795 sats \ 7 replies \ @faithandcredit 30 Oct 2023 \ on: US Treasury Estimates Borrowing Additional $1.6 Trillion In Next 6 Months meta
Why don't they cut expenses instead
Because at this point, government spending is an upward force putting a floor below the slowing economy. Beyond just the impact of the sheer dollars involved, increasingly many industries look to the gov't for direction on where to go/invest in.
Great example is EV's; carmakers are losing billions per year diving headfirst into manufacturing EV's that consumers don't want. But because the government wants it, and since there are plenty of incentives in place and political goodwill to be accrued, companies do it anyway.
Plenty of other examples out there showing this distortion field rampant government spending creates (offshore wind, being another pristine example).
Basically, without government spending acting like Atlas holding up the world, the bottom of the economy would fall out entirely. So expenses will never be cut, GrOwTh must be achieved at all costs, to keep the debt-based system spinning perpetually forward.
Let me know if you have any questions about the above. Hope that helps.
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Thanks for sharing. I would like to know more. What’s you’re area of expertise?
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My background is in analytics/credit risk, risk pricing. I'm an armchair economist for fun.
Edit: do you have any specific questions? Happy to continue discussing further. Let me know.
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I just saw an offshore wind project was cancelled. What are your thoughts on how Tesla and what they are doing? Will traditional ICE make the transition to EV or will they go bust?
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I think they'll make the transition - albeit very painfully and at substantial cost to the consumer. I am confident that ICE automakers will subsidize the EV losses by raising prices on all their vehicles. Tesla is much better positioned because it has already moved past the growing pains of scaling up EV manufacturing.
Thanks for the great set of questions! Happy to continue discussing if you'd like. What do you think?
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at this point, government spending is an upward force putting a floor below the slowing economy.
If the government continues to borrow and spend, due to being in so much debt already and due to the amounts being so big now, in order for the new debt to be attractive for anyone to hold, it must be such high yield that it will suck liquidity from other asset classes and thus having a slowing effect on the economy. But lets see.
We are getting to a point where its either the government that grows or at least avoids shrinking or everyone else does. There is no more room for a growing economy and a growing government. Its one or the other from now on. Despite whatever financial voodoo they try. But lets see.
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Wanted to add a follow-up on this thread regarding offshore wind. Saw this article today. Confirms everything I/others have mentioned with regard to efficient allocation of (taxpayer funded) government funds.
The outcome should not be surprising even if the quoted reasons for failure are pretty hilarious. The CEO can't come right out and say it, but the projects were never viable. Blaming rising rates just means that ZIRP was necessary for these projects to succeed.
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