4 ms·

U.S. Is Bankrupt and We Don't Even Know It

36 points by cwan 16y ago

maukdaddy 16y ago
How about a nice big disclaimer: Bloomberg Opinion
- madair 16y ago
  Actually this is Laurence Kotlikoff, he's pretty interesting : ) http://en.wikipedia.org/wiki/Laurence_Kotlikoff http://en.wikipedia.org/wiki/Laurence_Kotlikoff Wikipedia: In Kotlikoff's words, using the deficit as a guide to fiscal policy is like driving in LA with a map of NY. For unlike in our physical world in which we are all using the same language (have the same frame of reference), in the world of economics, we are each free to adopt our own frame of reference -- our own labeling convention. Thus, if Joe wants to claim that the U.S. federal government ran enormous surpluses for the last 50 years, he can simply choose appropriate words to label historic receipts and payments to produce that time series. If Sally wishes to claim the opposite, there are words she can find to "justify" her view of the past stance of fiscal policy. And if Sam wishes to claim that that economy has experienced fluctuations from deficits to surpluses of arbitrary magnitude from year to year, he can do so. Language is extremely flexible. And there is nothing in economic theory that pins down how we discuss economic theory.
jinushaun 16y ago
"Hacker news" is getting more and more political everyday. Thought I signed up for a tech and VC news site. Disclaimer: I actually agree with the opinion in this article, but I don't want politics with my tech news.
- Revisor 16y ago
  This is no mere political news, but an ominous sign of the times - of today's broken system. It might/will directly affect more than half of the hackers and indirectly all of us.
  - isamuel 16y ago
    In what sense is "mere political news" distinct from an "ominous sign" of "today's broken system" that will "indirectly [affect] all of us?" These submissions are getting really tiresome, not least because of the way discussions proceed: the article is submitted, it's silently upvoted by people who agree with it, and everyone who disagrees posts comments explaining why. This was the pattern on the "Why I'm Not Hiring" submission a while ago; nearly every comment explained the many idiotic deficiencies of the article, but it was still a highly upvoted submission because of people who agreed with its substance. Very annoying. edit: And now I'm getting silently downvoted too, in the mirror image of the above phenomenon. Excellent.
    - mkramlich 16y ago
      perhaps we should allow downvoting on submissions as well as comments.
      - c1sc0 16y ago
        I assumed that existed, but I hadn't reached the right karma threshold yet. So I keep flagging things, which is pretty much the same I guess.
        mkramlich 16y ago
        It doesn't exist at 1900 karma for sure. I think if we allowed downvoting on submissions there would be a lot less about Google and Apple, and perhaps less Zed Shaw, and definitely less politics, less Ruby/Rails, because then the wishes of non-fans would be weighed more in comparison to their fans. Heck, non-fans have no weight presently at all actually.
    - Revisor 16y ago
      Fair enough. I'll explain why I find this article important. The current crisis is not cyclical, it's man-made: http://www.rollingstone.com/politics/news/12697/64796 http://www.rollingstone.com/politics/news/12697/64796 Some have seen it coming, ie it could be averted. http://www.youtube.com/watch?v=2I0QN-FYkpw http://www.youtube.com/watch?v=2I0QN-FYkpw Countries have been breaking the basic economic law - income >= spendings - for a long time. There are several ways to get rid of the debt, eg inflation or nationalization. All of them are unethical and are basically stealing from all but a select few at the top. That's what this article is about. If things come as far as the author writes, it will affect all of us here at Hacker News. There is a lot of people here trying to create something, to enrich the others and thus to get rich. It will all be in vain if our governments decide it's time to rob us. I could have been less emotional and more specific about this. Thank you for challenging me.
- GiraffeNecktie 16y ago
  The state of the economy is not inherently political (although the response to any proposed solution is often coloured by political ideology)
- madair 16y ago
  It is the number one issue affecting business in America today, and this is a particularly interesting economist weighing in with very strong language.
- kqr2 16y ago
