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Does this correctly factor in that currently the US is the western worlds de facto military, more or less? Because as long as we hold that position I don’t ima

Does this correctly factor in that currently the US is the western worlds de facto military, more or less? Because as long as we hold that position I don’t imagine the US government will be shut out of the debt markets at all. This is part of the problem I wager is there is still enormous incentive to keep the scheme afloat by other nations too

mullingitover 3y ago
The dollar is still backed by a heavy metal, it just switched from gold to plutonium.
- HKH2 3y ago
  I guess that makes sense because plutonium goes missing too.
- mrguyorama 3y ago
  America would do everything it possibly could to avoid a nuclear exchange. It's literally the only feasible military threat to the country. As long as nukes remain taboo, America gets to play world police and mostly get away with being a bully in some places, because what are you going to do, fight them? If you are willing to die to American soldiers 10:1 like the NVA or most of the middle east, you can prevent America from "winning", but you're still going to be living in a bombed out hellhole while teens share celebrity gossip in American homes with zero fear for their lives.
csomar 3y ago
It didn't help the Soviet Union. I think people over-estimate the value of the military in this context. A default will dissolve the military as you can no longer pay its members. The Western world is mostly united behind the US because it's getting free defense (who doesn't want free stuff?). If you remove that, I highly doubt they'll align as much with the US.
- no_wizard 3y ago
  The Soviet Union lacked a domestic economy that could keep up with the needs of its population, and there by fell apart internally. I'd argue the US can do the same, but our domestic economy - at least on paper - is more functional the Soviet Unions ever was and can provide for its citizenry and is an important market for nations all over the world. That's a major difference than with the Soviet Union, and a key one.
  - csomar 3y ago
    I do not disagree with that; and that is also what my comment is about (the military is not the economy, it’s the other way around).
    - no_wizard 3y ago
      I agree, in so far as its the other way around. The key difference in opinion that may be surfacing here, is that other nations are willing to co-operate and push interests that also further US interests because they get tangible benefits from the US being the dominate superpower (IE, the western worlds military, de facto). This is a strong incentive for countries to look the other way in times of crisis. Arguably, because congress is inept at proper budgeting and such, we should already have trouble selling in the debt markets, but treasures still sell just fine and at an ultra low cost to the government, despite some notion of "downgrade" by one of the bond rating agencies (I think Moodys?). If I was looking at the US right now, and all the political in-fighting problems we are having, I wouldn't have nearly as much faith in the US government and buying its debt. This should have made debt more expensive to sell, and it hasn't. I posit, one reason is, keep the US propped up to a certain extent (IE, not raising the cost of the US government bonds by refusing to buy at current value) would be that we are the worlds de facto military, and western nations are increasingly leaning on us with the turmoil that has bubbled up recently, and they have every incentive to keep the machine going right now because of it. US consumers are also a great market, currently, and I doubt anyone wants to see that crumble, and that plays a big role here too.

mullingitover 3y ago

The dollar is still backed by a heavy metal, it just switched from gold to plutonium.

HKH2 3y ago
I guess that makes sense because plutonium goes missing too.
mrguyorama 3y ago
America would do everything it possibly could to avoid a nuclear exchange. It's literally the only feasible military threat to the country. As long as nukes remain taboo, America gets to play world police and mostly get away with being a bully in some places, because what are you going to do, fight them? If you are willing to die to American soldiers 10:1 like the NVA or most of the middle east, you can prevent America from "winning", but you're still going to be living in a bombed out hellhole while teens share celebrity gossip in American homes with zero fear for their lives.

csomar 3y ago

It didn't help the Soviet Union. I think people over-estimate the value of the military in this context. A default will dissolve the military as you can no longer pay its members. The Western world is mostly united behind the US because it's getting free defense (who doesn't want free stuff?). If you remove that, I highly doubt they'll align as much with the US.

no_wizard 3y ago
The Soviet Union lacked a domestic economy that could keep up with the needs of its population, and there by fell apart internally. I'd argue the US can do the same, but our domestic economy - at least on paper - is more functional the Soviet Unions ever was and can provide for its citizenry and is an important market for nations all over the world. That's a major difference than with the Soviet Union, and a key one.
- csomar 3y ago
  I do not disagree with that; and that is also what my comment is about (the military is not the economy, it’s the other way around).
  - no_wizard 3y ago
    I agree, in so far as its the other way around. The key difference in opinion that may be surfacing here, is that other nations are willing to co-operate and push interests that also further US interests because they get tangible benefits from the US being the dominate superpower (IE, the western worlds military, de facto). This is a strong incentive for countries to look the other way in times of crisis. Arguably, because congress is inept at proper budgeting and such, we should already have trouble selling in the debt markets, but treasures still sell just fine and at an ultra low cost to the government, despite some notion of "downgrade" by one of the bond rating agencies (I think Moodys?). If I was looking at the US right now, and all the political in-fighting problems we are having, I wouldn't have nearly as much faith in the US government and buying its debt. This should have made debt more expensive to sell, and it hasn't. I posit, one reason is, keep the US propped up to a certain extent (IE, not raising the cost of the US government bonds by refusing to buy at current value) would be that we are the worlds de facto military, and western nations are increasingly leaning on us with the turmoil that has bubbled up recently, and they have every incentive to keep the machine going right now because of it. US consumers are also a great market, currently, and I doubt anyone wants to see that crumble, and that plays a big role here too.