FIRST: Ever since the days of Alexander Hamilton, investors have regarded the debt of the U.S. government as a very valuable and safe asset. In all but rare and exceptional times, the only return return debt purchasers and holders have demanded from the U.S. government is that it maintain the real value of the wealth they have entrusted to it. The U.S. government should invest this wealth wisely and prudently, yes, in the highest societal-value projects, yes. But the main consideration and the bottom line is that—except in the 1870s and 1880s, and in the 1980s—the U.S. government has never faced a debt-financing constraint as long as long as its investments yield any possible positive return in the form of additional taxes collected downstream at all. Worried that this may change in the future if interest rates rise sharply? Then issue inflation-adjusted consols, and lock in real debt payments permanently:
Just read Ray Delio's preview of his book that there was a link to in the 9/9 substack. Does anyone , including Brad, have opinion on his work? Allen Kamp
I think Dan Davies is making the usual mistake of feeling safe.
No one is ever safe; there are known risks, and unknown risks, and you may (accurately or not) believe your risks are effectively managed. (Civilization is a tradeoff; you give up direct agency and immediate benefit for collective risk reduction and indirect benefit. People have to believe their risks are being well-managed to grant civilization legitimacy. This is an intractable problem when their construction of risk includes "civilization works and my violence-based construction of status gets disallowed".)
Social relations oblige you to care about the other party's construction of security; business relationships do not, because this is necessary to reduce the cost of the business relationship to level where you can engage in bunches of them, and as soon as you're dealing with some level of complexity -- some level of division of labour in the economy in which you are embedded -- you must do this. The idea that there's always been a sharp distinction between social and business relationships is risible; it got created over time, in little steps, as economic complexity increased. (It goes away as economic complexity decreases, too.)
So the core, critical thing is not _debt_ -- debt is a common solution to ritualizing away the "not a social relationship" part, because it's simple and easy to explain and thus copy into the future across heirs and other changes in circumstance. The core critical thing is the construction of security, and we're currently suffering from a belief that money is agency, so if you have a lot of money, you are inherently safe. As anyone paying attention to the current supply chain issues -- anyone with a cat with particular tastes, in the US at the moment -- can tell you, money is only trivially convertible to agency in the context of a functioning civilization.
If you haven't got that functioning civilization, money is not agency and nigh-all the constructions of security people desperately want to make work don't. Debt relations lose legitimacy. The economy requires some other basis; a fascist will certainly appear to offer one new basis, but you have to be deeply incompetent to want that one.
Not as incompetent as you have to be to insist that the old one will keep working when it isn't, though.
Just read Ray Delio's preview of his book that there was a link to in the 9/9 substack. Does anyone , including Brad, have opinion on his work? Allen Kamp
I think Dan Davies is making the usual mistake of feeling safe.
No one is ever safe; there are known risks, and unknown risks, and you may (accurately or not) believe your risks are effectively managed. (Civilization is a tradeoff; you give up direct agency and immediate benefit for collective risk reduction and indirect benefit. People have to believe their risks are being well-managed to grant civilization legitimacy. This is an intractable problem when their construction of risk includes "civilization works and my violence-based construction of status gets disallowed".)
Social relations oblige you to care about the other party's construction of security; business relationships do not, because this is necessary to reduce the cost of the business relationship to level where you can engage in bunches of them, and as soon as you're dealing with some level of complexity -- some level of division of labour in the economy in which you are embedded -- you must do this. The idea that there's always been a sharp distinction between social and business relationships is risible; it got created over time, in little steps, as economic complexity increased. (It goes away as economic complexity decreases, too.)
So the core, critical thing is not _debt_ -- debt is a common solution to ritualizing away the "not a social relationship" part, because it's simple and easy to explain and thus copy into the future across heirs and other changes in circumstance. The core critical thing is the construction of security, and we're currently suffering from a belief that money is agency, so if you have a lot of money, you are inherently safe. As anyone paying attention to the current supply chain issues -- anyone with a cat with particular tastes, in the US at the moment -- can tell you, money is only trivially convertible to agency in the context of a functioning civilization.
If you haven't got that functioning civilization, money is not agency and nigh-all the constructions of security people desperately want to make work don't. Debt relations lose legitimacy. The economy requires some other basis; a fascist will certainly appear to offer one new basis, but you have to be deeply incompetent to want that one.
Not as incompetent as you have to be to insist that the old one will keep working when it isn't, though.