it would be better if the stock market crashes us into a consensus to impeach and remove before the dollar and US Treasuries are permanently discredited.
@interfluidity short term doomer perspectives on the harms of quantitative easing (which I assume you're referring to here?) almost never pan out.
@realcaseyrollins no, i’m not referring at all to quantitative easing, which is at this point ordinary and nondisruptive. i’m referring to madly scribbling and rescribbling tariffs, negotiating in ways that even usually reserved allies describe as extortion, generally behaving in ways that abruptly convince the rest of the world they don’t want to hold US paper. that might be good for trade balance, could even drive us into surplus! but via a miserably disruptive path.
@diego okay. but political consensus in the US would be badly shaken by a stock market crash, which even people who have little understanding of the stock market know is a disruptive event that reflects and portends economic difficulty.
but in fact, stock market fluctuations are far less dangerous than what’s happening to the dollar, US Treasury bonds, and gold.
it’s less costly, but more politically salient, so a useful signal.
@interfluidity @diego Yeah people know that generally red=bad
Also it shouldn't be underestimated how correlated bad #stockmarket seasons are usually correlated with a poor economy and high prices, it's a big deal because it truly affects everyone
@realcaseyrollins @interfluidity @diego
Lots of ignoring facts and ignorance in this disucssion.
The US dollar has been on a path to collapse for a very long time. Look how much value it has lost in the last 100 years.
The "allies" that are complaining about extortion, have been ripping off the US for almost that same 100 years.
Even the guy who came up with the theory of comparative advantage, David Ricardo, on which free trade is based, acknowledged that it wasn't absolute and 1/2
@realcaseyrollins @interfluidity @diego could not survive if it was unidirectional, without destroying the nation that was open without getting openness in return.
Suppose we buy 100 trillion dollars worth of goods from other coutries and only sell 50 trillion. 50 trillion dollars goes out, reducing our money supply, which than has to be increased. This deficie is partially funded with asset sales and partially with debt and partially with expansion of the money supply. first 2 lower our 2/3
@realcaseyrollins @interfluidity @diego
lower our wealth, the last is very inflationar and erodes the value of the dollar.
Brics was created long before tariffs and was a portent of the dollar losing its position as a world currency.
The exponentially growing national dept is also destroying the value of the dollar and will all on it's own, lead to collapse eventually.
The status quo is the problem. Restoring trade balance and high wages is the SOLUTION, not the problem.
@Phil @realcaseyrollins @diego The dollar was not on remotely a path toward collapse until your movement put it there. Sure, a dollar has lost a lot of value over the last hundred years, if you kept it in a mattress. If you put it anywhere else — earned short-term, credit and interest-rate risk free Treasury bill rates — its value has increased.
From me, https://www.interfluidity.com/uploads/2017/10/Fiat-Is-Effective-Minitalk-light-edit-to-share.pdf 1/
@Phil @realcaseyrollins @diego It’s true that there’s a strong case for keeping trade in general in overall balance, though there are reasons for time-limited exceptions.
I’ve spent the last month making that case:
https://drafts.interfluidity.com/2025/04/20/keynesian-compromise/index.html 2/
@Phil @realcaseyrollins @diego But there is no coherent case for insisting upon and imposing *bilateral* rather than *overall* trade balance. Which is what this administration has absurdly, destructively, I’m sorry but stupidly, tried to impose. 4/
@Phil @realcaseyrollins @diego The United States should broadly buy roughly as much as it sells. It matters not a whit if it buys more from Lesotho than it sells to Lesotho as long as it sells to somebody else more than it buys from them. 5/
@Phil @realcaseyrollins @diego The overwhelming majority of ways the world could be in overall balance — all countries in overall balance — involve a lot of offsetting bilateral trade imbalances. That is the space we want markets to explore and optimize over. Insisting on bilateral balance between all countries is the international equivalent of barter. You only trade where there is a double coincidence of wants. 6/
@Phil @realcaseyrollins @diego But the Trump Administration wants to personalize international trade into trade partners taking advantage, or ripping us off, when the only party that could have intervened to insure the US remained in overall balance was the US itself, and it would not have been hard, we just didn’t want to do it, persuaded ourselves (wrongly!) that we shouldn’t. 7/
@Phil @realcaseyrollins @diego So it destroys friendships and alliances, and takes down the US economy, by idiotically deploying tariffs intended to immediately bring all trading relationships into bilateral balance. 8/
@Phil @realcaseyrollins @diego If what you want is a world of overall-balanced trade (which you should!), you should be perfectly comfortable with BRICs-ish diversification from the dollar as reserve currency to a wider basket of reserve assets. 9/
@Phil @realcaseyrollins @diego If a single issuer (think country) is to be the reserve currency provider, then it *must* run a current-account (usually trade) deficit, in order to supply the world with the reserve asset it demands.
I suspect you’ve encountered it. This is known as the Triffin Dilemma https://en.wikipedia.org/wiki/Triffin_dilemma?wprov=sfti1# 10/
@Phil @realcaseyrollins @diego My view is that the benefit of a world with overall balanced trade outweighs the benefit to the US of trying to maintain a near monopoly on reserve asset provision, so I prefer we go for overall balance rather than continue to run large deficits to supply the world with dollars. /fin
@Phil@freeatlantis.com@interfluidity @realcaseyrollins @diego
And people have been writing about the demise of the dollar for years.
https://www.amazon.com/Coming-Collapse-Dollar-How-Profit/dp/0385512236
something that isn't sustainable, will ultimately stop. The status quo is NOT sustainable.
You ideas have no practical method of implementation and are just (not that) pretty words on a page.
@Phil @realcaseyrollins @diego Mistaken people have been making the same mistakes for a very long time.
(Except, despite their mistaken reasoning, this administration may make their alarmist predictions come true after all, by themselves wrecking what they had predicted would fail.)
@Phil @realcaseyrollins @diego It’s not very hard to impose capital controls. China has done it for decades. There’s nothing impractical about imposing balance via the capital account unless you are ideologically attached to “free movement of capital”.
@interfluidity @realcaseyrollins @diego
Throughout my entire life, giving government long term control over anything as been a disaster. So I would not support anything that requires government control.