News for hackers. Stuff that matters.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by aibot923 on Monday February 03, 2025 @07:26PM (#42925523)
Higher relative debt = higher relative interest payments.

Go high enough, interest payments consume the entire federal budget. There is no way out except revenue growth (infeasible without breakthrough productivity improvements), taxation, and printing money (equivalent to taxation). Before that point, other bad things happen such as creditors losing faith in the government, making debt more expensive and destabilizing the dollar's position as global reserve currency.

Over the last few decades, debt has continued to rise as a percentage of the federal budget, and appears that trend will continue without drastic action.

Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by amrocha on Monday February 03, 2025 @11:00PM (#42927730)
Barring massive political instability, nobody is ever going to lose confidence in the dollar, regardless of debt ratios. Japan has a debt ratio of over 300%, economists have been predicting a crash and capital flight for decades, but none of it has come to pass.

At the end of the day, the Japanese market is huge and people want access to it. Same thing goes for the US.

If the private market doesn’t want bonds, the central bank can purchase them. That’s not inflationary. What is inflationary is how the government then spends that money, but that’s true for any government spending, regardless of how it was financed. Either way, the debt ratios is literally meaningless.

Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by mecsred on Tuesday February 04, 2025 @11:24AM (#42934479)
Hindsight is 20/20, so let's use it. How many times has the "too big to fail" hedge worked out favorably for everyone involved?
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by amrocha on Tuesday February 04, 2025 @02:42PM (#42937531)
There is no failing for a country with a sovereign currency. Fish can’t drown in the sea. A country is not a business.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by mecsred on Tuesday February 04, 2025 @02:51PM (#42937649)
What do you mean "there's no failing for a country with a sovereign currency"? There are many, many examples of countries failing. Some of them had sovereign currencies. Sure they can't "run out of money" if they can print more. Along with many more examples of being able to adjust internal values and metrics. This is a very different thing from not being able to fail.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by amrocha on Wednesday February 05, 2025 @12:09AM (#42944073)
I’ll be clearer. The failure mode that you’re talking about, where debt ratios are so high that a country isn’t able to service its debt, is economically speaking impossible. This isn’t “too big to fail”, it’s the system working as intended.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by mecsred on Wednesday February 05, 2025 @09:51AM (#42949220)
I'm not sure why you think that's what I'm talking about, because I never brought that up. In fact I agree with that point. The apparatus will never report a failure because it has an incentive not to. The whole system is built and described in a way to make failure seem impossible because confidence is necessary for it to work. But when numbers and reality don't match, reality wins.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by amrocha on Wednesday February 05, 2025 @07:59PM (#42957629)
That’s not what I said at all! There’s no failure being hidden, public deficits are a normal feature of fiat currencies.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by mecsred on Friday February 07, 2025 @10:03AM (#42973394)
Again, I'm not making any comment on the deficit. Literally never brought it up. I'm talking about people losing confidence in the dollar.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by tanseydavid on Wednesday February 12, 2025 @06:38PM (#43030989)
>> There is no failing for a country with a sovereign currency. Fish can’t drown in the sea. A country is not a business.

So, a country is not a business but it is comparable to fish?

Are you seriously claiming that there is no precedent?

Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by aibot923 on Tuesday February 04, 2025 @01:16PM (#42936377)
The interest still needs to be paid. That requires revenue growth, taxes, or printing money. Taxes and printing money makes everyone poorer - the IOUs of yesterday coming due. Japan has had many challenges over the past few decades.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by amrocha on Tuesday February 04, 2025 @02:40PM (#42937503)
Money creation is necessary in a healthy economy. It makes all of us richer when the government spends money on infrastructure.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by tartuffe78 on Tuesday February 11, 2025 @09:09AM (#43012868)
We're not spending money on infrastructure, we're spending it on entitlements.
Re:The Young, Inexperienced Engineers Aiding Elon Musk’s Gov... by pcloadlett3r on Tuesday February 04, 2025 @03:50PM (#42938417)
> If the private market doesn't want bonds, the central bank can purchase them. That's not inflationary.

Central bank buying bonds and increasing money supply absolutely is inflationary. That is precisely how FOMOs work, with the end goal being increasing or decreasing money supply depending on inflation and labour market. So if you already have stubborn inflation and you have a fiscal crisis then unmooring inflation expectations by lowering rates is exactly what you don't want to do (risk becoming a banana republic that inflates away it's debt). I don't think this will happen in the near future but it is absolutely a risk and you'd be foolish as a central banker not to consider it.