People need to accept that the world’s wealthy are tired of having to pay a premium for intellectual labor from US citizens. They can get it cheaper elsewhere, and they plan to.
The goal is not to bring the rest of the world up to the US’s standards of living, the goal is explicitly to bring the US standard of living down to match the rest of the world. They want us to accept lower pay and a lower standard of living, and they’re willing to tear it all apart and divide us so we’re at each other’s throats fighting for the scraps that are left.
As I’ve said before, the wealthy are in “let’s strip mine this bitch!” mode because they have decided the US citizenry do not offer the value they want or need anymore. The “shining city on the hill” is now a slum and they want to keep it that way.
Literally I have been saying for at least a decade now that it has felt like wealthy have had a plan to just give up on the US, and now it’s coming to fruition. They’ve extracted the wealth, and now they’re hanging us out to dry.
The US has been living on credit cards for decades now. The rest of the world has supported it because the most important thing for everyone is stability. With trade agreements getting ripped up, and nonsense tariffs everywhere, supporting Americas consumption habits is not necessarily in the world’s interests anymore.
Canada alone holds almost $500 billion in US debt. Europe and Japan hold another $2.5 trillion in US debt. America is picking fights with people who can bankrupt them.
Some material bits here - the US can’t run out of dollars so they can repay all of this debt, since it’s denominated in US dollars. The foreign countries can’t force the US to give them dollars in place of the bonds they hold, as far as I’m aware, since those bonds have predefined maturity dates. The US only has to pay their value in dollars as they come due. Which they can always pay. So bankruptcy from foreign debt isn’t on the cards. What foreign countries could do is not buy new US debt with the dollars the US pays them as bonds mature. That would leave the above mentioned dollars in international circulation and therefore devalue the dollar. And that would have implications on what the US can buy from other countries. Arguably this is the intended goal of Bessent and Miran. Although they were hoping to achieve it by getting other countries to appreciate their currencies against the dollar via Bretton Woods-style agreements.
They can certainly issue new dollars to pay them, but if they flood the market with new dollars, the value of the dollar drops, and inflation rises and market loses even more confidence in the value of the dollar.
The value of having a stable economy with stable dollar was ability to issue bonds on that amount. Nobody wants to get Russian ruble bonds atm. That isn’t quite the case for the USA, but the market of buyers has shrunk.
You are correct. “Bankrupt” is a little strong. But selling existing bonds back into the market while the U.S. is trying to issue new debt would not be great for America. I think dollar devaluation is 100% in the cards.
Yeah that’s a related effect as far as I understand, but it depends on how the domestic debt market reacts, as in whether it absorbs the difference. Also it depends on whether the US government continues the policy of issuing debt when creating dollars. They could just stop doing that. They don’t need debt to finance spending, they’ve just historically done so. That said I don’t know if they’d actually do that since they’re ideologically opposed to this sort of monetary policy.
The us issues many different kinds of bonds some you can’t sell for 6 months at which point you can turn them in for cash at any point or wait forbthem to fully mature
Quite true! Our economy has been held together with duct tape, hope, and the money printer going brrrrr for the better part of two decades now.
People forget that something like the TSA was essentially a jobs program to boost Bush’s weak economy.
I remember working in TV and getting very upset at my coworkers defending Bush and Henry Paulson asking for $700 billion to bail out the banks, telling them that if we didn’t solve these problems the hard way at the time they would grow and fester and become harder and harder to fix without complete disaster. I often wonder if my coworkers recall that conversation the way I do.
The goal is not to bring the rest of the world up to the US’s standards of living, the goal is explicitly to bring the US standard of living down to match the rest of the world.
America already has most indicators of standards of living near and even below the bottom of OECD measures.
Average lifespan, child mortality, litteracy, crime, bankruptcies etc. Why do you think Canada collectively threw up their lunch when the Cheeto Benito threatened us with having to live like Americans? No one wants to go down to your standards.
