24 ms·

The fraying of the U.S. global currency reserve system

348 points by paulsb 6y ago

myth_buster 6y ago
Relevant: https://www.principles.com/the-changing-world-order/#chapter3 https://www.principles.com/the-changing-world-order/#chapter...
appleflaxen 6y ago
You've been on HN for 13 years, and this is your first post in 7. Welcome back! Can you provide any context regarding why this article made the cut, when nothing did for 7 years? Sorry if it's a bit off topic; it's just an interesting circumstance, and I'm curious.
- razvanr 6y ago
  OP is clearly a weirdo :)
- lawrenceyan 6y ago
  It's pretty clear that the account was either sold or taken over. Look at the most recent comments as well; not even a single one since 2012. I know we aren't supposed to talk about this per HN guidelines, but this is just too blatant. And yes, I've already emailed hn@ycombinator.com.
  - QUFB 6y ago
    What about this interesting submission makes it "clear" the account was "sold"?
    - deleted 6y ago
      [deleted]
    - lawrenceyan 6y ago
      We can look at a timeline of the account history for paulsb. Last comment on the account: 2012 Last post on the account: 2013 7 years of inactivity This post --- If it were them coming back to their old account, given how regularly paulsb commented while still active, you would think there'd be at least a few recent comments showing some kind of ramp up in re-usage of the site.
  - glenstein 6y ago
    I understand that this is a complete digression from the main topic but I would love to know more about whatever you may know about accounts being bought/sold, or be pointed to a link with more. I'm familiar with it for, say, ebay, and at least indirectly familiar with it over reddit, but hn is a new one to me.
economusty 6y ago
How much debt can we accumulate before entities stop buying our bonds and treasuries?
- api 6y ago
  Everyone else is accumulating debt too. To escape a bear, you just need to run faster than everyone else not faster than the bear.
  - tastyfreeze 6y ago
    The only problem is the bear is tireless and insatiable. It will get everybody. Gotta kill the bear.
  - cheaprentalyeti 6y ago
    Since China actually manufactures stuff they'll accumulate debt slower. The US is more likely to be eaten by the bear.
    - cheaprentalyeti 6y ago
      Postscript: the abandonment of manufacturing, among other things, has really impacted race relations and class relations and pushed the US into a pre-revolutionary condition, which outside actors can use to further damage what's left of US manufacturing. I think the US Dollar is going to crash. You can't say this in polite society, or silicon valley, but you can say to invest in Bitcoin because it's a superior ponzi scheme to all the rest.
      - raziel2701 6y ago
        China may devalue their currency in order to achieve inflation (their CPI is falling). Doing so would strengthen the dollar. I'm honestly not sure about about the dollar bull/bear case, situation is not very clear to me.
- RobertoG 6y ago
silexia 6y ago
Lyn Alden has become my favorite macroeconomist through the Covid crisis. I bought a bunch of puts in February 2020, they went way up in March till the Fed stepped in and then went down. I went looking for answers on how to understand macroeconomics and Alden has had a lot of interesting takes on it.
- christophilus 6y ago
  If you find that interesting, I highly recommend the Grant Williams podcast. Particularly the episode with Lacy Hunt. But the entire Endgame series is really, really good.
- kqr2 6y ago
  If so, assets such as global equities, quality residential real estate, precious metals, industrial commodities, and alternatives such as Bitcoin, are likely to do well. Do you plan on shifting your investment strategy?
  - silexia 6y ago
    I don't like Bitcoin and I disagree with Alden on that in investment. I am also not a fan of precious metals. I currently have the majority of my portfolio in stocks in Australia, Sweden, Japan, Switzerland; in residential real estate, and in puts on overvalued tech stocks and TLT.
    - raziel2701 6y ago
      You're shorting TLT? The Fed is on the other side of that bet, I dare not go against the Fed.
      - silexia 6y ago
        Yeah, that position was the mistake I mentioned in my first post. The bias ask spread is so large that it it painful to exit it though. And the Fed may be forced to back off if inflation kicks up further, we will see.
aazaa 6y ago
> More troublesome, the inherent flaw of having the global reserve currency, in a theme that goes back to economist Robert Triffin from over half a century ago, is that in order to maintain the global reserve currency, the country must supply the world with its currency via structural deficits in one form or another. That "structural deficit" means allowing manufacturing to move overseas. The trade war is a distraction. Trade imbalances with the rest of the world could be solved very quickly by making it clear the the dollar is going down in flames and that policies will be put in place to make that happen: 1. massive federal budget deficit spending 2. purchase of all the debt by the Federal Reserve (yield curve control) Holders of bonds would be absolutely wrecked. That's a lot of institutions and wealthy individuals. The only question is whether the political will to do this can be mustered. So far it hasn't.
- lifty 6y ago
  Isn’t this happening now to a significant degree?
- api 6y ago
  I’ve seen fretting for years about the collapse of the dollar as the global reserve. Lately I have started wondering if this might not be good in the long run, and if maintaining the dollar as a global reserve is actually a very costly and economically distorting thing.
  - tastyfreeze 6y ago
    I think the only reason that a global reserve currency hasnt changed yet is that there are no sound currencies to use. USD was selected as the global reserve because it was backed by gold. We went and fucked that up. Now there are no currencies left backed by anything but promises. If there was a large enough country with gold backed money the reserve currency would have switched decades ago.
    - sidlls 6y ago
      I have not read one single serious justification (as in, empirical) for using gold as the backing of a currency. There are many indications that, historically, the boom and bust cycles that exist naturally are exacerbated when tying the value of currency to (often easily manipulated to be artificially) scarce things like gold. The world has moved beyond tying the value of our currencies to material goods. Digital "coins" aren't any better, and the same group of fringe types who push the gold standard have taken that over as well.
est31 6y ago
Which country would benefit from a weaker dollar? Germany wants to sell their cars. China their phones. If Americans can't afford them any more, then a big market would disappear.
- jcriddle4 6y ago
  The US would benefit from a weaker dollar as it would protect what remains of our manufacturing base and also act as an export subsidy. Currency valuation, and in particular currency manipulation, is equivalent to a tariff or an export subsidy depending on which side of it you are on. Yes people like to pretend that if something goes up in cost 20 percent because of currency change that is somehow normal but slap a 10 percent tariff on something and that is completely different.
  - tw8f969ae5b6f4 6y ago
