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Culture War Roundup for the week of January 13, 2025

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The alternative is default or hyperflation.

We're already spending > $1 trillion per year on interest on the debt. The government spends more than 140% of what it brings in each year.

This is a fiscal doom loop unless something stops it.

Surely too much debt is a problem, but cashflow issues be solved by either reducing spending or increasing revenue. And when you're talking about a government's budget, increasing revenue can be some combination of increasing tax rates and increasing tax base/GDP. Obviously, much of political disagreement is over exactly which policies will maximize GDP, and Republicans routinely state they believe things like DOGE will increase economic productivity by getting the federal government out of the way. On the other hand, the Democrats believe better regulations, which require funding the federal government, will maximum GDP. And they're in favor of raising taxes.

Additionally, it's unclear the current situation is "too much" debt. The Total Public Debt as Percent of Gross Domestic Product and Federal government current expenditures: Interest payments charts don't look great. On the other hand Federal Outlays: Interest as Percent of Gross Domestic Product looks high, but nowhere near a historical high.

Maybe I have a higher threshold for what "hyperinflation" is, but I think you can print your way out the debt without getting all the way there.

I do wonder about the second order effects: The USD is the reserve currency, central goverments have large stockpiles of it, and, all over the world, entire asset classes (like real estate) are denominated in it.

It's a scary time to be long bonds. Of course, it's a scary time to be long stocks as well.

Gold is the default alternative right now; it’s not hard to imagine a role for bitcoin as well.

Either way, we’ve seen inflation in reserve currencies before. It’s survivable.

There is no difference between default and hyperinflation, at least not as it affects the average citizen.