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Comment by sumanthvepa | Hacker News Reader

Not an American, but I would argue that this level while little bit of a concern is not a huge issue for a superpower that borrows in its own currency and has the military and economic might to crush any party (sovereign or corporate) attempting move away from that system.

You guys are too powerful.

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Some of that power comes from things like US Treasuries being rock solid, and this is the sort of thing that could change that. There are other players out there and other ways the world could trade and fiance.

There's a LOT of reasons for them to not want to do that, and the status quo benefits a lot of other powerful players as well, but screwing up treasuries would be a quick way to change that math.

We are still too powerful, but we're squandering that power alarmingly fast. We have destroyed diplomatic soft power. Our software industry used to be able to rely on getting 50% of their revenue outside the US, but we can't be trusted now, and that market can no longer be counted on.

One can get away with being an asshole only so long.

Maybe so, but our weakness is that we depend on new debt to finance our government spending. If investors stopped buying that debt, the US government would have to make sudden, dramatic spending cuts.

And that's not a problem that's solvable with military might! "Investors around the world are declining to buy US government bonds" can't be bombed the way an oil refinery can be.

Reserve status is based on confidence. The US can't bomb markets into trusting the dollar. They've already begun diversifying away from it.

Some things feel impossible until they happen.

It's not a problem when other nations borrow in the fiat currency. They're being taught to seek alternative, more tolerable regimes to invest in. Once they establish a better alternative they won't come back.

We seem to be lacking in military might lately, and are increasingly losing economic might.

TBF the US military are not magicians. Seemingly everybody except for five people in the White House was aware that you can't successfully invade Iran, no matter how many carriers bombers and bombs you've got. It's peak asymmetrical stupidity to have tried. No amount of additional military spending will fix that. Only 2 1/2 years more to go.

Bingo! Any country borrowing in its own sovereign currency cannot default on debt in that currency, unless it actively decides to do so for political reasons.

Sure, but it can still have hyperinflation.

This is a fantasy. Do you really think lenders would just not notice if America inflated its currency away to get rid of its debts, and they'd just say "aw shucks you got us. Anyways, here's a new loan at the same terms as last time." ?

And what about the American public? Look at how much Americans freaked out over a year or two of 6% yearly inflation. How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?

> This is a fantasy.

How so.

> Do you really think lenders

A government with its own sovereign currency doesn't need lenders. In fact, it is the government that allows lenders to lend money - not the other way around.

> Anyways, here's a new loan at the same terms as last time." ?

Why would they need to get a loan for from a lender?

> How do you think Americans would respond to 30% monthly inflation like in Argentina or Turkey?

Do you think that printing money automatically causes inflation? How does that work? Do people have some kind of magical device, or is it a physical phenomenon that can be measured? Of course not. Printing money only causes inflation if it is spend in a way exceeds the capacity of the market.

So you think the bond market is not important to the USA government?

> Printing money only causes inflation if it is spend in a way exceeds the capacity of the market.

Yes? So you acknowledge that the market has a capacity?

> So you think the bond market is not important to the USA government?

Not w.r.t. to "financing" the US.

> Yes? So you acknowledge that the market has a capacity?

Yes, of course.

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