alt Hacker NewsI just don't see much political appetite for austerity/entitlement cuts/more taxes, so I don't think we're going to fix this in any orderly way.
I guess the thing that worries me most about this is how this interacts with the USD's reserve currency status - that's historically absorbed a lot of the govt's deficits and suppressed inflation. I don't see many good alternatives to it in the set of global currencies, but there's been a lot of central bank buying of gold, and I could imagine a basket of other hard capital goods maybe functioning that way. And we're seeing more rmb-denominated trade.
>There is no evidence of this. There was in Japan. But Americans don't save as much as the Japanese, and the concavity of the wealth effect means that those who do don't tend to spend much more when their interest income rises.
I believe it tends to get sunk into asset inflation? Real estate/housing being one of those, and one of the biggest inflation drivers. Also of populist unrest. Agree that it doesn't push up labor prices as much because of the distribution effect you're talking about.
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We could restore tax rates to what they were in the 80s, maybe. When I was a kid investment income was taxed at a higher rate than earned income. Maybe that's an idea.
> believe it tends to get sunk into asset inflation? Real estate/housing
Housing prices tend to go down or at least stabilize when rates rise.
> I just don't see much political appetite for austerity/entitlement cuts/more taxes
One of these things is not like the others, one of these things just doesn't belong...
Austerity and entitlement cuts are what we've been trying since Reagan. They haven't worked. They don't work.
Raising taxes is unpopular, sure, but a) it can actually solve the problems—not just the symptoms, but make a good hard dig in at the root causes—and b) if we do it right, only a tiny fraction of the people will have to bear those increases.
Because what we need to be doing is returning tax rates to what they were like before Reagan. Before "trickle-down economics". Before all this black magic shit that has never worked, will never work, and any actual economist with a brain and a functioning heart could tell you would never work right from the start.
Yeah, anyone talking about the dollar being replaced by RMB or something is just kind of talking out of it.
China specifically does not actually want to be the reserve currency and replace the US, a good reserve currency should be fairly liquid and they like the ability to shut down capital flows into and out of China.
The other alternatives are not great; JPY has the same debt problems as USD. EUR has the same debt problems in certain member states like France, and the fiscal/banking crossborder liquidity isn’t very good and the governance still fickle and precarious. CHF is too small.