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Sheldon Trotman
@sheldon
Came across this interesting chart...it shows that the US is a net debtor to basically everyone in the world (…and pension holders) by a large magnitude. Primarily happened post WW2 but with the Fed now raising interest rates (and “higher for longer”), it'll increase the interest payments on the debt for the US.
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Sheldon Trotman
@sheldon
This means one of 2 things needs to happen, either: 1) inflation needs to run higher than the Fed interest rates. In other words the US dollar needs to be devaluing faster so the total amount of debt (aka “nominal value”) can be paid back with the same number of bills but which are worth less.
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Sheldon Trotman
@sheldon
2) the US defaults on its debt or austerity which can’t happen without civil unrest (see what happened in the Great Dression in 1929)
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Thomas
@aviationdoctor.eth
I'm always puzzled by the (likely true) argument that fiscal austerity will lead to societal unrest. Is our societal model really sustainable, if its sustenance depends on inflationary and runaway capital injections every year by the central bank? It feels Ponzi-ish that an ever-growing amount of public debt is needed.
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Sheldon Trotman
@sheldon
Well it’s more that if politicians want to get elected, it’s def hard to craft a campaign around “for the sake of long term health, we need to take pain today” Not saying it’s right but I can see how it then becomes “print as much money when calamity hits and maintain potentially unsustainable programs”
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