  http://ycombinator.com/newsguidelines.html http://ycombinator.com/newsguidelines.html On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity. Please don't submit comments complaining that a submission is inappropriate for the site. If you think something is spam or offtopic, flag it by going to its page and clicking on the "flag" link. (Not all users will see this; there is a karma threshold.) If you flag something, please don't also comment that you did.
  - gte910h 16y ago
    Yeah, I'm going to flag this, as I try to do to all non-tech related politics sites.
_ivan 16y ago
All you need to do is listen to people like Ron Paul and annihilate people? like Obama, Bush, Bernake .... are :) And audit Fed of course.
glhaynes 16y ago
These kinds of articles often seem to include a line like the one in this one: "And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece." What is it that makes people think people in US bonds are "asleep"? I certainly don't know whether they are or not, but it seems to go against the almost dogmatic claims you see elsewhere that the market "knows" and already has rational future expectations priced in.
- gamble 16y ago
  The Starbucks Principle: Just because something seems stupid and wrong, like opening four Starbucks outlets on the same intersection, that doesn't mean the market will punish it. Some people are deeply offended by the fact that America's unique position in the world economy allows it to run an incredible deficit without being punished by the market. The bond vigilantes are just a bogeyman invoked to preserve the illusion of a just world. The reality is that heavily-indebted examples like Japan suggest that the US can probably be mismanaged for decades before real consequences kick in.
c1sc0 16y ago
I would think that news about U.S. bankruptcy should be of interest to the startup community, so let's maybe re-orient this discussions towards: "Does this kind of doom-and-gloom news also scares the crap out of you as a startup founder? Or is it just meh?"
- barrkel 16y ago
  But this article isn't "news" about US bankruptcy - it's one-sided polemic. The US can't default on its debt in pretty much any scenario, because its debt is denominated in a currency it can print, and even more so since deflation looks like the problem, no inflation in sight; but that's only the beginning of its one-dimensional perspective, and it really doesn't belong here.
  - adammichaelc 16y ago
    I voted you up, though I disagree that it shouldn't be here. I think it would be interesting to take the article and have an interesting discussion around its main points. These kinds of rational and intelligent discussions at HN are what make it so worthwhile, regardless of the topic. With the caveat that I don't want a Repub vs Democrat or Apple vs Android flamewar, but I don't think this qualifies as that type of piece.
    - c1sc0 16y ago
      Interesting you put Apple vs. Repub and Android v.s Liberal in the same sentence.
spoiledtechie 16y ago
We all know the U.S. is worse off than most citizens earnings compared to the 14% GDP of what the government brings in every year. And to date, the U.S. Government has NEVER missed a payment for their debt, loans or interest. So until they do, will our economy be destroyed. What this will take is some think tank getting together and congress listening to them with a KEEN ear. We know our country is under bad circumstances, but with personal greed and politicians thinking that this $200k trip won't do anything in the overall scheme of things is what we need to change. It needs to change fast and with a drastic scale, but when are we actually willing to listen.
- spoiledtechie 16y ago
  Why did this get bad reviews when its the truth.
nanijoe 16y ago
If the US is bankrupt and we don't know it, does it not then mean that the consequences of being bankrupt are trivia enough that we should not worry about bankruptcy?
gte910h 16y ago
Bankrupt means you cannot pay your bills today. The US has many future obligations, which I'd best characterize as "indebted". We can easily meet them if we war a little bit less and tax people like we used to.
wonderzombie 16y ago
As soon as he brought up Social Security as the problem instead of, you know, two Trillion Dollar Infinite Wars^W^W^W^W infinite wars costing trillions or the Bush tax cuts, I stopped reading.
- mkramlich 16y ago
  I had a similar reaction. You can often tell where a writer's bias/agenda lies by what is cherry picked and what is ignored.

