5 ms·

While you present a compelling argument, I must respectfully disagree. I may catch some flack for saying it, and many people refuse to believe it, but the U.S.

by AC__ 11y ago

While you present a compelling argument, I must respectfully disagree. I may catch some flack for saying it, and many people refuse to believe it, but the U.S. is insolvent. The value of the U.S. dollar is artificially propped-up. How long do you truly believe the Russias and Chinas of the world are going to keep using greenbacks? They will feign WWIII, Israel will expand to encompass 'Greater Israel' and U.N. will formally install global government, and USD will cease to be de-facto global currency.

AC__ 11y ago
Downvote, but in a year or two remember atodaso lol https://www.pinterest.com/pin/264164334368722823/ https://www.pinterest.com/pin/264164334368722823/
- mikeash 11y ago
  Just for the record, I downvoted because of the "U.N. will formally install global government" nonsense, not anything related to the US dollar.
  - AC__ 11y ago
    Downvote the comment, not the Ricky meme, that shit is pure gold hahaha.
adventured 11y ago
Insolvent you say? The US owns 45% of all global wealth (per Allianz's global wealth studies, it was ~50% pre great recession, fell to about ~39% in 2010 as the US suffered heavy asset declines, and has rebounded back to around ~45% with the recovery in the US economy, that gap is mostly the arrival of China's wealth). The US is massively solvent in fact. Furthering this point, the US is now growing as fast as China in real terms (given pretty much every credible study indicates China is at least lying about half of their growth); the US is also gaining substantially against most of Europe, as its economy continues to grow faster than Europe even with a stronger dollar. South America and most emerging markets have been thrown into near-depression status, due to the stronger dollar. The US economy is likely to enjoy a very nice 10 or 20 year run in fact. Russia's economy is now - as of the latest 2015 numbers - 1/12th the size of the US economy. It no longer matters as a global economic power (it still matters as a global commodity player). Its economy is smaller than Canada's now. China will continue to use greenbacks because they will never have any other choice, the same as they'll continue using Euros. The US is back to being China's biggest trade customer (with the dollar having gained so much value): that trade is mostly done in dollars and that will continue.
- AC__ 11y ago
  AF http://www.usdebtclock.org/ http://www.usdebtclock.org/
  - adventured 11y ago
    That's a terrible argument. You're talking about public debt, which is a small fraction of all US wealth holdings (household + corporate + government), and can be trivially managed. Further, unlike a lot of countries, the US has significant spare taxing capability (it rests in the middle tier globally on taxation). The US could easily raise $200 billion in new annual income taxes on the top 25% and not miss a beat - that single move alone would handle any potential issues from the public debt cost. Or better yet: the US can constrain its spending growth (as it has been), allowing income and assets to continue to outrun the problem. And of course the US owns the global reserve currency, which enables it to export inflation to the rest of the world as a means to reduce the domestic hit of things like QE (which is why the Eurozone's QE hasn't been as effective). When the US uses the dollar to improve its fiscal circumstances, the rest of the world foots a big part of the bill. While that's sort of like cheating, it's an advantage the US possesses that nobody else does.
    - AC__ 11y ago
      Yeah you're right, your argument that the entire globe will absorb U.S. inflation indefinitely is much more grounded.
      - adventured 11y ago
        My argument rests on the fact that the US economy is the world's #2 manufacturing economy, has among the highest median incomes (and median disposable incomes), has one of the most productive economies with one of the highest GDP per capita numbers, does not have a demographic bomb going off (Europe, Japan, China), is capable of being fully self-reliant on energy (which very few nations are), has a boom coming in energy exports via natural gas, continues to have one of the most innovative and dynamic economies, is growing as fast as or faster than competing major economies, owns 45% of all global wealth, has significant spare taxing capacity, US households dramatically reduced their debt to income ratio over the last five years (while most competing economies have seen increases in that ratio), and is the global leader across numerous major industries. You picked out the one thing that is the easy trump card: the global reserve currency makes it all that much easier for the US.
tootie 11y ago
Every currency's value is 100% artificial, yet they are miraculously effective.
dang 11y ago
We detached this subthread from https://news.ycombinator.com/item?id=10650774 https://news.ycombinator.com/item?id=10650774 and marked it off-topic.
- AC__ 11y ago
  Freedom of speech 2.0, it's like freedom of speech except you go in a sound proof room and scream at the wall. Yay "democracy".
dools 11y ago
The US issues it's own currency and only issues debt in it's own currency. It can't be insolvent.
- AC__ 11y ago
  No the Federal Reserve issues USD, not the US government, most people don't realise this fact and it is the difference between a sovereign nation and whatever the fuck North American countries have become today. Canada, where I'm from, had control of our central banking authority up until 1974, what little sovereignty we had(we are still a constitutional monarchy) was relinquished to international banking interests. "Permit me to issue and control the money of a nation, and I care not who makes its laws!" - Mayer Amschel Rothschild
  - dools 11y ago
    Firstly, anyone who mentions the name Rothschild in a conversation about economics cannot be taken seriously. Secondly, the government creates dollars by spending -- when the US government spends, money is created. When the US government taxes, money is destroyed[1]. Same is true for the RBA in australia, it's even on their website[2]: "As the Australian Government is a customer of the Reserve Bank, these payment flows can be very large. Expenditure by the Government adds ES funds to the account of the recipient (or their financial institution), while tax receipts have the opposite effect." The US has several bizarre, self-imposed constraints like the "debt limit" and some crazy mechanism for the fed to buy treasury bills from the government that goes via the private banking system for no good reason but the net effect is the same. Government spending creates money and taxation destroys it. In terms of ownership and control, the RBA is owned by the Commonwealth (probably the same for Canada) and the Fed is owned by private companies because of concerns about government control when it was setup (even though the Fed and the Treasury co-operate so much they might as well be the same institution) but ownership is very different from ownership of a normal company[3]. [1] http://www.mecpoc.org/2011/07/who-can-really-print-money-the-fed-or-the-treasury/ http://www.mecpoc.org/2011/07/who-can-really-print-money-the... [2] http://www.rba.gov.au/mkt-operations/dom-mkt-oper.html http://www.rba.gov.au/mkt-operations/dom-mkt-oper.html [3] http://www.federalreserve.gov/faqs/about_14986.htm http://www.federalreserve.gov/faqs/about_14986.htm
AC__ 11y ago
Lots of downvotes, not much in the way of reasoned response though.

