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This is worse though, not better. Uncle Sam could cut payments to China or Japan in a crisis. It’s much harder to cut payments to your own people. It would i

This is worse though, not better. Uncle Sam could cut payments to China or Japan in a crisis. It’s much harder to cut payments to your own people. It would instantly make any crisis much worse.

andrekandre 5y ago
> It’s much harder to cut payments to your own people. is it though? wouldn't cutting payments to foreign investors going to hurt your credit rating abroad? also, ive heard its an advantage to japan to have its govt debt owned by its own people as well... curious to hear counter points!
cjensen 5y ago
The US has excellent credit because, beginning with Alexander Hamilton, it has never ever cut a payment on debt no matter what crisis it thinks it faces. Treasury notes are as good as money because of this. Keep in mind that debt is a liquid asset. If you were foolish enough to not pay out Chinese debt holders, they would simply sell to Americans. The notion of "lets not pay xyz" has spectacularly bad outcomes because it signals to the world that you are not a serious nation when it comes to debt. In the long term, the US strategy has clearly paid off.
- chewz 5y ago
  > The US has excellent credit because, The US has excellent credit because it has largest military and is the dominant global player. That makes money parked in US T-bills safe. Liquidity and good, healthy economy (but not perfect) helps.
  - snowwrestler 5y ago
    The big military only works in US’s favor because of the US commitment to pay. A country with a reputation for stealing people’s money does not attract foreign investment no matter how big the military. Does a robber seem trustworthy to you just because he’s got a big gun?
- hellbannedguy 5y ago
  The world might understand if China gets cute though--with all that iron talk. Maybe the USA is looking for a reason to not pay?
ur-whale 5y ago
> It’s much harder to cut payments to your own people. You never have to when you control the actual production of the currency. A foreign entity might demand to be paid back in actual assets, whereas joe citizen will have to accept any monkey money the USD decides to pay him back with.
- rsj_hn 5y ago
  LOL, no, a foreign entity can't buy a contract promising to pay X dollars and then demand to be paid in euros or something. The bond is not like a magic lamp that you rub to get wishes. If you don't like the payment terms, then don't buy the debt instrument with those terms.
rtpg 5y ago
There's a printer right there. If the past 2 decades haven't blown the "deficit/inflation" correlation myth out of the water, just wait until the US goes all Japan and turns up the printers even more and have absolutely nothing of consequence happen to it (especially considering the US is even more isolated from raw resource allocation cuz of all the sheer size and diversity of the economy).
- theslurmmustflo 5y ago
  Nothing of consequence has been happening since https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
  - DisjointedHunt 5y ago
    Much of the argument here is abstracted away behind human-made definitions of a word such as "Productivity" in economics: https://www.oecd.org/sdd/productivity-stats/40526851.pdf https://www.oecd.org/sdd/productivity-stats/40526851.pdf Simply the evolution of the economic output moving from manufacturing driven to what it is now makes the comparison a little less jarring. It flips the inference the author of that website is pushing on its head if you consider what those numbers are actually indicating with the context of what the definition is. Maybe it means the "Volume of input" has been greatly improved because of technological assistance, maybe it means human elements contributing to economic input have more help from advancement in sciences, maybe there are a lot more complex factors at play here than what we are aware of. tl;dr: "Productivity" in economics is not the intuitive sense of "productivity" the word in common English usage that indicates human work.
    - spiralx 5y ago
      This site goes into more detail on how productivity as shown on the famous chart is useless for telling you anything useful and worse means something different from the layman understanding of the word. With charts and basic maths. https://economicsfromthetopdown.com/2020/01/17/debunking-the-productivity-pay-gap/ https://economicsfromthetopdown.com/2020/01/17/debunking-the... > tl;dr: "Productivity" in economics is not the intuitive sense of "productivity" the word in common English usage that indicates human work. Oh snap. I read your link but not the tl;dr, oops.
pvaldes 5y ago
[Shrug] Maybe this would explain the strange appeal that covid19 has for some people, think tank groups and social media that were basically driving old and gullible people to its own demise in the last years feeding them with all the wrong advice 24 hours a day.

