Hugh Naylor pfp
Hugh Naylor
@hughnaylor
1/4 Not sure America is in a debt crisis, but it’s certainly an issue. With this in mind, two interesting models of paying off debt are a) productivity boom and b) massive inflation (i.e. money printing). Not sure if either will (or can) be pursued, but Great Britain and Israel do serve as interesting examples.
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Hugh Naylor pfp
Hugh Naylor
@hughnaylor
2/4 Great Britain experienced an astounding productivity boom during what became the Industrial Revolution of the 19th Century that ultimately enabled it to pay off the huge debts amassed during the Napoleonic Wars (along with other wars). This was largely a growth-driven escape from overbearing debt loads, but the rural-to-urban societal shocks were obviously intense.
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Hugh Naylor pfp
Hugh Naylor
@hughnaylor
3/4 Israel in 1980s, OTOH, did a sharp and fast money print (along with reforms and assistance in the form of US econ aid) that helped it dramatically inflate away/bring down a massive debt load that had built up as a result of the 1973 and 1982 Mideast wars. The consequence was a brief hyperinflation (anywhere from 400 to 1,000 percent inflation), wrecking those who saved in fiat curency.
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Hugh Naylor pfp
Hugh Naylor
@hughnaylor
4/4 Seems America could experience an Industrial Revolution-like growth boom from AI/automation, but such sudden productivity gains are hard to engineer and could unleash surging unemployment and associated risks (people with no money, financial institutions failing because everyone’s poor, social unrest, etc). An Israeli-like money print that is quick and big (as advocated by Luke Gromen) could get debt down meaningfully in a short period of time, but folks are already restive because of populism drivers like the recent GWOT, bad Covid policies, ongoing inflation/monetary debasement from QE after the GFC, etc. Not sure what the answer is. There could just be a more gradual inflating away of the debt pursued by the Trump Admin, coupled with naturally increasing productivity gains from tech, but drawing things out could just prolong and intensify the pain instead of just ripping the bandaid off. Also, I added these AI pics to make things look ominous because why not 🤷
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