3 ms·

All Western countries are devaluing their currency. No other way to reduce the debt. Cutting benefits is political suicide. Taking every dollar from billionaire

All Western countries are devaluing their currency. No other way to reduce the debt. Cutting benefits is political suicide. Taking every dollar from billionaires would knock a 1 year of debt off. The solution is inflation

_heimdall 1y ago
> The solution is inflation The response is inflation. It would only be a solution if it works, and of all the countries or empires that tried it in the past you'd be hard pressed to find one that succeeded at correcting their economy long term by debasing their own currency.
- lisbbb 1y ago
  We have already eaten a ton of inflation, particularly in the first year or so when Biden was President. Trump printed trillions to forestall a collapse during covid. The wisdom of that move is lost on me. I would have preferred the collapse--we might be recovering by now instead of sitting on an even higher precipice awaiting the inevitable fall.
  - marbro 1y ago
    [dead]
  - _heimdall 1y ago
    There is an interesting argument to be made that they have no choice once the problem passes a certain point. The interplay between bond yields, the fed funds rate, and inflation can lead to weird situations. Right noe the Fed is having to lower rates because (a) job numbers are pretty bad and (b) the US debt is held in a surprising number of short term bonds and higher rates make the debt just rack up faster. They're also watching inflation continue to chug along higher than their 2% target though, a scenario they'd normally raise rates for. I won't be surprised if we ultimately realize that, in the end, those in charge had way less control of the economy than they like to claim. I'm biased though, that's always been my view and it frustrates me that economics claims to be a field of science at all. It can be a very interesting and important historical analysis but it isn't predictive, and at the level of macroeconomics it can't realistically be isolated and tested.
    - hajile 1y ago
      When you outsource all your jobs that actually produce goods instead of services, you have nothing left to offer. At the same time, we're proving that short-term consumerism is completely destructive (designed to break is just another variant of the broken window fallacy). Either you lower US standard of living to match the countries it is currently outsourcing to or you establish protectionism and isolationist policies with a focus on total efficiency rather than short-term gains.
- pizlonator 1y ago
  It's both. The devaluation of the dollar relative to other currencies will eventually make it profitable for work to move to the US. I think we're not seeing that yet because there's an imperfect coupling between asset price inflation, consumer price inflation, and exchange rates.
  - _heimdall 1y ago
    It may be a short term solution, on the right time scale I'd give it that. The only way its a long term solution is if globalization is so fundamentally different from what other countries and empires have felt with that they can actually devalue at just the right rate to bring work back here. Getting that rate right seems like a tiny needle to thread though, and that only works if this situation is different from when other currencies were devalued intentionally.
  - Eisenstein 1y ago
    I think you might be confusing 'devaluation' with 'loss of spending power'. The dollar hasn't really lost value compared to other currencies. The thing that would do that would a loss of faith in the US to pay its debts, not the inability for the dollar to sustain a certain purchasing power.
    - pizlonator 1y ago
      > The dollar hasn't really lost value compared to other currencies Yes it has. Euro costs 10% more in USD than one year ago
      - Eisenstein 1y ago
        Is that what you meant by devaluation? That the dollar has lost 10% of it exchange compared to the euro?
      - mgh95 1y ago
        > Yes it has. Euro costs 10% more in USD than one year ago. But more or less only the euro. The USD has strengthened or held steady against INR, RMB, CAD, AUD, etc. The euro is strengthening even more, however.
carlosjobim 1y ago
> All Western countries are devaluing their currency. No other way to reduce the debt. You increase the debt when you are devaluing your currency.

_heimdall 1y ago

> The solution is inflation The response is inflation. It would only be a solution if it works, and of all the countries or empires that tried it in the past you'd be hard pressed to find one that succeeded at correcting their economy long term by debasing their own currency.

lisbbb 1y ago
We have already eaten a ton of inflation, particularly in the first year or so when Biden was President. Trump printed trillions to forestall a collapse during covid. The wisdom of that move is lost on me. I would have preferred the collapse--we might be recovering by now instead of sitting on an even higher precipice awaiting the inevitable fall.
- marbro 1y ago
  [dead]
- _heimdall 1y ago
  There is an interesting argument to be made that they have no choice once the problem passes a certain point. The interplay between bond yields, the fed funds rate, and inflation can lead to weird situations. Right noe the Fed is having to lower rates because (a) job numbers are pretty bad and (b) the US debt is held in a surprising number of short term bonds and higher rates make the debt just rack up faster. They're also watching inflation continue to chug along higher than their 2% target though, a scenario they'd normally raise rates for. I won't be surprised if we ultimately realize that, in the end, those in charge had way less control of the economy than they like to claim. I'm biased though, that's always been my view and it frustrates me that economics claims to be a field of science at all. It can be a very interesting and important historical analysis but it isn't predictive, and at the level of macroeconomics it can't realistically be isolated and tested.
  - hajile 1y ago
    When you outsource all your jobs that actually produce goods instead of services, you have nothing left to offer. At the same time, we're proving that short-term consumerism is completely destructive (designed to break is just another variant of the broken window fallacy). Either you lower US standard of living to match the countries it is currently outsourcing to or you establish protectionism and isolationist policies with a focus on total efficiency rather than short-term gains.
pizlonator 1y ago
It's both. The devaluation of the dollar relative to other currencies will eventually make it profitable for work to move to the US. I think we're not seeing that yet because there's an imperfect coupling between asset price inflation, consumer price inflation, and exchange rates.
- _heimdall 1y ago
  It may be a short term solution, on the right time scale I'd give it that. The only way its a long term solution is if globalization is so fundamentally different from what other countries and empires have felt with that they can actually devalue at just the right rate to bring work back here. Getting that rate right seems like a tiny needle to thread though, and that only works if this situation is different from when other currencies were devalued intentionally.
- Eisenstein 1y ago
  I think you might be confusing 'devaluation' with 'loss of spending power'. The dollar hasn't really lost value compared to other currencies. The thing that would do that would a loss of faith in the US to pay its debts, not the inability for the dollar to sustain a certain purchasing power.
  - pizlonator 1y ago
    > The dollar hasn't really lost value compared to other currencies Yes it has. Euro costs 10% more in USD than one year ago
    - Eisenstein 1y ago
      Is that what you meant by devaluation? That the dollar has lost 10% of it exchange compared to the euro?
    - mgh95 1y ago
      > Yes it has. Euro costs 10% more in USD than one year ago. But more or less only the euro. The USD has strengthened or held steady against INR, RMB, CAD, AUD, etc. The euro is strengthening even more, however.

carlosjobim 1y ago

> All Western countries are devaluing their currency. No other way to reduce the debt. You increase the debt when you are devaluing your currency.