    > The US would benefit from a weaker dollar as it would protect what remains of our manufacturing base At equilibrium, a weaker or stronger dollar doesn't affect exports, it's just an exchange rate. What can affect exports is a weakening dollar. In an inflationary disequilibrium, exports increase only insofar as foreign consumers are able to purchase domestic goods before those goods' prices have adjusted to inflation. In other words, exporters are unwittingly selling their goods for a lower price. Absent inflation, exporters could have chosen to increase exports by intentionally lowering their prices. That they didn't suggests something about their marginal costs. With inflation, the exporter has a similar benefit over its suppliers as the foreign consumer has over the exporter, namely buying goods with new money before prices have adjusted. As such, the exporter's suppliers are also unwittingly selling their goods for a lower price. Whether this is beneficial depends on where one is positioned as new money propagates through the economy. Banks get it first, then to their borrowers, other financial institutions, and so on. The losers are those at the tail-end, who face higher costs but have not yet had their own prices bid up with new money: wage workers, those on a fixed income, etc. The net effect of all this price manipulation is a wealth transfer from those who receive the new money later to those who receive it earlier. > currency manipulation, is equivalent to a tariff or an export subsidy While an export subsidy can also increase the quantity of exports, the larger economic impact of intentionally weakening the currency through inflation is very different.
CoffeeDregs 6y ago
"Instead of drawing down our gold reserves, however, we gradually draw down our domestic manufacturing base and it gets replaced piece-by-piece in foreign countries." To me, this is the money shot. I hadn't seen this expressed before and it makes perfect sense. I'm baffled that we (the US) caused this to happen to the US. I'm (unhappily) registered Republican but I argued vociferously to a Dem friend in 2000 that our inability to manufacture critical components was going to kill us. Kind of literally: AFAIK, the last LCD panel manufacturer in the US closed around then and we could no longer manufacture LCD for our military vehicles... (Even if this anecdote is untrue, the point remains valid...) I argued that, even in the presence of free trade, a country should have the ability to tariff imports to the extent that that country could maintain a 25% (or something) domestic market share.
- andy_ppp 6y ago
  I think people are starting to realise that globalisation needs to be balanced with other kinds of security especially around tech, hence TSMC being given a stack of cash to build a fab in the US. I wouldn’t say globalisation is dead more that it’s going to be more balanced going forward with local concerns.
  - flatline 6y ago
    So much of globalization up through the 2000s was exploitation of emerging markets for cheap labor and lax environmental and safety standards. This was not wholly without benefit to the people in these countries though: it has dragged a lot of the third world out of abject poverty despite some of the dystopian aspects. Hopefully the next three decades will be better on a number of fronts.
- downrightmike 6y ago
  This happened in part thanks to bain capital, those following the same business model of theivery, and the deregulation in the 80's. https://en.wikipedia.org/wiki/Bain_Capital https://en.wikipedia.org/wiki/Bain_Capital Republican lawmakers and party members have been destroying America for generations. Goes back even further to 1971 when Nixon opened talks with the CCCP and then went there in 1972 cutting the ground out from beneath American workers. And now if we even wanted to rebuild our manufacturing base, we have to deal with the same problems the few remaining factories do, finding people not on some kind of illegal substance that can work. The bodies are there, but they aren't in any shape to bring back what we had.
anti-shill 6y ago
she has some interesting perspectives on her twitter account
etothepii 6y ago
"From there, paper currency and credit was added as a more convenient layer onto gold." It's not a universally accepted opinion but I take Martin Felix's view, articulated in "Money," that credit predates coinage. It's turned me off the article and as a consequence I can't read any more.
- RobertoG 6y ago
  The article is wrong about that but not about other things. Overall is an interesting reading. It's also interesting to see how step by step some myths are disappearing. For instance, the article recognize the importance of taxes as a main drive of giving value to a fiat currency.
- oa335 6y ago
  David Graebers book “Debt” also argues, successfully in my opinion, that credit predates coinage. The first written documents from Sumeria support this view.
- oa335 6y ago
  By the way, though I agree with your sentiment re history of money, his allusion to the progression of economies from barter to coinage to credit was really just an aside and not relevant to any other part of the article. I did read the rest of the piece and found it very informative and enlightening, I highly recommend reading it, especially if you are interested in the nature of money.
jboydyhacker 6y ago
Economists writing about the end of the dollar as a reserve currency is not a new thing. With the Fed printing money tho at record rates this would be the time for a shift to happen. The problem is there is no alternative. The Euro has it's own structural issues and as we saw in March when folks got scared they sold alternatives like Bitcoin down hard. In short, there is no alternative without international cooperation to make a change which doesn't appear likely any time soonish.
- jaredtn 6y ago
  There are two concepts here: medium of exchange and store of value. Currently the US dollar (and Treasury bonds) do both. It's unlikely that the US dollar disappears as a medium of exchange, though there are steps being taken here, such as China + Russia pricing their oil trade in yuan rather than dollars. Yet with M2 money supply increasing 25% in the last year and the DXY crashing by 10%, the US dollar is no longer a reliable store of value. The larger shift is out of Treasury bonds into different reserve assets, such as commodities (oil, gold, alternative currencies). That one is very real.
  - birdsbirdsbirds 6y ago
    Gold is not priced as a commodity and if everybody is starting to buy oil to store their value, it will stop being a commodity, too. The oil price would go up for a short moment, investments into renewable energies would increase and oil would actually drop in value after it had sucked up the value to be stored. Can't the increased M2 money supply be interpreted as a move to stabilize the value of the dollar? Maybe the crisis made that increase necessary to maintain the value?
    - jaredtn 6y ago
      It was certainly a move to stabilize the stock market and Treasury market. However, having a reserve asset that steadily, stably climbs lower is not a store of value by any definition.
- wintersFright 6y ago
nine_zeros 6y ago
This is perhaps the best written article on the current state and future of US dollar (and thus, America). As an avid follower of geopolitics and with exposure to both east and west, I've often had to work out where the future lies and the thoughts of this article appear to mirror mine. Especially since Trump's election, I have always wondered about the future of America, not just socially but also economically. Trump's excessive use of sanctions and bullying comes at a major loss for future generations. And this line from the article elucidates it: "However, when major powers like China, Russia, and India begin pricing things outside of the dollar-based system and using their currencies for trade, including for energy in some cases, the US can’t realistically intervene militarily, and instead can only intervene with sanctions or trade disputes and other forms of geopolitical pressure." and "Chinese officials have said on numerous occasions that their reliance on the dollar system is a security risk for them. Having surpassed the United States as the world’s largest trading partner and world’s biggest importer of commodities, China increasingly has an interest in being able to acquire commodities and perform global trade without dollars, which as we see with trading partners like Russia, or with China’s yuan-based oil futures contract, they’re increasingly able to do with small steps at a time." The bullying is the last straw. A lot of countries are very independent and are only trading in dollars because of oil. Take that away with sanctions and the demand for dollars drops rapidly. Thus, US dollar doesn't need to be a major reserve currency, holding US dollars might even be a risk. Had bitcoin not been deflationary, bitcoin could have filled this gap. More likely though is that the declining faith in American politics will force other countries to go back to a multicurrency system and thus, US will no longer remain the top dog. History repeats.