36 points by cwan 16y ago

maukdaddy 16y ago

How about a nice big disclaimer: Bloomberg Opinion

madair 16y ago
Actually this is Laurence Kotlikoff, he's pretty interesting : ) http://en.wikipedia.org/wiki/Laurence_Kotlikoff http://en.wikipedia.org/wiki/Laurence_Kotlikoff Wikipedia: In Kotlikoff's words, using the deficit as a guide to fiscal policy is like driving in LA with a map of NY. For unlike in our physical world in which we are all using the same language (have the same frame of reference), in the world of economics, we are each free to adopt our own frame of reference -- our own labeling convention. Thus, if Joe wants to claim that the U.S. federal government ran enormous surpluses for the last 50 years, he can simply choose appropriate words to label historic receipts and payments to produce that time series. If Sally wishes to claim the opposite, there are words she can find to "justify" her view of the past stance of fiscal policy. And if Sam wishes to claim that that economy has experienced fluctuations from deficits to surpluses of arbitrary magnitude from year to year, he can do so. Language is extremely flexible. And there is nothing in economic theory that pins down how we discuss economic theory.

jinushaun 16y ago

"Hacker news" is getting more and more political everyday. Thought I signed up for a tech and VC news site. Disclaimer: I actually agree with the opinion in this article, but I don't want politics with my tech news.

Revisor 16y ago
This is no mere political news, but an ominous sign of the times - of today's broken system. It might/will directly affect more than half of the hackers and indirectly all of us.
- isamuel 16y ago
  In what sense is "mere political news" distinct from an "ominous sign" of "today's broken system" that will "indirectly [affect] all of us?" These submissions are getting really tiresome, not least because of the way discussions proceed: the article is submitted, it's silently upvoted by people who agree with it, and everyone who disagrees posts comments explaining why. This was the pattern on the "Why I'm Not Hiring" submission a while ago; nearly every comment explained the many idiotic deficiencies of the article, but it was still a highly upvoted submission because of people who agreed with its substance. Very annoying. edit: And now I'm getting silently downvoted too, in the mirror image of the above phenomenon. Excellent.
  - mkramlich 16y ago
    perhaps we should allow downvoting on submissions as well as comments.
    - c1sc0 16y ago
      I assumed that existed, but I hadn't reached the right karma threshold yet. So I keep flagging things, which is pretty much the same I guess.
      - mkramlich 16y ago
        It doesn't exist at 1900 karma for sure. I think if we allowed downvoting on submissions there would be a lot less about Google and Apple, and perhaps less Zed Shaw, and definitely less politics, less Ruby/Rails, because then the wishes of non-fans would be weighed more in comparison to their fans. Heck, non-fans have no weight presently at all actually.
  - Revisor 16y ago
    Fair enough. I'll explain why I find this article important. The current crisis is not cyclical, it's man-made: http://www.rollingstone.com/politics/news/12697/64796 http://www.rollingstone.com/politics/news/12697/64796 Some have seen it coming, ie it could be averted. http://www.youtube.com/watch?v=2I0QN-FYkpw http://www.youtube.com/watch?v=2I0QN-FYkpw Countries have been breaking the basic economic law - income >= spendings - for a long time. There are several ways to get rid of the debt, eg inflation or nationalization. All of them are unethical and are basically stealing from all but a select few at the top. That's what this article is about. If things come as far as the author writes, it will affect all of us here at Hacker News. There is a lot of people here trying to create something, to enrich the others and thus to get rich. It will all be in vain if our governments decide it's time to rob us. I could have been less emotional and more specific about this. Thank you for challenging me.
GiraffeNecktie 16y ago
The state of the economy is not inherently political (although the response to any proposed solution is often coloured by political ideology)
madair 16y ago
It is the number one issue affecting business in America today, and this is a particularly interesting economist weighing in with very strong language.
kqr2 16y ago
http://ycombinator.com/newsguidelines.html http://ycombinator.com/newsguidelines.html On-Topic: Anything that good hackers would find interesting. That includes more than hacking and startups. If you had to reduce it to a sentence, the answer might be: anything that gratifies one's intellectual curiosity. Please don't submit comments complaining that a submission is inappropriate for the site. If you think something is spam or offtopic, flag it by going to its page and clicking on the "flag" link. (Not all users will see this; there is a karma threshold.) If you flag something, please don't also comment that you did.
- gte910h 16y ago
  Yeah, I'm going to flag this, as I try to do to all non-tech related politics sites.

