NEWS Is the pivot to China a bunch of bullshit?

[Mirage]

Except you are fundamentally (economically) wrong about what happened to the Weimar Republic and why the current situation is vastly different. To start with, the Germans were wracked with war reparation payments and those payments (in kind and in cash) were linked to gold. As gold prices shifted the Germans found themselves paying continuously higher prices to provision the mark thus redefining its currency downward. That kind of neoclassical global financing was done away with after the Bretton Woods conference after WWII.

You are, one again, just factually wrong. The Germans eliminated the gold standard prior to the war. The Weimar Republic paper mark was not tied to gold, and they chose to repay their reparations by printing marks to buy foreign currency they could then use to pay the debt. This caused their hyperinflation. Similarly, but not in exactly the same way, one option available to us is to print dollars to pay our debt. The result will be the same, though it will take a lot more debt for us to cause a rout in the debt market (as Dimon and many other have recently explained).

The problem with the Wiemar Republic comparisons is that the US dollar is much, much, much stronger than the German Mark ever was. It is why comparing the monetary policy of, say, Argentina to the U.S. is a non-starter.

Every single person who has predicted hyperinflation (and there are a lot of them in the conservative political & media circles) has been wrong.

What you are explaining is a difference in magnitude, not a difference in kind. IE, us creating a much larger supply of dollars will have the same result as when the Germans, Argentinians, Zimbabweans, or many other countries have experienced. The only difference is in how much debt we can get away with first.

When will you be alarmed? When our interest payments each year are $2 trillion? 4 trillion? At some point, without huge and painful change, we will reach it.

 

[Griz882]

You are, one again, just factually wrong. The Germans eliminated the gold standard prior to the war. The Weimar Republic paper mark was not tied to gold, and they chose to repay their reparations by printing marks to buy foreign currency they could then use to pay the debt. This caused their hyperinflation. Similarly, but not in exactly the same way, one option available to us is to print dollars to pay our debt. The result will be the same, though it will take a lot more debt for us to cause a rout in the debt market (as Dimon and many other have recently explained).

What you are explaining is a difference in magnitude, not a difference in kind. IE, us creating a much larger supply of dollars will have the same result as when the Germans, Argentinians, Zimbabweans, or many other countries have experienced. The only difference is in how much debt we can get away with first.

When will you be alarmed? When our interest payments each year are $2 trillion? 4 trillion? At some point, without huge and painful change, we will reach it.

SNARK! I guess the Germans should have won the war….since the VICTORS set the terms!

You seriously need to read more. I’ve asked you before to cite a book or study to support your often preposterous claims and you always, always quibble…somI won’t bother.

 

[Mirage]

SNARK! I guess the Germans should have won the war….since the VICTORS set the terms!

You seriously need to read more. I’ve asked you before to cite a book or study to support your often preposterous claims and you always, always quibble…somI won’t bother.

In Hyperinflation's Aftermath, How Germany Went Back to Gold

It takes almost nothing, and little to no gold, to return to a gold standard.

www.forbes.com

Commanding Heights : The German Hyperinflation, 1923 | on PBS

"Germany abandoned the gold backing of its currency in 1914."

Just Google it man. Plenty of free info to show you what really happened. Ideally before you post nonsense next time. I'm not sure where you get off posting a bunch of objectively false history and then telling me that I need to read more. "May God have mercy on your soul"

 

[Griz882]

In Hyperinflation's Aftermath, How Germany Went Back to Gold

It takes almost nothing, and little to no gold, to return to a gold standard.

www.forbes.com

Commanding Heights : The German Hyperinflation, 1923 | on PBS

"Germany abandoned the gold backing of its currency in 1914."

Just Google it man. Plenty of free info to show you what really happened. Ideally before you post nonsense next time. I'm not sure where you get off posting a bunch of objectively false history and then telling me that I need to read more. "May God have mercy on your soul"

😆 You should read what you post…not just the headlines you can Google…man. From the article…

“After four disastrous years Germany had lost the war. Under the Treaty of Versailles it was forced to make a reparations payment in gold-backed Marks, and it was due to lose part of the production of the Ruhr and of the province of Upper Silesia. “

Not only do you need to read more…you actually need to read the crap you Google!

 

[Mirage]

😆 You should read what you post…not just the headlines you can Google…man. From the article…

“After four disastrous years Germany had lost the war. Under the Treaty of Versailles it was forced to make a reparations payment in gold-backed Marks, and it was due to lose part of the production of the Ruhr and of the province of Upper Silesia. “

Not only do you need to read more…you actually need to read the crap you Google!

Yes, and then the Germans negotiated a work around, where the Allies accepted repayment in their own currencies. Which is why I said previously that the Germans "chose to repay their reparations by printing marks to buy foreign currency they could then use to pay the debt." This is common knowledge. Read the Wikipedia for crying out loud.