- birdyrooster 6y ago
  I used to think losing US reserve currency was a bad thing, but now I see it as our responsibility to hand the world back their sovereignty. This could heal the planet more.
  - nine_zeros 6y ago
    Yep. It's a trap that has allowed us to live an unusually high standard of living. By letting go of reserve status, we don't need to go to wars, we'll get some manufacturing back domestically and less shipping from across the world. Sure, we'll have to reduce our quality of life with smaller houses, smaller cars, denser towns and lesser "stuff" in general but that's not a bad thing necessarily. So what if gas costs $7/gallon, we just need to reduce our consumption.
paulpauper 6y ago
>This article places an emphasis on where the bottlenecks and problems have been forming in the system, explains why a continued weak dollar over a 3-5 year period remains my base case, and shows why some of these growing pains seem to be leading to a new re-ordering of the global monetary system over this decade. 3-5 years isn't really saying much especially given that the US dollar does not have much movement, and that this is effectively the same as being bullish on the Euro and Pound and Yen, which are the biggest competing currencies. I do not see any reason why those currencies will see a sudden inflow. That last time that happened was in 2002-2008, but that was when there are much more interest in foreign assets , whereas today foreign assets are shunned in favor of domestic assets and tech. Pensions, hedge funds seek safe US assets such as investment-grade corporates bonds and treasury bonds, not riskier foreign assets. I do not expect any sort of fraying of the US dollar as the global reserve currency system though. Some of the conclusions the author draws are wrong or dubious, such as the purported inverse relationship between the US dollar and corporates profits. The dollar surged in 2014 but corporates profits did not fall.
- SilasX 6y ago
  The dollar has fallen ~10% this year against other currencies. https://www.marketwatch.com/investing/index/dxy https://www.marketwatch.com/investing/index/dxy Example: the Swiss franc, but you see the same with GBP, EUR, and JPY: https://finance.yahoo.com/quote/CHF=X?p=CHF=X&.tsrc=fin-srch https://finance.yahoo.com/quote/CHF=X?p=CHF=X&.tsrc=fin-srch
  - paulpauper 6y ago
    that probably suggests that the trend will likely reverse, not continue. I would be bullish on the dollar now. The dollar always has a tendency of snapping back violently when few expect, like in 2014 or 2017.
BlueTemplar 6y ago
That Game of Thrones meme was quite unexpected.
RhodoYolo 6y ago
The collapse of the dollars strength and rise of crypto being thought of as 'a store of wealth' may lead to the next financial revolution. Imagine a world where etheruem has enough market cap where it's volatility decreases, smart contracts for services are wide spread, everyone works free-lance giving the economy a inherent conflict of interest problem that rockets innovation forward while at the same time of having the effect of directly capturing some of the wealth you create by charging on a 'free-lance' model. No need for the dollar, but it does change the inventives built into the system and will have radical effects on globalism.
- elevenoh 6y ago
  I like the open, competitive, low-middle-man economic vision. I'm not sure whether the volatility of ETH price matters much when stablecoins are readily available. Generally: I'll switch to ethereum for daily spending when I can spend through a proxy that allows revert an erroneous transaction (e.g. a overcharge or wrong recipient), perhaps necessarily arbitrated by a 3rd party. It's just a little too stressful sending >$100-500 frequently w/ ethereum right now. This week, I bought a little airbnb pre-ipo, then sold post-ipo through Ethereum->FTX exchange. Also bought some 24 hr traded synthetic tesla stock on eth.mirror.finance. (completely anonymously) Wild times. Hard to go back once you have a taste of financial freedom.
  - RhodoYolo 6y ago
    I don't think crypto will ever be used on daily spending, but could be better for 'contractual spending'. It won't ever be used for buying a coke, or anything like that (not saying it won't, just not it's actual purpose'. Things like employment, insurance, reccuring subscriptions, etc. It can A.) sometimes insure anonymity when wanted, complete visibility of reccuring spend and contract in place but employment is going to be the big transition is causes. Imagine upwork, but decentralized and written in airtight contracts to ensure performance. But tbh your whole second blurb goes over my head.
    - elevenoh 6y ago
chaostheory 6y ago
“ What the next system will look like is an open question. I’ve seen multiple proposals. Whatever form it takes, it’ll be decentralized in the sense that it won’t be completely tied to any one country’s currency, since no country is big enough for that anymore. It’ll be based around neutral reserve assets, and/or a more regional-reserve model based on a handful of key country currencies, with an expanded variety of payment channels.” No wonder Facebook continues to fight hard for their Libra / Diem project
JumpCrisscross 6y ago
> At this stage, instead of just blue-collar labor in America being hurt by the system, the geopolitical ambitions of United States hegemony are also subverted. As far as Americans were concerned, for 40+ years the petrodollar system used to work for the top half of the income spectrum but not really the bottom half, and now it neither particularly works for the top half nor the bottom half. It’s now a system without a purpose. This is the article’s key insight. Dollar hegemony no longer works for anyone. The Fed needs to support international payments in multiple currencies and build its non-dollar reserves. Congress should prioritise domestic manufacturing and wage growth.
- howmayiannoyyou 6y ago
  I'm here to tell you that Democrat controlled Congress will NEVER support the regulatory reforms necessary for domestic manufacturing to flourish in the US. At best, they will enact protectionist legislation that will result in a modest increase in US MFG, but nothing on the order necessary to make the US a major player in the global supply chain.
  - defterGoose 6y ago
    This doesnt gel with the (widely shared) idea that we're supposed to lead the world in terms of innovation and environmental protection. Why is it so hard to explain to people that if you lead the world by continuing to discount the value of having a livable environment, that where it gets you negates any benefits reaped from getting there?
  - BoiledCabbage 6y ago
    And I here to tell you that regulatory reforms won't bring back manufacturing jobs because they aren't what's stopping them. The reason items aren't manufactured in the US is due to the dollar being so strong. That's what makes American products so expensive. No regulation changes bring manufacturing back with this strong of a dollar.
    - yuhong 6y ago
aflessner 6y ago
Are macro-economic forecasts generally accurate? It is my understanding that they are not very good generally speaking. https://www.google.com/amp/s/www.wsj.com/amp/articles/edward-lazear-government-forecasters-might-as-well-use-a-ouija-board-1413503121 https://www.google.com/amp/s/www.wsj.com/amp/articles/edward...
- raziel2701 6y ago
  I'm sure there's some good macroeconomists that get paid bags of money to be on the right side of the fence. They would not be dispensing their predictions for free.
deleted 6y ago
[deleted]
Threeve303 6y ago