_ivan 16y ago

All you need to do is listen to people like Ron Paul and annihilate people? like Obama, Bush, Bernake .... are :) And audit Fed of course.

glhaynes 16y ago

These kinds of articles often seem to include a line like the one in this one: "And bond traders will kick us miles down our road once they wake up and realize the U.S. is in worse fiscal shape than Greece." What is it that makes people think people in US bonds are "asleep"? I certainly don't know whether they are or not, but it seems to go against the almost dogmatic claims you see elsewhere that the market "knows" and already has rational future expectations priced in.

gamble 16y ago
The Starbucks Principle: Just because something seems stupid and wrong, like opening four Starbucks outlets on the same intersection, that doesn't mean the market will punish it. Some people are deeply offended by the fact that America's unique position in the world economy allows it to run an incredible deficit without being punished by the market. The bond vigilantes are just a bogeyman invoked to preserve the illusion of a just world. The reality is that heavily-indebted examples like Japan suggest that the US can probably be mismanaged for decades before real consequences kick in.

c1sc0 16y ago

I would think that news about U.S. bankruptcy should be of interest to the startup community, so let's maybe re-orient this discussions towards: "Does this kind of doom-and-gloom news also scares the crap out of you as a startup founder? Or is it just meh?"

barrkel 16y ago
But this article isn't "news" about US bankruptcy - it's one-sided polemic. The US can't default on its debt in pretty much any scenario, because its debt is denominated in a currency it can print, and even more so since deflation looks like the problem, no inflation in sight; but that's only the beginning of its one-dimensional perspective, and it really doesn't belong here.
- adammichaelc 16y ago
  I voted you up, though I disagree that it shouldn't be here. I think it would be interesting to take the article and have an interesting discussion around its main points. These kinds of rational and intelligent discussions at HN are what make it so worthwhile, regardless of the topic. With the caveat that I don't want a Repub vs Democrat or Apple vs Android flamewar, but I don't think this qualifies as that type of piece.
  - c1sc0 16y ago
    Interesting you put Apple vs. Repub and Android v.s Liberal in the same sentence.

spoiledtechie 16y ago

We all know the U.S. is worse off than most citizens earnings compared to the 14% GDP of what the government brings in every year. And to date, the U.S. Government has NEVER missed a payment for their debt, loans or interest. So until they do, will our economy be destroyed. What this will take is some think tank getting together and congress listening to them with a KEEN ear. We know our country is under bad circumstances, but with personal greed and politicians thinking that this $200k trip won't do anything in the overall scheme of things is what we need to change. It needs to change fast and with a drastic scale, but when are we actually willing to listen.

spoiledtechie 16y ago
Why did this get bad reviews when its the truth.

nanijoe 16y ago

If the US is bankrupt and we don't know it, does it not then mean that the consequences of being bankrupt are trivia enough that we should not worry about bankruptcy?

gte910h 16y ago

Bankrupt means you cannot pay your bills today. The US has many future obligations, which I'd best characterize as "indebted". We can easily meet them if we war a little bit less and tax people like we used to.

wonderzombie 16y ago

As soon as he brought up Social Security as the problem instead of, you know, two Trillion Dollar Infinite Wars^W^W^W^W infinite wars costing trillions or the Bush tax cuts, I stopped reading.

mkramlich 16y ago
I had a similar reaction. You can often tell where a writer's bias/agenda lies by what is cherry picked and what is ignored.