Hyperinflation in the Weimar Republic - Wikipedia

en.m.wikipedia.org

 

[number9]

What you are explaining is a difference in magnitude, not a difference in kind. IE, us creating a much larger supply of dollars will have the same result as when the Germans, Argentinians, Zimbabweans, or many other countries have experienced. The only difference is in how much debt we can get away with first.

When will you be alarmed? When our interest payments each year are $2 trillion? 4 trillion? At some point, without huge and painful change, we will reach it.

But the difference in magnitude is incredibly important in this case. The tools that we have at our disposal could not even be contemplated by the Germans, yet alone the Argentinians or the Zimbabweans. It's not comparing apples and oranges, it's comparing watermelons with strawberry seeds.

 

[ChuckMK23]

If I may repeat, the US debt is a non-issue. Let's move the fuck on. Our government has the capacity to create more money as necessary. This is not a zero-sum game. As Americans, we are exceptional and we deserve a certain standard of living by being the most important country on the fucking planet and in the history of the world.

 

[Mirage]

If I may repeat, the US debt is a non-issue. Let's move the fuck on. Our government has the capacity to create more money as necessary. This is not a zero-sum game. As Americans, we are exceptional and we deserve a certain standard of living by being the most important country on the fucking planet and in the history of the world.

We deserve? We deserve nothing more than the poorest African child starving to death deserves. Our lives are worth no more than their's. We aren't special just because we're rich by international standards. This is disgusting.

 

[Griz882]

We deserve? We deserve nothing more than the poorest African child starving to death deserves. Our lives are worth no more than their's. We aren't special just because we're rich by international standards. This is disgusting.

I apologize…I have made this mistake before. I try to engage with you in basic conversation and you just…don’t get it or even worse…don’t want too (likely the case). I’ll continue this thread with thoughtful people.

 

[Griz882]

But the difference in magnitude is incredibly important in this case. The tools that we have at our disposal could not even be contemplated by the Germans, yet alone the Argentinians or the Zimbabweans. It's not comparing apples and oranges, it's comparing watermelons with strawberry seeds.

More like comparing bicycles to apples.

 

[Griz882]

Back to China…as with all seismic economic and political changes it starts from the middle class.

https://www.bbc.com/news/world-asia-china-62402961

 

[Mirage]

I apologize…I have made this mistake before. I try to engage with you in basic conversation and you just…don’t get it or even worse…don’t want too (likely the case). I’ll continue this thread with thoughtful people.

What didn't I get? That Germany had a gold standard during the Weimar Republic? That their hyperinflation was caused not by their printing press, but by fluctuating gold prices?

You make false claims like these, then instead of learning and moving on, you attack me and say I need to read more, I'm not thoughtful, and that I don't want to get it. What immature nonsense. Grow up.

 

[Spekkio]

The risk to high debt : GDP ratio is inflation, not default.

The federal reserve can borrow infinite securities from the US treasury to fund the federal government. That's what makes the federal government different than personal finances - imagine you could turn to your spouse and say "give me $1,000..." and s/he responds by opening a spreadsheet, typing an extra $1,000 into your account, and it's done. You just owe her 3% interest per year over the next 10 years for this favor.

These securities are then given to banks, which multiplies the money supply through loans and fractional reserve banking. Principle behind QE, one of the factors that got the debt : GDP ratio where it is today... but was necessary to dampen the shit economy from 2009-2014.

QT is the opposite - the securities reach maturity, the US treasury gives the money back to the federal reserve, which in turn basically removes it from the economy.

Fundamentally different from the Weimar Republic.

And although from a fiscal philosophical perspective, I like what much of what the TCJA did by expanding standardized deductions and eliminating a lot of personal exemptions / deductions, the cut to marginal income tax rates during a hot economy following 8 years of QE wasn't necessary. Then again, we could eliminate 1/3 the budget deficit by repealing the corporate subsidies given for employer sponsored health insurance, the "secret sauce" of the ACA...but anyone who talks about that gets tarred and feathered as wanting to take away people's healthcare.

Anyway, our debt : GDP is sustainable right now. The issue is that we have very little room to deal with economic downturns that would necessitate additional deficit spending and QE to dampen the trough. Doesn't get a lot of talking points because people are naturally not very forward looking, and it doesn't make for good one-line campaign slogans. Also see: Bush 42's attempt to reform SS, which would have worked if implemented in the 00s.

 

[number9]

We deserve? We deserve nothing more than the poorest African child starving to death deserves. Our lives are worth no more than their's. We aren't special just because we're rich by international standards. This is disgusting.

We are special because our economy is special. Regardless of whether you think it's good or bad, it is nonetheless true and it needs to be factored into macroeconomic analyses. Otherwise you run the risk of making the same mistake of the talking heads that have been predicting hyperinflation every time a Democrat takes office.

 

[Griz882]

Although the work is a bit old, here is an interesting take on Chinese naval developments.

Why Most Navies Fail... And Why the Chinese Navy Could Be Next

Why did so many countries embark on the construction of great fleets, how did they do so, and why did they fail?

nationalinterest.org