Before spending the rest of the day reading articles on this site, I have to say this is a comprehensive and easily understood history for how the U.S. got to this point financially. Being a cynic, I've studied many aspects of this system for some time. I have to say I'm shocked how obvious the PR has been for some of this stuff. A favorite example is the Iraq war. Clearly a mafioso protection racket type of move. Nice country you got here, quit using Dollars and see what happens... The 1970s in can be almost explained in the sense of a 1930s style run on the bank, except this time it's allies and foreign countries after their gold. The Saudi benefit from attacking Iraq probably even mirrored what France thought it was getting in "French Indonesia and French Vietnam". You can almost imagine a scene playing out between French and U.S. diplomats where the French ask for their gold and the U.S. goes, "well... here's the thing about your gold, tell you what let us call it even and we will spend a decade or more at war for you? Deal?" The entire thing is absolutely crazy and the way it is taught to average people is complete bullshit.
deleted 6y ago
[deleted]
rdiddly 6y ago
wtfhappenedin1971.com Question answered.
ilaksh 6y ago
Luckily none of this has any military implications. All the people who have dollars or bonds will be happy to see their money evaporate. And no one will be concerned if the US defaults, because they have nothing of value anyway worth liquidating or foreclosing. And we could never have another global war. We are completely passed that now of course. All of the recent wars have been totally isolated incidents, mainly caused by evil dictators. /s
bawolff 6y ago
This was a fascinating look at the history of a subject i must admit i know very little about. However the author lost me a bit when he started talking about bitcoin. I get why bitcoin might be appealing to a country like Iran with cheap energy and sanctions preventing them from participating in the world economy. I also get why it would be appealing to individuals in developing countries with unstable local currencies, and perhaps limited access to harder assets. I don't get what the benefit would be to national reserve banks and finance between countries in the general case, where special circumstances (like Iran) don't apply.
specialist 6y ago
I'm just a simple bear, so I don't understand any of this stuff. (I comfort myself knowing I'm in good company.) Skim reading this, I provisionally label Lyn Adlen as an advocate of monetary policy. As every one knows, abandoning the gold standard, adopting fiscal policy, makes monitarians anxious. Over time, I'm leaning towards a refreshed Keynesian view: empire means huge military means deficits. Both trade and federal. I'm not a classical Liberal or a Neo-Liberal. I'm just saying Keynesian and MMT notions seems like useful metaphors for understanding the current world. -- Lyn Adlen does mention petrodollars. But doesn't provide a clue to what comes next. Rare earth dollars? Gigawatt hours dollars? Some kind of PoW (and therefore measure of energy) crypto coin? Does it even matter? Are petrodollars just a shibboleth for monetarians that can't accept there's "no there there" when money became fiat?
- HexagonalKitten 6y ago
  Petrodollars will stop mattering when tanks and rockets stop burning hydrocarbons. Petrodollars are backed by the ability to apply force.
dang 6y ago
Recent and related: https://news.ycombinator.com/item?id=25405042 https://news.ycombinator.com/item?id=25405042
yalogin 6y ago
I have wondered for quite some time what the impact of unlimited QE is on the economy but never found a good answer. I think I found it now. QE will be one parameter in the large equation that is the global currency system. With eroding grip/leadership in the world, the US is ceding the leadership position to either China or creating a vacuum. This accelerated in the last four years which unfortunately led into the pandemic too. So on the whole QE is just facilitating the case for the dollar to become less powerful.
ruuda 6y ago
One thing I don't understand: > The COVID-19 pandemic hit in early 2020, which halted global trade and contributed (along with a structural oil oversupply issue) to a collapse in oil prices. The dollar quickly spiked, foreigners began outright selling Treasuries and other US assets to get dollars Earlier on the article explains that in the petrodollar system, foreigners need dollars to buy oil. If they can now buy oil for less dollars, then why do they want to get more dollars?
- thedudeabides5 6y ago
  They want to get more dollars because their liabilities are denominated in dollars. So when things go bad, and the price of dollars goes up, everyone who's "short" dollars (via having liabilities priced in dollars vs local currency assets) sees the value of their debt appreciate, and it's painful.
  - ruuda 6y ago
    Thanks, that makes sense.
tw8f969ae5b6f4 6y ago
It seems to me that those taking the position that the minimum wage should be lowered/abolished and those taking the opposite position are both accepting the premise that absent the minimum wage, wages would fall. Is there any real-world basis for that premise? From basic supply and demand: 1. a downward pressure on wages emerges from workers competing with workers (competition among suppliers of labor) 2. an upward pressure on wages emerges from employers competing with employers (competition among consumers of labor) And, ceteris paribus, some equilibrium wages emerge. The minimum wage ostensibly exists to interfere with #1 (though usually framed as protecting workers from employers), assuming the minimum wage is set above the would-be equilibrium wage. But what if the minimum wage is set below the would-be equilibrium wage? Perhaps the minimum wage instead serves to interfere with #2 by allowing a point of collusion among employers, and thereby keep wages artificially low. Is anyone aware of any research on this?
- conanbatt 6y ago
  If min wage restriction is put below the market rate, it will have no effect. I think they are called called non-bounding limits in micro-econ
ketamine__ 6y ago
Peter Thiel bet against the US dollar and lost big. > Subsequent down years have reduced the fund's assets under management to $681 million as of December 2010.[4] Clarium Capital Management was reported to have had big losses in 2010.[14] The firm has continued to struggle with bets that it made on inflation and the US dollar. https://en.wikipedia.org/wiki/Clarium_Capital https://en.wikipedia.org/wiki/Clarium_Capital
- m-ee 6y ago
  I interviewed there years ago, at the time it solely managed Peter Thiels personal money because all the other investors had pulled out. Strange and funny dynamic, I’ve never heard of someone running and staffing an entire hedge fund just for themselves. Traders said that you had to be on call at all times in case Thiel called you from some other time zone to execute a particular trade he wanted.
  - ketamine__ 6y ago
    It makes me wonder if there is a bias that says day trading and risky investments aren't risky when one is a billionaire? Magical thinking abounds when one crosses a threshold?
I-M-S 6y ago
Video of Ron Paul's speech linked in the article: https://www.youtube.com/watch?v=44wo8IhuHfQ&ab_channel=ttj1776 https://www.youtube.com/watch?v=44wo8IhuHfQ&ab_channel=ttj17...
- eli_gottlieb 6y ago
  I see a Democrat must have won the Presidential election, because people are dragging out their Ron Paul-type libertarianism again.
2Gkashmiri 6y ago
Meh. India similarly trues hard to manufacture stuff on its own buys weaponry from USA and Israel and France and other countires? Why ? Cant they produce gunmetal ? Yes they can but the ministers who take the decision get kickbacks from countries. Essentially for a minister, it is a financial incentive to buy from USA because he/she will get a share of the deal. If India starts making their own, this revenue stream will dry up and they cant let that happen. https://i.redd.it/wjxa2s4dbr461.jpg https://i.redd.it/wjxa2s4dbr461.jpg 2 billion usd I presume. This money could build many megafactories but again, kickbacks

