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Comment by 1970-01-01 | Hacker News Reader

1970-01-01

What should happen, and nobody is talking about this, is the USA is severely downgraded in its overall credit rating due to an unhinged and ongoing "fire, aim, ready" self-audit.

https://en.wikipedia.org/wiki/United_States_federal_governme...

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The last credit downgrade of the US by a major ratings agency was by Fitch in 2023. They cited projections for the US deficit to continue to rise, due to projected weaker revenues and increased spending.

https://www.fitchratings.com/research/sovereigns/united-stat...

The deficit hawks don't understand how money works. Everything about DOGE and their mission has a fundamental deep misunderstanding of why governments with their own currency must have deficits. Literal accounting 101. Unfortunately Elon has an economics degree, which means he is completely uneducated in accounting.

No need to infatilize their behavior by pointing to a lack of education. If he can head up several corporations, he can read a balance sheet. This is smash and grab politics, the things that happen in places like post-USSR when there's a power vaccuum, everything is up for grabs, the courts are powerless and territories start getting carved up by a coterie of connected technocrats. How long was it before Yeltsin's uneasy alliance with oligarchs crumbled, paving the way for a ruler who wasn't going to make the same mistakes?

It doesn't appear that DOGE is handling the problem with the appropriate amount of care or analysis, but the US does have a deficit problem. The issue is not simply that the US has a deficit, nor have I heard anyone argue this point, but that the deficit to GDP ratio is around twice as large as the historical average, and is projected to continue to increase.

> Everything about DOGE and their mission has a fundamental deep misunderstanding of why governments with their own currency must have deficits

DOGE has nothing to do with deficits, they're not even bothering to count it properly [1]. DOGE will remake the federal government for Musk's benefit. That's why he's using cannon-fodder DOGE bros instead of his best and brightest. That's why the collateral damage isn't of principal concern, and why they're moving quickly: they need to finish their work before checks and balances start swinging.

[1] https://www.nytimes.com/2025/02/18/upshot/doge-contracts-mus...

What does he think will happen after four years? Trump is old and can escape accountability by dying but most of these toadies are middle-aged.

> What does he think will happen after four years?

Musk will honestly probably be fine. These kids will get hammered, as they should, at the very least with a decade+ of litigation and possibly prosecution.

The only consequences that might last will hit Tesla in the form of tariffs and bans. But he seems to be fine raiding Tesla as a piggy bank to fund his ambitions on Mars and in politics.

>why governments with their own currency must have deficits

I'm not sure I understand this myself. Can you elaborate?

This is news to me that “accounting 101” demands you spend more than you bring in. Any reasonable person would realize you can only do this for so long. Can you explain this in great detail?

Look at the accounting equation (assets = liability + equity) and imagine a two entity economy. One is Joe (the government) and the other is Bob (private sector). Joe controls Joe Bucks, which MUST be used by Bob to pay his liabilities (taxes to Joe). Where does Bob get the Joe Bucks from? The answer is obvious, from Joe! Ok, so where does Joe (who controls Joe bucks) get Joe Bucks from? I'll let you figure that out (hint, one person's liability is another person's asset)

I was thinking the same thing. If this even slightly jeopardizes America's ability to pay off its debt, the entire world will suffer. Something that occurred to me from talking to Americans online is that most of them don't realize just how much soft power they have across the world. I really feel that China becoming the global superpower might end up becoming the least bad option if America keeps destabilizing.

Nice username. I thought HN was broken for a second.

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