by AC__ 11y ago

AC__ 11y ago

Downvote, but in a year or two remember atodaso lol https://www.pinterest.com/pin/264164334368722823/ https://www.pinterest.com/pin/264164334368722823/

mikeash 11y ago
Just for the record, I downvoted because of the "U.N. will formally install global government" nonsense, not anything related to the US dollar.
- AC__ 11y ago
  Downvote the comment, not the Ricky meme, that shit is pure gold hahaha.

adventured 11y ago

Insolvent you say? The US owns 45% of all global wealth (per Allianz's global wealth studies, it was ~50% pre great recession, fell to about ~39% in 2010 as the US suffered heavy asset declines, and has rebounded back to around ~45% with the recovery in the US economy, that gap is mostly the arrival of China's wealth). The US is massively solvent in fact. Furthering this point, the US is now growing as fast as China in real terms (given pretty much every credible study indicates China is at least lying about half of their growth); the US is also gaining substantially against most of Europe, as its economy continues to grow faster than Europe even with a stronger dollar. South America and most emerging markets have been thrown into near-depression status, due to the stronger dollar. The US economy is likely to enjoy a very nice 10 or 20 year run in fact. Russia's economy is now - as of the latest 2015 numbers - 1/12th the size of the US economy. It no longer matters as a global economic power (it still matters as a global commodity player). Its economy is smaller than Canada's now. China will continue to use greenbacks because they will never have any other choice, the same as they'll continue using Euros. The US is back to being China's biggest trade customer (with the dollar having gained so much value): that trade is mostly done in dollars and that will continue.