348 points by paulsb 6y ago

Relevant: https://www.principles.com/the-changing-world-order/#chapter3 https://www.principles.com/the-changing-world-order/#chapter...

appleflaxen 6y ago

You've been on HN for 13 years, and this is your first post in 7. Welcome back! Can you provide any context regarding why this article made the cut, when nothing did for 7 years? Sorry if it's a bit off topic; it's just an interesting circumstance, and I'm curious.

razvanr 6y ago
OP is clearly a weirdo :)
lawrenceyan 6y ago
It's pretty clear that the account was either sold or taken over. Look at the most recent comments as well; not even a single one since 2012. I know we aren't supposed to talk about this per HN guidelines, but this is just too blatant. And yes, I've already emailed hn@ycombinator.com.
- QUFB 6y ago
  What about this interesting submission makes it "clear" the account was "sold"?
  - deleted 6y ago
    [deleted]
  - lawrenceyan 6y ago
    We can look at a timeline of the account history for paulsb. Last comment on the account: 2012 Last post on the account: 2013 7 years of inactivity This post --- If it were them coming back to their old account, given how regularly paulsb commented while still active, you would think there'd be at least a few recent comments showing some kind of ramp up in re-usage of the site.
- glenstein 6y ago
  I understand that this is a complete digression from the main topic but I would love to know more about whatever you may know about accounts being bought/sold, or be pointed to a link with more. I'm familiar with it for, say, ebay, and at least indirectly familiar with it over reddit, but hn is a new one to me.

economusty 6y ago

How much debt can we accumulate before entities stop buying our bonds and treasuries?

api 6y ago
Everyone else is accumulating debt too. To escape a bear, you just need to run faster than everyone else not faster than the bear.
- tastyfreeze 6y ago
  The only problem is the bear is tireless and insatiable. It will get everybody. Gotta kill the bear.
- cheaprentalyeti 6y ago
  Since China actually manufactures stuff they'll accumulate debt slower. The US is more likely to be eaten by the bear.
  - cheaprentalyeti 6y ago
    Postscript: the abandonment of manufacturing, among other things, has really impacted race relations and class relations and pushed the US into a pre-revolutionary condition, which outside actors can use to further damage what's left of US manufacturing. I think the US Dollar is going to crash. You can't say this in polite society, or silicon valley, but you can say to invest in Bitcoin because it's a superior ponzi scheme to all the rest.
    - raziel2701 6y ago
      China may devalue their currency in order to achieve inflation (their CPI is falling). Doing so would strengthen the dollar. I'm honestly not sure about about the dollar bull/bear case, situation is not very clear to me.
RobertoG 6y ago

silexia 6y ago

Lyn Alden has become my favorite macroeconomist through the Covid crisis. I bought a bunch of puts in February 2020, they went way up in March till the Fed stepped in and then went down. I went looking for answers on how to understand macroeconomics and Alden has had a lot of interesting takes on it.

christophilus 6y ago
If you find that interesting, I highly recommend the Grant Williams podcast. Particularly the episode with Lacy Hunt. But the entire Endgame series is really, really good.
kqr2 6y ago
If so, assets such as global equities, quality residential real estate, precious metals, industrial commodities, and alternatives such as Bitcoin, are likely to do well. Do you plan on shifting your investment strategy?
- silexia 6y ago
  I don't like Bitcoin and I disagree with Alden on that in investment. I am also not a fan of precious metals. I currently have the majority of my portfolio in stocks in Australia, Sweden, Japan, Switzerland; in residential real estate, and in puts on overvalued tech stocks and TLT.
  - raziel2701 6y ago
    You're shorting TLT? The Fed is on the other side of that bet, I dare not go against the Fed.
    - silexia 6y ago
      Yeah, that position was the mistake I mentioned in my first post. The bias ask spread is so large that it it painful to exit it though. And the Fed may be forced to back off if inflation kicks up further, we will see.

aazaa 6y ago

> More troublesome, the inherent flaw of having the global reserve currency, in a theme that goes back to economist Robert Triffin from over half a century ago, is that in order to maintain the global reserve currency, the country must supply the world with its currency via structural deficits in one form or another. That "structural deficit" means allowing manufacturing to move overseas. The trade war is a distraction. Trade imbalances with the rest of the world could be solved very quickly by making it clear the the dollar is going down in flames and that policies will be put in place to make that happen: 1. massive federal budget deficit spending 2. purchase of all the debt by the Federal Reserve (yield curve control) Holders of bonds would be absolutely wrecked. That's a lot of institutions and wealthy individuals. The only question is whether the political will to do this can be mustered. So far it hasn't.

lifty 6y ago
Isn’t this happening now to a significant degree?
api 6y ago
I’ve seen fretting for years about the collapse of the dollar as the global reserve. Lately I have started wondering if this might not be good in the long run, and if maintaining the dollar as a global reserve is actually a very costly and economically distorting thing.
- tastyfreeze 6y ago
  I think the only reason that a global reserve currency hasnt changed yet is that there are no sound currencies to use. USD was selected as the global reserve because it was backed by gold. We went and fucked that up. Now there are no currencies left backed by anything but promises. If there was a large enough country with gold backed money the reserve currency would have switched decades ago.
  - sidlls 6y ago
    I have not read one single serious justification (as in, empirical) for using gold as the backing of a currency. There are many indications that, historically, the boom and bust cycles that exist naturally are exacerbated when tying the value of currency to (often easily manipulated to be artificially) scarce things like gold. The world has moved beyond tying the value of our currencies to material goods. Digital "coins" aren't any better, and the same group of fringe types who push the gold standard have taken that over as well.

est31 6y ago

Which country would benefit from a weaker dollar? Germany wants to sell their cars. China their phones. If Americans can't afford them any more, then a big market would disappear.

jcriddle4 6y ago
The US would benefit from a weaker dollar as it would protect what remains of our manufacturing base and also act as an export subsidy. Currency valuation, and in particular currency manipulation, is equivalent to a tariff or an export subsidy depending on which side of it you are on. Yes people like to pretend that if something goes up in cost 20 percent because of currency change that is somehow normal but slap a 10 percent tariff on something and that is completely different.
- tw8f969ae5b6f4 6y ago
  > The US would benefit from a weaker dollar as it would protect what remains of our manufacturing base At equilibrium, a weaker or stronger dollar doesn't affect exports, it's just an exchange rate. What can affect exports is a weakening dollar. In an inflationary disequilibrium, exports increase only insofar as foreign consumers are able to purchase domestic goods before those goods' prices have adjusted to inflation. In other words, exporters are unwittingly selling their goods for a lower price. Absent inflation, exporters could have chosen to increase exports by intentionally lowering their prices. That they didn't suggests something about their marginal costs. With inflation, the exporter has a similar benefit over its suppliers as the foreign consumer has over the exporter, namely buying goods with new money before prices have adjusted. As such, the exporter's suppliers are also unwittingly selling their goods for a lower price. Whether this is beneficial depends on where one is positioned as new money propagates through the economy. Banks get it first, then to their borrowers, other financial institutions, and so on. The losers are those at the tail-end, who face higher costs but have not yet had their own prices bid up with new money: wage workers, those on a fixed income, etc. The net effect of all this price manipulation is a wealth transfer from those who receive the new money later to those who receive it earlier. > currency manipulation, is equivalent to a tariff or an export subsidy While an export subsidy can also increase the quantity of exports, the larger economic impact of intentionally weakening the currency through inflation is very different.

