I know this happens occasionally and I may just be seeing a pattern that’s not there, but it seems like a noticeable uptick in leaders who don’t understand why people they just fucked over won’t trust their IOUs anymore
Was really glad that this article mentioned Liz Truss at the end, because I think the dynamics are absolutely the same. It was painfully obvious (indeed, the current PM made it clear in the summer) that cutting taxes, and having no way to pay for them, in the midst of rampant inflation is an idiotic idea. I read elsewhere that it's almost as if Truss and Kwarteng formed a pact in college saying, "if we ever make it to the top of government, we'll prove that supply side ideology works!", and then completely disregarded the current economic climate.
I just see it more and more over the past decade or so that things that you know are not going to end well (see also crypto deposits paying 10% interest) somehow snowball because it's easier to surround yourself with "ideological cultism".
Let's see what happens here in the U.S. :-/
I can definitely understand arguments and debates around the proper level of taxation. But while it may be acceptable and even a good idea to substantially lower taxes and raise the deficit during periods of low inflation, it is the height of idiocy to do that during a period of high inflation.
“CBO estimates that Public Law 117-169 will result in a net decrease in the unified deficit totaling $58.1 billion over the 2022-2031 period. That decrease in the deficit is estimated to result from an increase in direct spending of $50.6 billion and an increase in revenues of $108.7 billion.”
Money needs to be taken out of circulation, not added.
... and who has a large balance of historical debt?
A similar reversal of roles can be seen in Germany, where the greens economics minister surprised the business community with effective solution oriented "realpolitik" and the free Liberal (a pro business/free market party) finance minister is blocking decisions for purely ideological reasons often against the recommendations of large portions of the business community.
https://www.spectator.co.uk/article/liz-truss-hasn-t-underst...
This is just statist feudalism exposed.
Modern technology is also amplifying populism, which is who the word 'Truss' ends up in all of this, because however much one may agree or disagree with the contents or orientation of the mini-budget, it was woefully misrepresented in the press (almost universally) in an excessively populist manner.
Big economic/political/tech shifts leave people mistrusting old institutions that naturally aren’t well equipped to handle the new situation. The institutions screw up, electors lose trust, and new folks take over. The new folks (being new, and sometimes being the less-competent rejects) tend to misunderstand the institution, and change things that aren’t necessary; they overreact.
What you’re seeing is just the overreactions: they’re knocking out walls, and sometimes they hit the wrong wall.
But you also don’t see the benefits because effective bureaucratic adaptation is boring.
The thing I wonder about is if the seeming endless screw ups are because we have more change today, more morons, or we just see it all more.
We're using the wrong language, the wrong source control, the wrong methodologies, the wrong libraries, and so on.
If the flavor of the month is say BoringSSL we should be working to switch all our code from OpenSSL and so on.
Usualy it takes a bit of effort to bring them up to speed. There are positives and negatives to all choices. Usually I assign them the task of coming up with 5 downsides to their suggestions.
Articulating the downsides helps to show you understand the whole impact of an idea, and thus aren't making a "buying the koolaid" decision simply based on popular opinion.
If the current high-inflation, high interest rate environment sticks around, a whole lot of things are going to end up very different, because the bond investors won't be so desperate for yield and so there will be a penalty for disrespecting the bond market. If it doesn't stick around (which seems to be the current aggregated guess of the bond market) then this will be a brief blip. Trillions of dollars rest on the answer to that question.
If you want an example of now vs then go try to buy some cybersecurity insurance for data breaches or flood insurance.. in those circumstances things have legitimately changed!
When they win, they are bad at their jobs.
In France, you cannot escape expensive white elephants: the population might even vote for one, like that Airport in the middle of nowhere they wanted to revitalize the dead region. These issues become political eventually with both sides veering to the irrational to defend, or attack, the expensive project. Since we can all vote, we end up balancing left and right, project and no project, cancelling stuff half built, starting others.
In dictatorship, the absurdity is different: sometimes, no matter how silly the white elephant (the HK Macau Zuhai bridge is a good exemple: no car can ever get 3 license plates, three driving permits and three driving insurance, so no car can ever drive on it), the politicians will stubbornely see it to completion, gloat in intense glory whatever the cost overrun when it's done, and move on with the project standing there unused.
I dont know what the best model is, I only know there cannot be perfection: we cannot always take good public decisions, always stick to them, always be right about the future. We can only fail in absurd waste sometimes.
I think, some countries are broken by design, others, because of technical progress, have to change their borders and/or internal structure, but not many lucky enough to do this in time.
https://qz.com/1274875/how-argentina-went-from-selling-100-y...
But my point is more that investors haven't blacklisted them forever, just because of prior defaults.
I don't know whether the interest on this particular bond is still being paid at the quoted rate, or if it was "restructured", since they did default again in 2020:
https://www.dw.com/en/argentina-in-default-for-second-time-t...
The current clear demonstrations in the world, on both the global and domestic stage, are endless.
Direct, mean, ALL decisions will be made by referendum, using latest technologies - blockchain, crypto, distributed document editing, govt in smartphone, etc, so everybody will have opportunity to affect decisions.
I think, this is more question of right geography, so will not work https://en.wikipedia.org/wiki/Gerrymandering
But unfortunately, in real world, exists deficit of good leaders, and it is much worse on local govt level, because this is like second league (supreme league are govt of country, country parliament, top scientific organizations, military tops, and tops of top corporations).
Institutionalist right wing politicians understood the value of trust, the new right all over the world is generally not institutionalist anymore, so they break things and then wonder why everyone is freaking out. When the useful idiots start to actually win elections we learn what idiots they are.
Unless a politician fucks up so badly that they completely ruin their party's reputation, people will keep voting for whichever candidate their favorite party endorses.
Parties have gotten clever, too. They'll quickly throw a troublemaker overboard than risk ruining the whole party's reputation. The conservatives in UK quickly got rid of Liz Truss. Few members of the People Power Party in South Korea are even trying to defend Kim Jin-tae now. Likewise, the party has more or less abandoned the head of Yongsan-gu district who is currently taking a lot of heat for October's Itaewon disaster. The party leaders are probably too busy arguing who to endorse in the readily foreseeable by-election.
Ignoring norms and escalating worked for Johnson, it worked for Trump, it worked for Putin, and the wealthy individuals and orgs who back them love them for it.
The belief that you can wish debt away is rooted in the Keynesianism/Reaganomics of the past five decades. MMT basically just accepts the realpolitik that the enormous handouts to the financial industry will never be stopped, and says that we might as well use some of the new money deliberately. From my economically conservative Austrian perspective, at least MMT appears intellectually honest. MMT also corrects/shortens the feedback path from monetary creation to price inflation, rather than relying on the roundabout feedback path that has created this ever-growing asset bubble.
I advocate replacing slow burning inflation with negative interest on cash. When that is done, debts can be repaid.
MMT is attractive to essentially all politicians. It says you can spend without consequences. You don't have to spend that on a welfare state although many MMT advocates take this line. You could just as easy spend it on the military or surveillance.
Really? I thought it said that money exists because a government prints it, so a government cannot default on a debt denominated in its currency unless it chooses to, and that inflation is a second order effect resulting from the money supply increasing faster than the pool of goods and services it's chasing.
The name implies that it is mainstream modern economics, but it isn’t.
So the entirety of that statement is toothless.
The second order effects that limit money creation are highly fluid but the fact that governments with their own currency cannot default is set in stone.
Well, inflation is currently sky-fucking high, so right now is when MMT would say you do have to worry about deficits and debt.