Kim Dotcom: This may be the most important thread I ever make | Hacker News Reader

Kim Dotcom: This may be the most important thread I ever make

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28 pointsguiambros28 comments

Considering that this thread appears to be a fairly average doomer spiel about US debt and the possibility of losing reserve currency status, Kim’s putting a low ceiling on importance for his future Twitter output. (I’m not saying he’s wrong about the risks, just that he’s not presenting any new ones or offering any new insight.)

Things are much more complicated than this twitter thread suggests. Some parts of the US national debt need to be serviced with interest payments and some don't. Some parts have to be repaid and some don't. Some parts are effectively the government owing money to itself for book-keeping purposes.

I wouldn't be at all surprised if Dotcom's conclusion is roughly true, but he is no economist and shows no sign of understanding the details.

Economists are modern astrologers. The GFC proved that most of them know nothing.

But Kim Dotcom though, he knows.

Deja vu?

https://news.ycombinator.com/item?id=31375924

IIUC he reposted a tweet he wrote a month ago with a few changes... Am I missing something?

I don’t think it’s this dire but the US does need to get its debt problem under control. There was a time when at least one of the parties cared about this, nowadays we doesn’t even have an option.

Also in the next decade I bet we get close enough to GAI that it completely revolutionizes everything

The merits of these claims aside, one thing that I've learned is that some of the people who make these claims do so not based on their merit, but because they hate the current status quo. They hate the USA, they hate the EU, they hate "the elites", "the media", etc etc. They hate western civilization, in a nutshell. Again, the merits aside, I think it's good to keep this point in mind.

As a side note, the most extreme of these people end up as cheerleaders for Russia and China, I guess because "the enemies of my enemies are my friends". You see them a lot online parroting their talking points; keep an eye on this thread and see them materialize.

Unrolled link: https://threadreaderapp.com/thread/1533524778610348032.html

> The United States did not have a surplus or a balanced budget since 2001. In the last 50 years the US only had 4 years of profit.

Keynesian economic theory states that governments save in the good times and spend in the bad. According to that quote, there's only been 4 years in the past 50 that have been good. Something is bullshit or the USA isn't following Keynes.

We stopped following (classical) Keynesian economics because it did not predict the stagflation of the 1970s. Also, no elected official really wants the government to save - because they can score political points by increasing government spending or decreasing taxes. (Yes, this kicks the can down the road, but this is a failure mode of democracy.)

That is dumb. The US isn't raising money by printing it; money issued by the Fed doesn't go to the government to pay for government expenditures, it goes into the economy via the financial system. It eventually works its way back to the government, but not before reducing the value of the money below what it would be without the policy, which is why the Fed does it (to fight deflation expected without the policy), which makes it a singularly ineffective means of finding government.

Marginal government spending comes from borrowing, not money printing. Does money printing make borrowing easier? Sure, nominally, but it increases how much money the government has to borrow for the same real spending.

Also, graphing the absolute size of the deficit is dumb in this context; it doesn't mean anything. To the extent there is a debt or deficit problem, its in the ratio of either to GDP.

And the talk about government profit history compared to the deficit size is weird. The government isn't a business and isn't run to make and return a profit. Government surpluses are a sign of either taxes or borrowing in excess of needs, which for the federal government would be a bad thing. (State governments have different constraints.)

https://twitter.com/KimDotcom/status/1533524789893050368

This one is the pretty classic "long-term growth chart looking scary in linear rather than logarithmic" situation.

Anything that grows at a even a stable % will look very similar to that over time.

I can’t take seriously anything that Kim says.

Ok, let's say he's 100% right. Now what? He's scared a bunch of people without even the smallest bit of a solution. What do we do? Grab a bunch of freeze dried food, get a rifle, find the nearest cave and wait. For what?

This is useless info. Well, maybe the start of an interesting dystrophic book or movie.

People predicting doom and gloom due to debt have been wrong for decades. 2012 was the last big hoopla around this I remember.

What is however true is that the end of several hundred years of Western dominance now comes to a close as the East regains supremacy

The average American hadn’t internalized what this means yet

I'm pretty sure the average American will be dead long before any of this meaningfully affects their lives in a concrete way.

Empty American grocery store shelves is a leading indicator

Why would grocery store shelves be empty if China becomes more dominant? Most non-dominant countries still have stocked shelves.

I think you underestimate how quickly the world can change. You have lived a US-centric life where all of popular, social & political culture has been dominated by progressive, liberal & Western ideas. Your way of thinking has been seen as the gold standard - not that of, say, the average citizen of the Phillipines of Kashmir.

Over the next 10-20 years, that is going to radically shift towards China - a collectivist culture with a set of values diametrically opposed to the social norms you're used to.

You don't think you're going to feel a seismic global cultural shift away from the value system you grew up with?

It’s true I am rating a seismic shift in US culture within 10-20 years to be pretty unlikely.

His premise is wrong. Balanced budgets and profit are not things of government.

If your budget isn't balanced you need to borrow. When you borrow, you have to pay interest.

Paying more and more interest leaves less and less money for services for your citizens. To compensate you must raise taxes and print money.

Printing money inflates the savings away from middle class citizens, and wages lag inflation causing a double whammy. This generates increased inequality, which then puts more pressure on government.

So yes, balanced budgets do matter.

> if your budget isn't balanced you need to borrow.

No.

That is how it works for citizens and households.

That is not how it works for governments and central banks. Their role and their financial apparatus is completely different.

Thinking that it works the same way is a well-known fallacy. The government more closely resembles the _counterparty_ in civilian borrowing.

https://en.wikipedia.org/wiki/Government-Household_analogy

https://www.taxresearch.org.uk/Blog/2019/11/11/the-uk-govern...

https://theconversation.com/why-the-federal-budget-is-not-li...

Thank you. Those links are gems. It's probably worth also noting that the government does borrow a lot (even when it doesn't have to), but often from itself, and also often from the private sector but on terms that are completely different from those available to anyone else. Also that government borrowing generally doesn't cause (or even coincide with) inflation (although I think maybe sometimes it does - this is where I'm not clear on the details).

Those links simply back up that I was correct in saying that our government borrows money, and as a result we have to cover an ever increasing amount of interest payments which was around $1 trillion dollars last year - https://www.crfb.org/blogs/debt-rises-interest-costs-could-t...

So where does that trillion dollars come from? We inflate it away from citizens by printing more money. And that trillion dollars is wasted on interest, it isn't used on any services for the citizens.

So yes, balanced budgets matter.

>That is how it works for citizens and households.

>That is not how it works for governments and central banks.

At no point did I mention households.

Governments absolutely do borrow money - https://www.investopedia.com/terms/t/treasurybill.asp

If they weren't borrowing money, then what do you call the interest they have to pay? Which by the was $1 trillion last year - https://www.crfb.org/blogs/debt-rises-interest-costs-could-t...

Imagine what we could do with that trillion dollars...instead we have to print more money and deflate the savings of our middle class citizens to cover the cost.

Kim Dotcom... the famous Setch Rich conspiracy theorist, hasn't been right about much.

Right or wrong, better expect the unexpected. We'll see then.

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