send this piece to Mitch and what’s his name that sold our collective souls to make him speaker.
I never fully wrapped my head about the MMT debate when it was active a year ago. It did occur to me back then that, while Treasuries may not be “debt”, if they are treated as debt that can force certain behaviors.
As the Federal “debt” rises, so does the interest burden, which leads the Treasury to issue more bills/bonds regardless of demand, increases pressure on the Fed to hold rates low, increases the risk of low-rate-driven asset bubbles, motivates voters to support excessive spending cuts or tax hikes or engage in class conflict, etc.
This is spot on. Call it debt, ‘interest bearing dollars’, or whatever you want. The reality is that the fed either buys it or the economy experiences crowding out.
You’ve succinctly summarized the negatives of the one and we know what happens in the other.
Perfect Saturday afternoon read. Thanks
H-Man, so inflation hangs around for awhile. The bets just recalibrate.
At the Munich Security Conference, ongoing this weekend,
Deutsche Welle interviewed Anne Applebaum
, an historian who writes for the Atlantic Monthly. It’s worth watching if you have not seen it.
Coincidentally, I saw news this morning that Biden is going to Warsaw, not Munich. Biden is visiting Poland because things are changing in Ukraine, not necessarily for the better. China is talking about supporting Russia with weapons. Russia is planning a broader invasion of Ukraine, basically a do-over of the invasion last year.
That means the war in Ukraine is expanding. I’m hoping it also means the US and other western countries will provide Ukraine with F-16 fighter planes. We’ve been quite timid to do this so far, but it now seems to be necessary.
This implies an expansion of NATO and greater US involvement. It raises the stakes in the fight, and the possibility of potential impacts on our markets. But I say it is necessary. Just my opinion, but Putin has said he wants to relive the good-old days, when Russia had dominance over Eastern Europe. He said before this war that this was what he wanted most before leaving his post as president.
He’s getting his wish, but it’s more than he bargained for. If we have any interest in retaining the value of sovereignty for all the countries in Europe, we need at a very minimum to give more to the Ukrainians to defend themselves.
Plaxico Burress? Dude, I’m dying here. You’re the Bill Simmons of the financial world. A mix of deep subject matter expertise with a slice of geopolitics and pop culture thrown in. You’re not charging enough.