CoffeeDregs 6y ago

"Instead of drawing down our gold reserves, however, we gradually draw down our domestic manufacturing base and it gets replaced piece-by-piece in foreign countries." To me, this is the money shot. I hadn't seen this expressed before and it makes perfect sense. I'm baffled that we (the US) caused this to happen to the US. I'm (unhappily) registered Republican but I argued vociferously to a Dem friend in 2000 that our inability to manufacture critical components was going to kill us. Kind of literally: AFAIK, the last LCD panel manufacturer in the US closed around then and we could no longer manufacture LCD for our military vehicles... (Even if this anecdote is untrue, the point remains valid...) I argued that, even in the presence of free trade, a country should have the ability to tariff imports to the extent that that country could maintain a 25% (or something) domestic market share.

andy_ppp 6y ago
I think people are starting to realise that globalisation needs to be balanced with other kinds of security especially around tech, hence TSMC being given a stack of cash to build a fab in the US. I wouldn’t say globalisation is dead more that it’s going to be more balanced going forward with local concerns.
- flatline 6y ago
  So much of globalization up through the 2000s was exploitation of emerging markets for cheap labor and lax environmental and safety standards. This was not wholly without benefit to the people in these countries though: it has dragged a lot of the third world out of abject poverty despite some of the dystopian aspects. Hopefully the next three decades will be better on a number of fronts.
downrightmike 6y ago
This happened in part thanks to bain capital, those following the same business model of theivery, and the deregulation in the 80's. https://en.wikipedia.org/wiki/Bain_Capital https://en.wikipedia.org/wiki/Bain_Capital Republican lawmakers and party members have been destroying America for generations. Goes back even further to 1971 when Nixon opened talks with the CCCP and then went there in 1972 cutting the ground out from beneath American workers. And now if we even wanted to rebuild our manufacturing base, we have to deal with the same problems the few remaining factories do, finding people not on some kind of illegal substance that can work. The bodies are there, but they aren't in any shape to bring back what we had.

anti-shill 6y ago

she has some interesting perspectives on her twitter account

etothepii 6y ago

"From there, paper currency and credit was added as a more convenient layer onto gold." It's not a universally accepted opinion but I take Martin Felix's view, articulated in "Money," that credit predates coinage. It's turned me off the article and as a consequence I can't read any more.

RobertoG 6y ago
The article is wrong about that but not about other things. Overall is an interesting reading. It's also interesting to see how step by step some myths are disappearing. For instance, the article recognize the importance of taxes as a main drive of giving value to a fiat currency.
oa335 6y ago
David Graebers book “Debt” also argues, successfully in my opinion, that credit predates coinage. The first written documents from Sumeria support this view.
oa335 6y ago
By the way, though I agree with your sentiment re history of money, his allusion to the progression of economies from barter to coinage to credit was really just an aside and not relevant to any other part of the article. I did read the rest of the piece and found it very informative and enlightening, I highly recommend reading it, especially if you are interested in the nature of money.

jboydyhacker 6y ago

Economists writing about the end of the dollar as a reserve currency is not a new thing. With the Fed printing money tho at record rates this would be the time for a shift to happen. The problem is there is no alternative. The Euro has it's own structural issues and as we saw in March when folks got scared they sold alternatives like Bitcoin down hard. In short, there is no alternative without international cooperation to make a change which doesn't appear likely any time soonish.

jaredtn 6y ago
There are two concepts here: medium of exchange and store of value. Currently the US dollar (and Treasury bonds) do both. It's unlikely that the US dollar disappears as a medium of exchange, though there are steps being taken here, such as China + Russia pricing their oil trade in yuan rather than dollars. Yet with M2 money supply increasing 25% in the last year and the DXY crashing by 10%, the US dollar is no longer a reliable store of value. The larger shift is out of Treasury bonds into different reserve assets, such as commodities (oil, gold, alternative currencies). That one is very real.
- birdsbirdsbirds 6y ago
  Gold is not priced as a commodity and if everybody is starting to buy oil to store their value, it will stop being a commodity, too. The oil price would go up for a short moment, investments into renewable energies would increase and oil would actually drop in value after it had sucked up the value to be stored. Can't the increased M2 money supply be interpreted as a move to stabilize the value of the dollar? Maybe the crisis made that increase necessary to maintain the value?
  - jaredtn 6y ago
    It was certainly a move to stabilize the stock market and Treasury market. However, having a reserve asset that steadily, stably climbs lower is not a store of value by any definition.
wintersFright 6y ago

nine_zeros 6y ago

This is perhaps the best written article on the current state and future of US dollar (and thus, America). As an avid follower of geopolitics and with exposure to both east and west, I've often had to work out where the future lies and the thoughts of this article appear to mirror mine. Especially since Trump's election, I have always wondered about the future of America, not just socially but also economically. Trump's excessive use of sanctions and bullying comes at a major loss for future generations. And this line from the article elucidates it: "However, when major powers like China, Russia, and India begin pricing things outside of the dollar-based system and using their currencies for trade, including for energy in some cases, the US can’t realistically intervene militarily, and instead can only intervene with sanctions or trade disputes and other forms of geopolitical pressure." and "Chinese officials have said on numerous occasions that their reliance on the dollar system is a security risk for them. Having surpassed the United States as the world’s largest trading partner and world’s biggest importer of commodities, China increasingly has an interest in being able to acquire commodities and perform global trade without dollars, which as we see with trading partners like Russia, or with China’s yuan-based oil futures contract, they’re increasingly able to do with small steps at a time." The bullying is the last straw. A lot of countries are very independent and are only trading in dollars because of oil. Take that away with sanctions and the demand for dollars drops rapidly. Thus, US dollar doesn't need to be a major reserve currency, holding US dollars might even be a risk. Had bitcoin not been deflationary, bitcoin could have filled this gap. More likely though is that the declining faith in American politics will force other countries to go back to a multicurrency system and thus, US will no longer remain the top dog. History repeats.

