And meanwhile there is always a lot of US debt that needs to be rolled over (i.e. re-issued to a willing buyer.)
Except for the data point of today's 10-Year Treasury Auction which had a normal, usual result.
Trump is just a product of this right-vs-left volatile maximalism, represented as woke-vs-maga, which is fully on-track to get worse. Try guessing who will be the next woke maximalist and maga maximalist candidate, and what Executive Orders it leads to, which the US is pretty much ruled by at this stage.
Good luck with flip-flopping maga and woke Executive law as a country.
Trump is notable because he is unusual for the US.
This is a product of duopolistic parties AND social media algorithms. Outrage. Outrage gets clicks, gets money, gets votes.
The two-party angle really has very little to do with it, because there’s not that many “true moderates” in the electorate. Research shows that the “center” is comprised of people with a heterodox mix of views, but they’re not particularly mushy about any specific view.
France embraced the chaos and made it a point of pride, while China finds it absolutely terrifying and unproductive - but my point is that the population is exactly the same, scarily similar, in all its funny diversity, but the system is not a mirror of it, just an awkward model built on compromises: France wants to maximize representability and China wants to maximize order.
The US system is pragmatic: need to win, need to give the people a feeling of choice but not give them any sort of real power of structural change, and they split on a strange line, for most of the world, that I have even trouble to describe myself. I think Trump pleases people there because he pretends to be a structure reformist, which sounds fresh.
It's not the people who can't be diverse politically exactly, it's more complex.
I don't think this holds up to any sort of scrutiny. Brexit, plenty of other examples across the world
> the US is politically unstable with its two party democracy
Somewhat tangential: I see two serious flaws with the US democratic system: (1) The supreme court is too powerful. If you look at many other highly developed, democratic nations, their supreme court (or equivalent) is much less powerful, and they are no worse for it. I have seen that in both semi-presidential and parliamentary systems. (2) The US president is too powerful.
Lots of countries settle trades between each other using dollars.
Making it harder to get those dollars will leave them seeking to use something else to trade.
Can't really count on more and more currencies these days. Including our own here in the US.
Even if dollar gets weaker, better to have less debts and more industrialization
Inflation and the "hollowing of your industrial base" are not inevitably connected, and in the case of the USA, have almost no connection to each other at all.
https://www.msn.com/en-us/money/markets/aggressive-tariffs-f...
https://www.msn.com/en-us/money/markets/trump-threatens-100-...
https://www.bloomberg.com/news/articles/2024-12-02/south-afr...
These developments are going to be interesting.
Is it? They have some intra-government spats, but I hadn't heard that this threatened the stability of the whole country yet.
> which yes, brazil and India alone may hold up a stable reserve currency.
Also several other countries which joined the last year or are in the process of joining. I believe at some point, the official name was also changed to BRICS+
It's only the shit that we want to buy retail on Amazon US that are crazy expensive. And a big chunk is ICMS, that is state wide, not federal tax.
On top of that DHL charges a premium.
I know because sometimes I can buy directly using my prime subscription my beloved Nintendo games (that I hope I can buy directly from Asia now and cut one big middleman).
Brazil's deficit in the last decade accumulates hundreds of billions USD already, but only benefits a few. Yet as a good dogs we feel relieved that is only 10%. But you forget our biggest export products are already 35% on top what was before (steel).
This is a oligarchy fight that will splat on everyone, including my eggs since we quintupled the exports to cover someone's asses.
By the way, why do we need to buy expensive ethanol abroad since ours is cheaper, but in my state ethanol is never cheaper than gasoline?
But Trump also managed to devalue the dollar so much, we won't even feel the difference.
This is incorrect when your national currency happens to be the global reserve currency. All it requires is for the other country to be willing to accept dollars in payment.
[ EDIT: even that's wrong. All it requires is someone being willing to accept dollars, either in payment or as part of a currency exchange. ]
However, we define trade deficits to exclude financial transactions for various reasons.
You cannot import something without exporting something else. That something else, in almost 100% of the situations, is dollars.
I'd be happy to see a link that does.
