Can the ponzi last through the next election cycle?
Fitch downgraded the United States’ long-term credit rating as expected. This is basically the reason:
Thank you Barak, Donald, Joe, Janet, Jerome, Ben, US Congress et al.
My question is, can the ponzi last through the upcoming election cycle? Instability rears its ugly head from time to time like an alcoholic realizing he is slipping into the abyss. SVB bank, commercial real estate, Fitch credit ratings....
How easy or difficult will it be for the party in power to pin it on the other party?
Oh well, I guess we'll just let the good times roll... for now.
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I'm not sure that's why it was downgraded. They mentioned it themselves. An erosion of governance. And it's not hard to pinpoint where that's coming from. That is, if you keep a foot in reality. Global investors would still rather carry U.S. bonds more than any other country in the world. And I have zero idea how ponzi scheme is relevant. Maybe you're not familiar with what a ponzi scheme is. Side note. The man's name is spelled BARACK. Good try though. America-haters will always find a way. But when they come from the U.S. I'll just never understand why they don't grow a pair and leave. Always strikes me as pure weakness. Gotta' be it.
Global investors would still rather carry U.S. bonds more than any other country in the world.
As with people and companies, governments that borrow have debt service payments and eventually have to pay back principal, which is painful. The only differences in their finances are that governments can confiscate wealth through taxes and indirectly through inflation, so that’s what we should expect to happen. Will this be a big problem? The answer is probably not much over the near term but probably a lot later.
And I have zero idea how ponzi scheme is relevant.
1) The scammer (US Government) running the Ponzi scheme attracts initial investors by promising unusually high returns on their investments in a short period. (Initial massive deficit spending. Thank you BARACK and Janet.)
2) Some early investors may indeed receive the promised returns (e.g. Obamacare etc), which helps to build confidence in the scheme and attract more investors. (voters supporting reckless fiscal policy)
3) However, instead of generating profits through legitimate business (GDP growth), the fraudster (US Government) uses the money invested by new participants (e.g. Gen X) to pay returns to earlier investors. (Baby boomers)
4) This creates the illusion of a successful venture. (illusion: US fiscal policy soundness)
5) As long as new investors keep joining (taxpayer compliance, voter acceptance) and some money keeps flowing into the scheme (Fed money printing), it can continue to pay returns to earlier stakeholders, sustaining the deception.
6) Eventually, as the number of new stakeholders diminishes (Gen Z), it becomes difficult to maintain the promised returns. At this point, the scheme collapses, and many investors (citizens who acted in good faith) are left with substantial losses. (Inflation and/or higher taxes and/or an actual default)
@Ynotisay "An erosion of Governance" is one of those catch all phrases. If we had to translate into English. "Things are getting worse and you arent doing anything to fix it" covers it. That doesnt help identify the cause. But it does help you see their thinking..😷