birdyrooster 6y ago
I used to think losing US reserve currency was a bad thing, but now I see it as our responsibility to hand the world back their sovereignty. This could heal the planet more.
- nine_zeros 6y ago
  Yep. It's a trap that has allowed us to live an unusually high standard of living. By letting go of reserve status, we don't need to go to wars, we'll get some manufacturing back domestically and less shipping from across the world. Sure, we'll have to reduce our quality of life with smaller houses, smaller cars, denser towns and lesser "stuff" in general but that's not a bad thing necessarily. So what if gas costs $7/gallon, we just need to reduce our consumption.

paulpauper 6y ago

>This article places an emphasis on where the bottlenecks and problems have been forming in the system, explains why a continued weak dollar over a 3-5 year period remains my base case, and shows why some of these growing pains seem to be leading to a new re-ordering of the global monetary system over this decade. 3-5 years isn't really saying much especially given that the US dollar does not have much movement, and that this is effectively the same as being bullish on the Euro and Pound and Yen, which are the biggest competing currencies. I do not see any reason why those currencies will see a sudden inflow. That last time that happened was in 2002-2008, but that was when there are much more interest in foreign assets , whereas today foreign assets are shunned in favor of domestic assets and tech. Pensions, hedge funds seek safe US assets such as investment-grade corporates bonds and treasury bonds, not riskier foreign assets. I do not expect any sort of fraying of the US dollar as the global reserve currency system though. Some of the conclusions the author draws are wrong or dubious, such as the purported inverse relationship between the US dollar and corporates profits. The dollar surged in 2014 but corporates profits did not fall.

SilasX 6y ago
The dollar has fallen ~10% this year against other currencies. https://www.marketwatch.com/investing/index/dxy https://www.marketwatch.com/investing/index/dxy Example: the Swiss franc, but you see the same with GBP, EUR, and JPY: https://finance.yahoo.com/quote/CHF=X?p=CHF=X&.tsrc=fin-srch https://finance.yahoo.com/quote/CHF=X?p=CHF=X&.tsrc=fin-srch
- paulpauper 6y ago
  that probably suggests that the trend will likely reverse, not continue. I would be bullish on the dollar now. The dollar always has a tendency of snapping back violently when few expect, like in 2014 or 2017.

BlueTemplar 6y ago

That Game of Thrones meme was quite unexpected.

RhodoYolo 6y ago

The collapse of the dollars strength and rise of crypto being thought of as 'a store of wealth' may lead to the next financial revolution. Imagine a world where etheruem has enough market cap where it's volatility decreases, smart contracts for services are wide spread, everyone works free-lance giving the economy a inherent conflict of interest problem that rockets innovation forward while at the same time of having the effect of directly capturing some of the wealth you create by charging on a 'free-lance' model. No need for the dollar, but it does change the inventives built into the system and will have radical effects on globalism.

elevenoh 6y ago
I like the open, competitive, low-middle-man economic vision. I'm not sure whether the volatility of ETH price matters much when stablecoins are readily available. Generally: I'll switch to ethereum for daily spending when I can spend through a proxy that allows revert an erroneous transaction (e.g. a overcharge or wrong recipient), perhaps necessarily arbitrated by a 3rd party. It's just a little too stressful sending >$100-500 frequently w/ ethereum right now. This week, I bought a little airbnb pre-ipo, then sold post-ipo through Ethereum->FTX exchange. Also bought some 24 hr traded synthetic tesla stock on eth.mirror.finance. (completely anonymously) Wild times. Hard to go back once you have a taste of financial freedom.
- RhodoYolo 6y ago
  I don't think crypto will ever be used on daily spending, but could be better for 'contractual spending'. It won't ever be used for buying a coke, or anything like that (not saying it won't, just not it's actual purpose'. Things like employment, insurance, reccuring subscriptions, etc. It can A.) sometimes insure anonymity when wanted, complete visibility of reccuring spend and contract in place but employment is going to be the big transition is causes. Imagine upwork, but decentralized and written in airtight contracts to ensure performance. But tbh your whole second blurb goes over my head.
  - elevenoh 6y ago

chaostheory 6y ago

“ What the next system will look like is an open question. I’ve seen multiple proposals. Whatever form it takes, it’ll be decentralized in the sense that it won’t be completely tied to any one country’s currency, since no country is big enough for that anymore. It’ll be based around neutral reserve assets, and/or a more regional-reserve model based on a handful of key country currencies, with an expanded variety of payment channels.” No wonder Facebook continues to fight hard for their Libra / Diem project

JumpCrisscross 6y ago

> At this stage, instead of just blue-collar labor in America being hurt by the system, the geopolitical ambitions of United States hegemony are also subverted. As far as Americans were concerned, for 40+ years the petrodollar system used to work for the top half of the income spectrum but not really the bottom half, and now it neither particularly works for the top half nor the bottom half. It’s now a system without a purpose. This is the article’s key insight. Dollar hegemony no longer works for anyone. The Fed needs to support international payments in multiple currencies and build its non-dollar reserves. Congress should prioritise domestic manufacturing and wage growth.

howmayiannoyyou 6y ago
I'm here to tell you that Democrat controlled Congress will NEVER support the regulatory reforms necessary for domestic manufacturing to flourish in the US. At best, they will enact protectionist legislation that will result in a modest increase in US MFG, but nothing on the order necessary to make the US a major player in the global supply chain.
- defterGoose 6y ago
  This doesnt gel with the (widely shared) idea that we're supposed to lead the world in terms of innovation and environmental protection. Why is it so hard to explain to people that if you lead the world by continuing to discount the value of having a livable environment, that where it gets you negates any benefits reaped from getting there?
- BoiledCabbage 6y ago
  And I here to tell you that regulatory reforms won't bring back manufacturing jobs because they aren't what's stopping them. The reason items aren't manufactured in the US is due to the dollar being so strong. That's what makes American products so expensive. No regulation changes bring manufacturing back with this strong of a dollar.
  - yuhong 6y ago

aflessner 6y ago

Are macro-economic forecasts generally accurate? It is my understanding that they are not very good generally speaking. https://www.google.com/amp/s/www.wsj.com/amp/articles/edward-lazear-government-forecasters-might-as-well-use-a-ouija-board-1413503121 https://www.google.com/amp/s/www.wsj.com/amp/articles/edward...

raziel2701 6y ago
I'm sure there's some good macroeconomists that get paid bags of money to be on the right side of the fence. They would not be dispensing their predictions for free.