Trade networks allow for stable equilibriums with no individual country having equal trade with any other county. To simplify, A on net sends money to B, and B buys stuff from C with A’s currency, C then buys stuff from A in A’s currency returning that money to A. However, people want to operate in their native currency and there are a lot more than 3 countries in the real world so you end with intermediary currency exchanges changes going on. In theory supply and demand steps in to balance things, in practice cash flows rarely actually sum to 0.
International finance is almost entirely about balancing the current and capital accounts [1].
The trade deficit is just one part of the current account [2]. Zeroing out the trade balance ceteris paribus requires a change in the capital account, i.e. foreign ownership of domestic assets and/or domestic ownership of foreign assets. If we’re just reducing the current account with tariffs, that means reducing both. Necessarily. This is one of the closest things to a law economics offers because it’s based on identities. The only run-around to it is the reserve account printing domestic currency, and we know how that goes.
[1] https://www.investopedia.com/ask/answers/031615/whats-differ...
Is it that hard to admit that you didn't properly read the comment you responded to?
And so far we've been cool with that because it:
- continues to make the USD the dominant global reserve currency, strengthening our economic and political clout
- allows us to borrow cheaply to finance our military and whatever else we're spending $ on
A journalist successfully reverse-engineered the likely formula used to arrive at the figures for each nation, and it's not only implemented stupidly, it's also wrong from first principles. It's the same thing an actual school child might come up with if you asked them to. This is the same kind of "economic policy" cooked up by dumbasses on reddit who sincerely believe they are qualified to "fix US trade."
If our congress wasn't also packed full of ineffectual liberals and other fucking idiots, he'd be impeached by now for sheer incompetence.
It's the same issue we had in the last Trump admin. This nonsense is elevated to undue credibility by serious people discussing it seriously. It shouldn't be debated, it should be mocked, relentlessly, mercilessly, cruelly. As should Trump himself, as should his supporters, as should his sycophantic followers. Mock, belittle, make fun of, bully, parody, just continuously until every single one of these people refuses to approach a microphone.
In their world, any "evidence" to the contrary must be manipulated or misinterpreted, because as we all know the sky is green, the ocean is -- oh, he said it's yellow now? And the sky is red? Hah, of course! We knew it all along, it was the plan, stupid!
And meanwhile...
Most of the democrats' tiny minds struggle to operate outside of a context of rigid rules and procedures. A context of arguing a point and getting at least some degree of fair debate in return.
But this is another age of populism. It doesn't matter what you argue, on either side. Debate transforms, serving only to transmit your message to your side, ideally while inspiring them and demoralizing the enemy. It matters that you seem confident and powerful while you say whatever you're saying. It matters that you seem invincible and indefatigable.
Their world won't be back for quite some time, assuming something at all like it sticks around. They'll keep operating like robots, not understanding why an excellent diss or crude mockery matters more than 1000 additional volumes of "proof" about something in contention.
We think this is stupid because it kinda is, but this behaviour is part of the human traits and possibly is adaptive behaviour to enable the very possibility of us living in large societies.
I've always been in awe at the (absolutely crazy if you ask me) concept of money. The fact that we accept to give up possessions or time in exchange for the promise that anyone in the future will provide something equivalent because we just show some token/proof (which in itself are intrinsically valueless: sticks, stones, minerals, papers, now bits...).
We've been educated to be a bit suspicious and maybe show a slight contempt for it, probably to avoid being inelegant and also particularly because a lot of big owner of it are seen as not necessarily deserving of it.
But from an evolutionary perspective it's absolutely stupefying. And at its core its extremely positive. It shows absolute trust in our peers. It's probably one of the few behavior that really binds us together.
One could argue that it's the actually one trait that really distinguish us from other animals.
No offense intended, but I think the way you're explaining this is a little overly silly. Value credit was a natural evolution from the barter system and it makes perfect sense. If you wanna run down to the 7/11 for a slushie, do you want to bring a $10 bill, or a live chicken? I definitely vote $10 bill, especially because there's a non zero chance the cashier wouldn't want a chicken anyway, even if it's technically worth enough to trade for a slushie. Money just streamlines this whole process and makes even exchange for goods infinitely more efficient for all parties involved, and I think that's why virtually every organized society we've found evidence of has some type of currency, going back thousands of years.