AC__ 11y ago
AF http://www.usdebtclock.org/ http://www.usdebtclock.org/
- adventured 11y ago
  That's a terrible argument. You're talking about public debt, which is a small fraction of all US wealth holdings (household + corporate + government), and can be trivially managed. Further, unlike a lot of countries, the US has significant spare taxing capability (it rests in the middle tier globally on taxation). The US could easily raise $200 billion in new annual income taxes on the top 25% and not miss a beat - that single move alone would handle any potential issues from the public debt cost. Or better yet: the US can constrain its spending growth (as it has been), allowing income and assets to continue to outrun the problem. And of course the US owns the global reserve currency, which enables it to export inflation to the rest of the world as a means to reduce the domestic hit of things like QE (which is why the Eurozone's QE hasn't been as effective). When the US uses the dollar to improve its fiscal circumstances, the rest of the world foots a big part of the bill. While that's sort of like cheating, it's an advantage the US possesses that nobody else does.
  - AC__ 11y ago
    Yeah you're right, your argument that the entire globe will absorb U.S. inflation indefinitely is much more grounded.
    - adventured 11y ago
      My argument rests on the fact that the US economy is the world's #2 manufacturing economy, has among the highest median incomes (and median disposable incomes), has one of the most productive economies with one of the highest GDP per capita numbers, does not have a demographic bomb going off (Europe, Japan, China), is capable of being fully self-reliant on energy (which very few nations are), has a boom coming in energy exports via natural gas, continues to have one of the most innovative and dynamic economies, is growing as fast as or faster than competing major economies, owns 45% of all global wealth, has significant spare taxing capacity, US households dramatically reduced their debt to income ratio over the last five years (while most competing economies have seen increases in that ratio), and is the global leader across numerous major industries. You picked out the one thing that is the easy trump card: the global reserve currency makes it all that much easier for the US.

tootie 11y ago

Every currency's value is 100% artificial, yet they are miraculously effective.

dang 11y ago

We detached this subthread from https://news.ycombinator.com/item?id=10650774 https://news.ycombinator.com/item?id=10650774 and marked it off-topic.

AC__ 11y ago
Freedom of speech 2.0, it's like freedom of speech except you go in a sound proof room and scream at the wall. Yay "democracy".

dools 11y ago

The US issues it's own currency and only issues debt in it's own currency. It can't be insolvent.

AC__ 11y ago
No the Federal Reserve issues USD, not the US government, most people don't realise this fact and it is the difference between a sovereign nation and whatever the fuck North American countries have become today. Canada, where I'm from, had control of our central banking authority up until 1974, what little sovereignty we had(we are still a constitutional monarchy) was relinquished to international banking interests. "Permit me to issue and control the money of a nation, and I care not who makes its laws!" - Mayer Amschel Rothschild
- dools 11y ago
  Firstly, anyone who mentions the name Rothschild in a conversation about economics cannot be taken seriously. Secondly, the government creates dollars by spending -- when the US government spends, money is created. When the US government taxes, money is destroyed[1]. Same is true for the RBA in australia, it's even on their website[2]: "As the Australian Government is a customer of the Reserve Bank, these payment flows can be very large. Expenditure by the Government adds ES funds to the account of the recipient (or their financial institution), while tax receipts have the opposite effect." The US has several bizarre, self-imposed constraints like the "debt limit" and some crazy mechanism for the fed to buy treasury bills from the government that goes via the private banking system for no good reason but the net effect is the same. Government spending creates money and taxation destroys it. In terms of ownership and control, the RBA is owned by the Commonwealth (probably the same for Canada) and the Fed is owned by private companies because of concerns about government control when it was setup (even though the Fed and the Treasury co-operate so much they might as well be the same institution) but ownership is very different from ownership of a normal company[3]. [1] http://www.mecpoc.org/2011/07/who-can-really-print-money-the-fed-or-the-treasury/ http://www.mecpoc.org/2011/07/who-can-really-print-money-the... [2] http://www.rba.gov.au/mkt-operations/dom-mkt-oper.html http://www.rba.gov.au/mkt-operations/dom-mkt-oper.html [3] http://www.federalreserve.gov/faqs/about_14986.htm http://www.federalreserve.gov/faqs/about_14986.htm

AC__ 11y ago

Lots of downvotes, not much in the way of reasoned response though.