Yellen's warning about the debt ceiling.

@whowasthatmaskedman Except that every other major country is in worse shape that we are. So where do these countries turn when we default?

Defaulting is a horrible idea. Just as horrible as running up the national debt to 40, 50, 60 trillion. This is what is inexorably happening. And how about adding in the underfunded entitlements problems, as well as the state and local pensions? Who will pay these bills?

The only default that's really going to happen is inflation. We got our first nasty whiff of that in 2022.

@irishmolly72 Do you understand WHAT inflation is?

@SomeMichGuy I see it every day.

@irishmolly72 Yes, but WHY does it occur?

@irishmolly72 Now that just plain untrue. The US economy is in worse shape that Greece ever was and STILL heading south.. The difference is that America is blindfolded its own citizens, by protecting inefficient industries with subsidies and tariffs. Everything from farm products to steel and pharamaceuticals is protected from competition from outside. The world tolerated that when America was king of the heap. But all thats changing as the Chinese and Saudis are making themselves better deals. America requires about 90% of its GNP just to service its debt.. Imagine if nearly all your imcome went just making the minimum payments on your credit cards. Now maybe the kids wouldnt know, because there was still food on the table and the internet was still connected, for now..😷

@whowasthatmaskedman 123% in 2022, per
https://www.thebalancemoney.com/national-debt-by-year-compared-to-gdp-and-major-events-3306287

This suggests that CUTTING taxes is foolish.

@SomeMichGuy You are of course correct. But the "fake" pandemic has thrown everyones numbers for the past few years. Its not fair to count those as "normal".. Plus the new normal wont be the same as the old. Air travel patterns will change, possibly affecting places like the Arab Emirates and singapore. The Cruise ship business will never be the same, reflecting shifts in smaller tourist economies. The European reliance on Russian gas will change. The same for Chinese coal and steel. And a looming labor surplus in some places has been turned into a shortage. And thats the pick of the litter.😷

@whowasthatmaskedman Oh, of course.

A single-payer health system, removing the SS cap, revoking the Trump tax cuts would help fund us and reduce the deficit...a lot.

@SomeMichGuy internally, Yes..But it wont make all that much difference to the problem measured against the globe. Using the $US as the measure of health in an economy is the same as skydiving.. You are your buddies are all in freefall and you have the illusion you are all together and everything is fine.. But down below that ground is coming up awful fast.. Wheres your parachute again??😷

@whowasthatmaskedman Reducing the % of GDP servicing the debt *is* a good thing.

@SomeMichGuy Almost....If interest rates were not rising.. And there is the fact that America is still living beyond its means to the tune of a $ Trillion a year before Trump and the pandemic. Since Americans cant spell "austerity" its hard to see this ending well.😷

@whowasthatmaskedman

No, reducing the % of GDP servicing the debt absolutely *is* a good thing.

Interest rates are near their likely high, as the rate of inflation is decreasing, etc.

@SomeMichGuy Lets hope so. But we are talking global again. And China is in a different phase of the cycle and has a centralised economy. They can chose to tip the barrow over..😷

@whowasthatmaskedman You mean stop buying our debt?

@SomeMichGuy Yes.. And the process has already started. China are now wrting import deals for raw materials they need, with a primary stipulation being that the deal is in Chinese Yuan. This is no hardship for most, since trade with China is two way and those countries can spend the Yuan they receive to buy Chinese imports. That cuts the $US out of the loop. Over the next decade, China intends to become the dominant trade currency, and by the same logic America used after WW2 they have every right to. Once thats done, America will need Yuan to buy imports and China will set the exchange rate in its favor (an old US trick) The only way America will be able to pay off its debt will be in real exports..Or by selling the farm. or some supercarriers, and other real assets.. Of course, this is a chess game, so there wil be a lot of moves. But China already owns the board and most of the pieces..😷

@whowasthatmaskedman We needed to be on top of this long ago...

@SomeMichGuy Yes. It was all managable early on. Sadly the politicians (all flavors) decided to keep reaching into the same pocket time after time, to deal with the latest crisis. without having a recession that is sometimes needed.. Then they just got plain greedy and convinced the people America was invincible and exceptional... There aint no such animal..😷

@whowasthatmaskedman The Chinese have been pursuing policies to better position themselves for years.

@SomeMichGuy They long ago worked out it was cheaper and easier to win a war by economic means than military means and learned Japans post war lessons well..😷

@whowasthatmaskedman No, they didn't.

Japan understood its quality problems & welcomed W. Edwards Deming.

We had overpaid auto industry execs, for one, who had never considered the constraints of the sandbox in which their market was positioned.

China makes crap. Unlikely to change.

I hope the death of a fundamentally oppositional China will be the rise of the monied non-Communists...but idk.

@SomeMichGuy Oops. Sorry. over 25% of the content of all "American made" cars is Chinese manufactured Components. True , their current crop of export vehicles are not great. But they are dirt cheap and improving in leaps and bounds every year. Remember. These people arent competeing against Mercedes or even Honda. They are close to Chrysler already.. As were Kia and Hyundai a decade ago. And they dont need to make short term profits, being able to focus on long term market goals.. Now I admit Covid has stalled their efforts as it has upset a lot of plans. But they arent going away..😷

@whowasthatmaskedman You are welcome to buy Chinese as often as you can.

@SomeMichGuy Well I bought Japanese, since we dont make our own.. But I cant guarantee where the brakes and suspension started life.😷

@whowasthatmaskedman Oh, of course!