Absolutely no one serious thinks that, but when you feel like you need to diversify you don't have to find a like-for-like replacement. Any port in a storm.

Just consult Google. All a country has to do to find itself on the receiving end of punishing Chinese trade actions is being mildly critical of China in the wrong way, and next thing they know their exporters to China report being held up for months. The EU has taken offense at how China kicks around smaller EU members, Australia has been on the receiving end of it more than once.

If you'd said the EU might be seen as a relatively more stable trading partner, that may be true, the EU does seem to be fairly happy deindustrializing itself. Though it's fueling a rise in the fractured politics there too.

That 33%-39% goes back into stimulating the global economic system where America is at the center. To people like me that own US Treasuries.

You’re not wrong. But it’s not as simple as 33-39% disappearing into a black hoe.

Why is the individual income tax revenue important to compare to interest costs? Total interest cost as a percent of total revenue seems like a more holistic comparison, which is 15%.

https://fiscaldata.treasury.gov/americas-finance-guide/feder...

The US ticked all the boxes that are credited with the break up of the USSR last year aiui.

Anyone not taking that seriously is in for the most hilarious of surprises.

Tell that to the Romans.

You need to adjust for inflation.

Also the correct measure is % of GDP

    Democrats          Change in Deficit
    ---------          -----------------
    Joe Biden              -6.1% GDP
    Barack Obama           -6.4% GDP
    Bill Clinton           -5.0% GDP
    Jimmy Carter           -0.2% GDP

    Republicans        Change in Deficit
    -----------        -----------------
    Donald Trump           +8.6% GDP
    George W. Bush        +11.0% GDP
    George H. W. Bush      +1.1% GDP
    Ronald Reagan          +0.2% GDP
    Gerald Ford            +2.3% GDP
    Richard Nixon          +0.7% GDP
    Dwight Eisenhower      -1.1% GDP

    President                    Change pp
    Eisenhower                   -1.8
    Nixon                        +0.8
    Ford                         +0.8
    Carter                        0
    Reagan                       +0.5
    GHW Bush                     +1.8
    Clinton                      -6.1
    GW Bush                      +4.3
    Obama                        -6.6
    Trump                        +11
    Biden                        -5.8

It would be nice to see change in debt numbers vs change in deficit numbers. I think only Clinton ran a surplus in the last 30 years.

Two thumbs up for bringing numbers.

Though I would like to see which dates were used to calculate them. And if it was from ”first day to last day of office” it would also be interesting to calculate with a certain ”lag” to account for the fact that effect of some legislation may not show until a bit later.

The idea that the GOP was ever about "fiscal restraint" is one of the most successful propaganda exercises ever because this hasn't been true since probably the Eisenhower administration.

What's funny is that this era (the 1950s) is often fetishized by people who absolutely oppose the policies that made that possible, including a top marginal tax rate of 91% and a CEO to median worker ratio of 20-25x instead of the 400x+ it is now.

So the Cato Institute finally realized something that hasn't been true for 50+ years. What we're witnessing is the looting of government coffers and transfer of wealth from the poor to the rich on a scale never seen before. And they don't care about the consequences because capital is mobile. They'll simply leave.

> From 2018, "Sadly, Fiscal Restraint Is No Longer a Core Principle of the GOP":

While I agree, surely the assumption that the Democrats will be more fiscally responsible isn't true either?

This is more an issue with modern political expectations imo – compounded by challenges of aging demographics.

I can only give my view as a Brit, but I think the same applies here as in the US. Here people expect far more from the government today than at any point in history. Some of these exceptions are reasonable, but many are not.

But either way, despite huge government revenues theres just never enough money to fund all of the social programs voters ideally want. And under this pressure the only option to win elections is to borrow.

I guess to frame it another way – what spending would people want to see the politicians cut? I suspect the only way Western governments will get spending under control is to understand that government can't solve every problem, however nice it might be if they could.

> The US will become insolvent by trying to prop up Japan.

No, it won’t. The worst case we are looking at is paying more interest on debt. It’s not great but we aren’t in danger of becoming insolvent because of Japan.

>The markets generally respond to US concerns by buying more US treasuries. That’s counter-intuitive but reflects the situation that if things hit the fan they feel loaning the US money is still the safest place for their money.

I thought that dynamic broke down with the liberation day tariffs, where both stocks and bonds dropped at the same time?

May sound very similar but it's more like if everything is going down, the strongest one is going to go down last. It's not really "unlikely to be a scenario where the US becomes insolvent" — it's that if it happens, it happens last. And a lot of that just has to be because the US "owns" the dollar, and the world ended up picking (let's not get into how) the dollar as the reference point for their own currencies; aka everyone's reserve currency.

So no matter how much the US fucks up, they just print more and more dollars and ensure the entire world collectively pays up for their fuck-ups. But if the US doesn't fuck up and does something good, then the benefits of that? Oh, that's a different story. No excessive benefit printing, no sir.

All hail exorbitant privilege.

> The markets generally respond to US concerns by buying more US treasuries.

I think the market is buying more gold from US than ever -- this is trading US dollar for gold

US gold export is at its all-time high.

>For better or worse there’s unlikely to be a scenario where the US becomes insolvent

How can any organization that issues its own fiat currency become insolvent? Being solvent is simply an issue of adding digits to the borrowers' account in an electronic database.

The only thing that happens (and is happening) is the increase in the supply of currency outpaces the increase in the economic value of goods and services that can be exported, hence the currency loses purchasing power.

The US also used to have the distinction of being the most stable large organization, allowing it to earn a "trust" premium on its currency. But we are voluntarily giving that up.

The financial markets only bought US treasuries under those conditions because they were the least bad option during risky moments. There's no law of physics which says that will always be the same.

Trumpanomics is trying to weaken the dollar to make us more competitive as an exporter (along with tariffs which make imports into the US less competitive with domestic goods) and he is Trump's Congress is blowing away previous deficits, so investors are wise to reevaluate their previous risk mitigation strategies.

The Yen Carry Trade is now fully in reverse and both JP and US are going to see higher interest rates, causing both of their debt service to take up an increasing slice of the budget pie.

Investors are jumping into CN bonds now and are likely to look to the rest of the BRICS nations as the IS looks increasingly unable to manage a responsible budget, an economy that doesn't seem to be growing much, and sovereign bonds which have fewer buyers today than a month ago.