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The US is pretty much the definition of a top credit rating. Besides having the biggest economy, they can print more of the world's reserve currency. Not defen
by FredPret 3y ago
The US is pretty much the definition of a top credit rating. Besides having the biggest economy, they can print more of the world's reserve currency.
Not defending government debt by the way - I think it's an especially insidious form of tax that devalues the entire currency and hits the poor the hardest.
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- Detrytus 3y ago> Besides having the biggest economy, they can print more of the world's reserve currency. Both those things will soon become false - US economy will be eclipsed by China, and the process of de-dollarisation of world's reserves is accelerating. The fact that the US can print as many dollars as they want is one of the reasons for it.
- boc 3y agoSource? Growth rates in China have slowed significantly in the past two years, and demographic collapse is going to render their economy stagnant in the coming decades. Some analysts are reversing their expectation that China will ever pass the US. [1] [1] https://asia.nikkei.com/Economy/China-s-GDP-unlikely-to-surpass-U.S.-in-next-few-decades-JCER https://asia.nikkei.com/Economy/China-s-GDP-unlikely-to-surp...
- DiogenesKynikos 3y agoChina's PPP GDP (which is a more accurate measure of the total size of an economy) is already somewhat larger than that of the US. Slower growth still means about 5% GDP growth per year, which is much higher than growth in developed economies. The "demographic collapse" is a gradual decline in population over many decades, offset by vastly improved education among the younger generation entering the workforce. Just to give you an illustrative example, if three workers with 8 years of schooling retire from the workforce, and two workers with college degrees enter the workforce, is that a demographic collapse?
- DaiPlusPlus 3y ago> Just to give you an illustrative example, if three workers with 8 years of schooling retire from the workforce, and two workers with college degrees enter the workforce, is that a demographic collapse? Yes, because, unfortunately, every economy depends on having workers willing to do occupations that don’t depend on high-level qualifications. As China’s population ages while the pool of young workers without career aspirations shrinks, where are they going to find all the medical care-assistants, agricultural workers, and things like that? Other countries such as in the Middle East the “solution” was to import labour from India and SE Asia - I don’t believe that approach will work for China at all.
- DiogenesKynikos 3y agoThe idea that a more educated workforce is a drag on the economy is new to me. Color me skeptical.
- DaiPlusPlus 3y agoI’d phrase it more as an example of unintentional consequences.
- goodSteveramos 3y agoWhy would he need a source for something you acknowledge has been the expert consensus for years? Its possible that consensus is wrong but your flat out objection is out of place.
- rayiner 3y agoWe'll also soon be eclipsed on the technological front. Losing our leading position in semiconductor manufacturing is, I suspect, the first in what will become a pattern. And once we lose economic prominence, military superiority will quickly follow. In 1939, the U.S. Army was the 39th largest in the world, and the country produced just 3,000 military aircraft. In the next five years, the U.S. produced 300,000 aircraft: https://www.pbs.org/kenburns/the-war/war-production https://www.pbs.org/kenburns/the-war/war-production.
- JamesBarney 3y agoWho is going to eclipse us on the technological front?
- DaiPlusPlus 3y agoHonestly it’s confusing to me that India, not China, hasn’t overtaken the world in CS/SE/AI - considering the sheer size of their workforce and their (relative to China) uncensored Internet access.
- i2cmaster 3y agoDifferent peoples do different things.
- infamouscow 3y agoI think the argument is pretty weak when you lay all the cards on the table. China's economy was projected to overtake and eventually eclipse the economy of the USA. China is currently staring down an existential population collapse. China's also a net importer of both energy and food. Pointing to BRICS nations dropping the USD for trade demonstrates a fundamental misunderstanding of what BRICS is.
- CoolGuySteve 3y agoWhat a strange attitude you have, simultaneously ignorant of how sovereign debt ratings work while also dismissing the work of experts in the field.
- wyldfire 3y agoI'm pretty sure I don't know any of the work from experts but isn't it incredibly unlikely that the US will be unable or unwilling to pay their debt? And doesn't that form the basis of their rating? asking genuinely because that's the limit of my understanding.
- 0zemp2c 3y agoit isn't ignorance, he's right there is no external context for a buyer of debt to assess value outside of sovereign currencies, which are basically ALL junk for G7 nations the other G7 nations with worse stats all have AAA...its meaningless...if you want to buy G7 debt, you MUST buy toxic waste maybe one day Mars will issue high-quality debt backed by hard assets...until then...
- FredPret 3y agoPlease educate me, oh Cool Guy Steve. Government debt is usually denominated in the currency that government issues. They can print themselves out of debt at any time. At the cost of inflation. And that currency getting devalued against the world's trading currency, the US dollar. So if the country in question has a huge and diversified economy, this is less of an issue. And if the country in question can print more US dollars, and has never defaulted on its debt in centuries, I don't see how they would let that go. The actual risk to an investor in US government debt of not getting paid is zero, unless their name is China and they start WW3. Now, does this mean US government debt is a good investment? That's a different question.
- CoolGuySteve 3y ago> At the cost of inflation. Almost there. Come on, just a bit further.
- JamesBarney 3y agoWhy would monetary expansion hit the poor harder than the rich?
- TremendousJudge 3y agoThe day a rich person has to decide between having food or paying rent, monetary expansion will have hit them as hard as it does a poor person.
- FredPret 3y agoInflation boosts my stock earnings which is great for me, but not so much if you don't own stocks / real estate.