This is worse though, not better. Uncle Sam could cut payments to China or Japan in a crisis. It’s much harder to cut payments to your own people. It would instantly make any crisis much worse.

andrekandre 5y ago

> It’s much harder to cut payments to your own people. is it though? wouldn't cutting payments to foreign investors going to hurt your credit rating abroad? also, ive heard its an advantage to japan to have its govt debt owned by its own people as well... curious to hear counter points!

cjensen 5y ago

The US has excellent credit because, beginning with Alexander Hamilton, it has never ever cut a payment on debt no matter what crisis it thinks it faces. Treasury notes are as good as money because of this. Keep in mind that debt is a liquid asset. If you were foolish enough to not pay out Chinese debt holders, they would simply sell to Americans. The notion of "lets not pay xyz" has spectacularly bad outcomes because it signals to the world that you are not a serious nation when it comes to debt. In the long term, the US strategy has clearly paid off.

chewz 5y ago
> The US has excellent credit because, The US has excellent credit because it has largest military and is the dominant global player. That makes money parked in US T-bills safe. Liquidity and good, healthy economy (but not perfect) helps.
- snowwrestler 5y ago
  The big military only works in US’s favor because of the US commitment to pay. A country with a reputation for stealing people’s money does not attract foreign investment no matter how big the military. Does a robber seem trustworthy to you just because he’s got a big gun?
hellbannedguy 5y ago
The world might understand if China gets cute though--with all that iron talk. Maybe the USA is looking for a reason to not pay?

ur-whale 5y ago

> It’s much harder to cut payments to your own people. You never have to when you control the actual production of the currency. A foreign entity might demand to be paid back in actual assets, whereas joe citizen will have to accept any monkey money the USD decides to pay him back with.

rsj_hn 5y ago
LOL, no, a foreign entity can't buy a contract promising to pay X dollars and then demand to be paid in euros or something. The bond is not like a magic lamp that you rub to get wishes. If you don't like the payment terms, then don't buy the debt instrument with those terms.

rtpg 5y ago

There's a printer right there. If the past 2 decades haven't blown the "deficit/inflation" correlation myth out of the water, just wait until the US goes all Japan and turns up the printers even more and have absolutely nothing of consequence happen to it (especially considering the US is even more isolated from raw resource allocation cuz of all the sheer size and diversity of the economy).

theslurmmustflo 5y ago
Nothing of consequence has been happening since https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/
- DisjointedHunt 5y ago
  Much of the argument here is abstracted away behind human-made definitions of a word such as "Productivity" in economics: https://www.oecd.org/sdd/productivity-stats/40526851.pdf https://www.oecd.org/sdd/productivity-stats/40526851.pdf Simply the evolution of the economic output moving from manufacturing driven to what it is now makes the comparison a little less jarring. It flips the inference the author of that website is pushing on its head if you consider what those numbers are actually indicating with the context of what the definition is. Maybe it means the "Volume of input" has been greatly improved because of technological assistance, maybe it means human elements contributing to economic input have more help from advancement in sciences, maybe there are a lot more complex factors at play here than what we are aware of. tl;dr: "Productivity" in economics is not the intuitive sense of "productivity" the word in common English usage that indicates human work.
  - spiralx 5y ago
    This site goes into more detail on how productivity as shown on the famous chart is useless for telling you anything useful and worse means something different from the layman understanding of the word. With charts and basic maths. https://economicsfromthetopdown.com/2020/01/17/debunking-the-productivity-pay-gap/ https://economicsfromthetopdown.com/2020/01/17/debunking-the... > tl;dr: "Productivity" in economics is not the intuitive sense of "productivity" the word in common English usage that indicates human work. Oh snap. I read your link but not the tl;dr, oops.

pvaldes 5y ago

[Shrug] Maybe this would explain the strange appeal that covid19 has for some people, think tank groups and social media that were basically driving old and gullible people to its own demise in the last years feeding them with all the wrong advice 24 hours a day.