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Threeve303 6y ago

Before spending the rest of the day reading articles on this site, I have to say this is a comprehensive and easily understood history for how the U.S. got to this point financially. Being a cynic, I've studied many aspects of this system for some time. I have to say I'm shocked how obvious the PR has been for some of this stuff. A favorite example is the Iraq war. Clearly a mafioso protection racket type of move. Nice country you got here, quit using Dollars and see what happens... The 1970s in can be almost explained in the sense of a 1930s style run on the bank, except this time it's allies and foreign countries after their gold. The Saudi benefit from attacking Iraq probably even mirrored what France thought it was getting in "French Indonesia and French Vietnam". You can almost imagine a scene playing out between French and U.S. diplomats where the French ask for their gold and the U.S. goes, "well... here's the thing about your gold, tell you what let us call it even and we will spend a decade or more at war for you? Deal?" The entire thing is absolutely crazy and the way it is taught to average people is complete bullshit.

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rdiddly 6y ago

wtfhappenedin1971.com Question answered.

ilaksh 6y ago

Luckily none of this has any military implications. All the people who have dollars or bonds will be happy to see their money evaporate. And no one will be concerned if the US defaults, because they have nothing of value anyway worth liquidating or foreclosing. And we could never have another global war. We are completely passed that now of course. All of the recent wars have been totally isolated incidents, mainly caused by evil dictators. /s

bawolff 6y ago

This was a fascinating look at the history of a subject i must admit i know very little about. However the author lost me a bit when he started talking about bitcoin. I get why bitcoin might be appealing to a country like Iran with cheap energy and sanctions preventing them from participating in the world economy. I also get why it would be appealing to individuals in developing countries with unstable local currencies, and perhaps limited access to harder assets. I don't get what the benefit would be to national reserve banks and finance between countries in the general case, where special circumstances (like Iran) don't apply.

specialist 6y ago

I'm just a simple bear, so I don't understand any of this stuff. (I comfort myself knowing I'm in good company.) Skim reading this, I provisionally label Lyn Adlen as an advocate of monetary policy. As every one knows, abandoning the gold standard, adopting fiscal policy, makes monitarians anxious. Over time, I'm leaning towards a refreshed Keynesian view: empire means huge military means deficits. Both trade and federal. I'm not a classical Liberal or a Neo-Liberal. I'm just saying Keynesian and MMT notions seems like useful metaphors for understanding the current world. -- Lyn Adlen does mention petrodollars. But doesn't provide a clue to what comes next. Rare earth dollars? Gigawatt hours dollars? Some kind of PoW (and therefore measure of energy) crypto coin? Does it even matter? Are petrodollars just a shibboleth for monetarians that can't accept there's "no there there" when money became fiat?

HexagonalKitten 6y ago
Petrodollars will stop mattering when tanks and rockets stop burning hydrocarbons. Petrodollars are backed by the ability to apply force.

dang 6y ago

Recent and related: https://news.ycombinator.com/item?id=25405042 https://news.ycombinator.com/item?id=25405042

yalogin 6y ago

I have wondered for quite some time what the impact of unlimited QE is on the economy but never found a good answer. I think I found it now. QE will be one parameter in the large equation that is the global currency system. With eroding grip/leadership in the world, the US is ceding the leadership position to either China or creating a vacuum. This accelerated in the last four years which unfortunately led into the pandemic too. So on the whole QE is just facilitating the case for the dollar to become less powerful.

ruuda 6y ago

One thing I don't understand: > The COVID-19 pandemic hit in early 2020, which halted global trade and contributed (along with a structural oil oversupply issue) to a collapse in oil prices. The dollar quickly spiked, foreigners began outright selling Treasuries and other US assets to get dollars Earlier on the article explains that in the petrodollar system, foreigners need dollars to buy oil. If they can now buy oil for less dollars, then why do they want to get more dollars?

thedudeabides5 6y ago
They want to get more dollars because their liabilities are denominated in dollars. So when things go bad, and the price of dollars goes up, everyone who's "short" dollars (via having liabilities priced in dollars vs local currency assets) sees the value of their debt appreciate, and it's painful.
- ruuda 6y ago
  Thanks, that makes sense.

tw8f969ae5b6f4 6y ago

It seems to me that those taking the position that the minimum wage should be lowered/abolished and those taking the opposite position are both accepting the premise that absent the minimum wage, wages would fall. Is there any real-world basis for that premise? From basic supply and demand: 1. a downward pressure on wages emerges from workers competing with workers (competition among suppliers of labor) 2. an upward pressure on wages emerges from employers competing with employers (competition among consumers of labor) And, ceteris paribus, some equilibrium wages emerge. The minimum wage ostensibly exists to interfere with #1 (though usually framed as protecting workers from employers), assuming the minimum wage is set above the would-be equilibrium wage. But what if the minimum wage is set below the would-be equilibrium wage? Perhaps the minimum wage instead serves to interfere with #2 by allowing a point of collusion among employers, and thereby keep wages artificially low. Is anyone aware of any research on this?

conanbatt 6y ago
If min wage restriction is put below the market rate, it will have no effect. I think they are called called non-bounding limits in micro-econ

ketamine__ 6y ago

Peter Thiel bet against the US dollar and lost big. > Subsequent down years have reduced the fund's assets under management to $681 million as of December 2010.[4] Clarium Capital Management was reported to have had big losses in 2010.[14] The firm has continued to struggle with bets that it made on inflation and the US dollar. https://en.wikipedia.org/wiki/Clarium_Capital https://en.wikipedia.org/wiki/Clarium_Capital

m-ee 6y ago
I interviewed there years ago, at the time it solely managed Peter Thiels personal money because all the other investors had pulled out. Strange and funny dynamic, I’ve never heard of someone running and staffing an entire hedge fund just for themselves. Traders said that you had to be on call at all times in case Thiel called you from some other time zone to execute a particular trade he wanted.
- ketamine__ 6y ago
  It makes me wonder if there is a bias that says day trading and risky investments aren't risky when one is a billionaire? Magical thinking abounds when one crosses a threshold?

I-M-S 6y ago

Video of Ron Paul's speech linked in the article: https://www.youtube.com/watch?v=44wo8IhuHfQ&ab_channel=ttj1776 https://www.youtube.com/watch?v=44wo8IhuHfQ&ab_channel=ttj17...

eli_gottlieb 6y ago
I see a Democrat must have won the Presidential election, because people are dragging out their Ron Paul-type libertarianism again.

2Gkashmiri 6y ago

Meh. India similarly trues hard to manufacture stuff on its own buys weaponry from USA and Israel and France and other countires? Why ? Cant they produce gunmetal ? Yes they can but the ministers who take the decision get kickbacks from countries. Essentially for a minister, it is a financial incentive to buy from USA because he/she will get a share of the deal. If India starts making their own, this revenue stream will dry up and they cant let that happen. https://i.redd.it/wjxa2s4dbr461.jpg https://i.redd.it/wjxa2s4dbr461.jpg 2 billion usd I presume. This money could build many megafactories but again, kickbacks