It’s not that they’re strip mining it because the value proposition isn’t there. Generations past, towards the end of the guilded age, we saw that the wealthy could meaningfully invest in and elevate society and still be fabulously wealthy. We see as much in the modern day with McKenzie Scott. It’s more that ripping out the plumbing and wiring is quick and easy, and that’s all anybody cares to do anymore. Why make $100 in ten years when I could make $3 right now? This is the natural and probable outcome of the way we’ve allowed our economic system to run, especially but not exclusively since Reagan embraced supply side economics and rejected the Great Society view of America. It’s a race to the bottom, and always has been. That’s what’s always been lurking under the “bring manufacturing back from China” narratives, since Chinese factories have such fabulous features as unknown chemicals that make you just drop dead sometimes (electronics manufacturing), on-site bunk houses, and suicide nets.
The empire’s been slowly eroding since the Vietnam war, and especially since the end of the cold war was apparent. It finally ran out of other places to fuck up for cheap gains, and it’s turned in on itself to try and keep those cheap gains coming. We all know you can’t survive, let alone thrive, by eating your own flesh, but the wealthy are all so goddamn short sighted that they’re quite happy to try feudalism part 2: surveillance state boogaloo.
The thing that kills me is that we were the wealthiest nation on earth, we had it all, we could have had an absolutely outrageous standard of living for everyone in terms of healthcare, education, scientific advancement for the benefit of all mankind, etc. and we literally blew all of it out of our ass blowing up brown people and giving it away to like ten of the wealthiest people. It’s such a disappointment to think of what could have been.
This has always been the case and intellectual labor isn’t special other than the training lacking in some parts of the world. The owner class has always worked to lower the standard of living in the US with only organized labor preventing or slowing it down. Perhaps a secondary factor standing in the way of this process used to be the restriction on movement of capital prior to free trade taking over the world. That meant the owner class would face the contradictory effect of suppressing labor costs - decreasing demand for the goods they sell and profit from. Now that owner capital has moved around the world however, they can utilize the aggregate demand of many countries to keep themselves rich, even if there are fewer people in each country that can afford their products. I think in effect this frees them to depress wages in the wealthiest countries in the absence of strong organized labor.
People need to accept that the world’s wealthy are tired of having to pay a premium for intellectual labor from US citizens. They can get it cheaper elsewhere, and they plan to.
The goal is not to bring the rest of the world up to the US’s standards of living, the goal is explicitly to bring the US standard of living down to match the rest of the world. They want us to accept lower pay and a lower standard of living, and they’re willing to tear it all apart and divide us so we’re at each other’s throats fighting for the scraps that are left.
As I’ve said before, the wealthy are in “let’s strip mine this bitch!” mode because they have decided the US citizenry do not offer the value they want or need anymore. The “shining city on the hill” is now a slum and they want to keep it that way.
Literally I have been saying for at least a decade now that it has felt like wealthy have had a plan to just give up on the US, and now it’s coming to fruition. They’ve extracted the wealth, and now they’re hanging us out to dry.
The US has been living on credit cards for decades now. The rest of the world has supported it because the most important thing for everyone is stability. With trade agreements getting ripped up, and nonsense tariffs everywhere, supporting Americas consumption habits is not necessarily in the world’s interests anymore.
Canada alone holds almost $500 billion in US debt. Europe and Japan hold another $2.5 trillion in US debt. America is picking fights with people who can bankrupt them.
Some material bits here - the US can’t run out of dollars so they can repay all of this debt, since it’s denominated in US dollars. The foreign countries can’t force the US to give them dollars in place of the bonds they hold, as far as I’m aware, since those bonds have predefined maturity dates. The US only has to pay their value in dollars as they come due. Which they can always pay. So bankruptcy from foreign debt isn’t on the cards. What foreign countries could do is not buy new US debt with the dollars the US pays them as bonds mature. That would leave the above mentioned dollars in international circulation and therefore devalue the dollar. And that would have implications on what the US can buy from other countries. Arguably this is the intended goal of Bessent and Miran. Although they were hoping to achieve it by getting other countries to appreciate their currencies against the dollar via Bretton Woods-style agreements.
They can certainly issue new dollars to pay them, but if they flood the market with new dollars, the value of the dollar drops, and inflation rises and market loses even more confidence in the value of the dollar.