Now, that's not to say I don't agree that the monetary system as it exists is borderline a crime against humanity. Capitalism and it's various knock-on effects, starting plus or minus with colonialism depending how you want to slice it, is, I think, the most horrific thing we've done to each other in our entire history as a species. But I don't think that's an indictment of money strictly speaking.
You can take any introductory banking system course and it will tell the same story. (I recommend Economics of Money and Banking by Perry G Mehrling)
It's not really a finished exchange.
Money represent a debt.
It's a one sided exchange against the promise of the completion of the other side of the exchange in the future (by someone else in this case).
It's like the amount in your bank account is not really money. It's a debt from the bank: the promise that it will deliver this amount as cash if you ask. (M1)
And money is so liquid that we never think about it that way. Except during hyperinflation periods. And bank account are so solid that we think about them as cash. Except during bank runs.
As a side note, the theory that barter really meaningfully took place is being challenged as there is no real evidence of this.
That said, as a consumer, I have no comprehension of how that would actually work. Do I get my guaranteed money 7 days after C-Day or 6 months after C-Day?
If an EMP blitzes my bank's electronic hard-drive records, is it my responsibility to prove I had X dollars in the account? If so, how? I can easily print a statement, but a statement clearly easily be forged. If it's the bank's responsibility, is there any guarantee they maintain physical and up-to-date records? Is there any regulation mandating they keep such records?
What happens if hyperinflation occurs and the 250,000 guaranteed by the FDIC is enough to buy a week's worth of groceries?
There's a lot of unknown variables and potential fragility in the system.
In other complex realms like software engineering, we get evidence that those complex systems really only have the budget to build the "happy path" and lawyers fight the cases when customers get damaged by the "unhappy paths."
It seems like our monetary system is on the happy path and very few times have the unhappy paths been tested.
Also the love affair with tariffs comes from a guy that wrote a book with his ideas and in that book he made up economic expert to support his views. (Ron Cara)
Someone was dumping, we don't know who or why. But the answer to that question is a lot (a lot) more important than people realize, and certainly more so than the immediate market motion or tariff policy.
Honestly if the answer was "The PRC was unloading bonds to send a message" that's sort of the best option, as they have limited wiggle room to continue to do so without wrecking their own financial situation.
If it's "The market as a whole lost confidence in US debt", then we're fucked no matter what Trump does next.
The problem is that China holds only 2.6% of US Debt as of February 2025. Can they leverage that small a percentage to make a market move like that? Especially assuming they didn't dedicate all of their holdings to that action?
https://x.com/Nihonpolitics/status/1910096159835594786?t=RWB...
If you want the world to trade using your currency. You have to give them dollars. That is buy something from them. That is, imports.
All of this comes a section of US politics not being able to understand why the dollar standard even exists.
Well, also, the holders of our debt now need liquidity. So they sell this famously-liquid asset we've been selling them for decades.
There's also a more basic answer to why US debt got more expensive. There is no such thing as a "trade deficit". You cannot import something without exporting something else. That something else, in almost 100% of the situations, is dollars. What do you do with dollars, if there's nothing you want to buy? You buy debt. So, every trade deficit ultimately tends to export debt. We have long known that government debt is proportional to trade deficits.
The problem with tariffs, in this context, is that they are being used as a signal that we don't want to sell people dollars anymore, explicitly saying "no more trade deficits". In doing so we are choking off the supply of dollars used to buy debt (rather abruptly), so that US debt is chasing fewer dollars and has to give a bigger yield as a result.
What's worse, is that because we are signalling that the tariffs are meant to be permanent, and we're seeing reciprocal tariffs as a result. When that happens, it means that using dollars in the future will purchase fewer US goods, so the time discount of money has gone up too. Further driving up yields to make bonds attractive enough to sell.