The value of having a stable economy with stable dollar was ability to issue bonds on that amount. Nobody wants to get Russian ruble bonds atm. That isn’t quite the case for the USA, but the market of buyers has shrunk.
You are correct. “Bankrupt” is a little strong. But selling existing bonds back into the market while the U.S. is trying to issue new debt would not be great for America. I think dollar devaluation is 100% in the cards.
There’s also the issue that the US needs to sell bonds at higher and higher yields just to convince them it’s worth the risk.
As far as I understand it (not an economist), that might lead to a debt spiral.
Yeah that’s a related effect as far as I understand, but it depends on how the domestic debt market reacts, as in whether it absorbs the difference. Also it depends on whether the US government continues the policy of issuing debt when creating dollars. They could just stop doing that. They don’t need debt to finance spending, they’ve just historically done so. That said I don’t know if they’d actually do that since they’re ideologically opposed to this sort of monetary policy.
Depending on the type of bond you absolutely can turn it in for dollars early.
Oh. Is that the kind of bonds the US government issues?
The us issues many different kinds of bonds some you can’t sell for 6 months at which point you can turn them in for cash at any point or wait forbthem to fully mature
Quite true! Our economy has been held together with duct tape, hope, and the money printer going brrrrr for the better part of two decades now.
People forget that something like the TSA was essentially a jobs program to boost Bush’s weak economy.
I remember working in TV and getting very upset at my coworkers defending Bush and Henry Paulson asking for $700 billion to bail out the banks, telling them that if we didn’t solve these problems the hard way at the time they would grow and fester and become harder and harder to fix without complete disaster. I often wonder if my coworkers recall that conversation the way I do.
America already has most indicators of standards of living near and even below the bottom of OECD measures.
Average lifespan, child mortality, litteracy, crime, bankruptcies etc. Why do you think Canada collectively threw up their lunch when the Cheeto Benito threatened us with having to live like Americans? No one wants to go down to your standards.
You are a USian, aren’t you?
It’s not that they’re strip mining it because the value proposition isn’t there. Generations past, towards the end of the guilded age, we saw that the wealthy could meaningfully invest in and elevate society and still be fabulously wealthy. We see as much in the modern day with McKenzie Scott. It’s more that ripping out the plumbing and wiring is quick and easy, and that’s all anybody cares to do anymore. Why make $100 in ten years when I could make $3 right now? This is the natural and probable outcome of the way we’ve allowed our economic system to run, especially but not exclusively since Reagan embraced supply side economics and rejected the Great Society view of America. It’s a race to the bottom, and always has been. That’s what’s always been lurking under the “bring manufacturing back from China” narratives, since Chinese factories have such fabulous features as unknown chemicals that make you just drop dead sometimes (electronics manufacturing), on-site bunk houses, and suicide nets.
The empire’s been slowly eroding since the Vietnam war, and especially since the end of the cold war was apparent. It finally ran out of other places to fuck up for cheap gains, and it’s turned in on itself to try and keep those cheap gains coming. We all know you can’t survive, let alone thrive, by eating your own flesh, but the wealthy are all so goddamn short sighted that they’re quite happy to try feudalism part 2: surveillance state boogaloo.
The thing that kills me is that we were the wealthiest nation on earth, we had it all, we could have had an absolutely outrageous standard of living for everyone in terms of healthcare, education, scientific advancement for the benefit of all mankind, etc. and we literally blew all of it out of our ass blowing up brown people and giving it away to like ten of the wealthiest people. It’s such a disappointment to think of what could have been.
That’s just the default condition.
This has always been the case and intellectual labor isn’t special other than the training lacking in some parts of the world. The owner class has always worked to lower the standard of living in the US with only organized labor preventing or slowing it down. Perhaps a secondary factor standing in the way of this process used to be the restriction on movement of capital prior to free trade taking over the world. That meant the owner class would face the contradictory effect of suppressing labor costs - decreasing demand for the goods they sell and profit from. Now that owner capital has moved around the world however, they can utilize the aggregate demand of many countries to keep themselves rich, even if there are fewer people in each country that can afford their products. I think in effect this frees them to depress wages in the wealthiest countries in the absence of strong organized labor.