41 sats \ 12 replies \ @didiplaywell 13 Aug \ on: Tether's Circle of Death econ
I can not see evidence of it working that way, at all. Countries that have officially adopted USD as local currency have never suffered any of the symptoms described but all the contrary. That's why here in Argentina we are on our path to adopt it as well. What's more: absolutely no country on earth has the economic power to "help" the USA war machine other than the USA itself. All of the little 3rd world countries, combined, are dwarfed by the USA domestic economy. And yet even more: not even USA domestic tax hikes are up to pace with govt spending. Let it be 50% of your income, and that can help the USD lose half its value, yet, it has lost 99% of its value since the inception of state-controlled banking in the USA. How did you transitioned from a factor of 2 to a factor of 100 without greater taxes? Criminal level of money emission. The USA govt only imposes heavy taxes because that allows it to confiscate property legally (a 50% tax rate means that the state shares half of your property rights and reserves the final right to confiscate it), not because it needs the money, they have the infinite money machine for that, to which no little 3rd world country can "help", let alone the USDT niche within 3rd world economies, it's a joke.
When they deficit finance by auctioning bonds, do you think they're hoping more or fewer people bid on them?
You have to think on the margins with this stuff, not in absolutes.
That said, my sense is that Krattert had the Middle East in mind, more so than Latin America.
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Let's do take the Middle East. Why do the Emirates do so well? Why are they unscathed while their profit on their resources? Even Russia is, amidst a war, still selling its resources, specially titanium, to the USA. If they do commerce even being sworn enemies, why would the USA govt turn allies into foes anywhere else? The same "destabilization" theory as been repeated here tirelessly and when you go to the sources it turns out it's never true. I'm not saying that the USA govt is an angel, but those "death spiral" theories are just flawed, numbers don't add up.
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I'm not as familiar with this as you seem to be. I recall reading about this in Development Econ courses I took a long time ago, but it wouldn't surprise me to learn that reality differs from what was being taught.
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We too were early indoctrinated into this "destabilization" theories, as an explanation for Argentina's pitfalls. The first clue is realizing that those "destabilization" schemes exclusively appear as an excuse dying socialists regimes instigate into its population. How does it come it never happens in democratic, capitalist countries, is a mystery.
We are fortunate enough to have people from those "destabilization" times still living, and by a fortunate alignment of planets so I happened to cross many in my path. None of those theories were true, not one, not once. The reason for my fortune in my early awakening was my decision to study Aeronautical Engineering, which as a remnant of the old regimes is tied exclusively to the Air Force, which thus was tied exclusively to politics. So I met the very people that lived in those times, and they are always roaring outspoken in their indignation at how obscene are the lies people were told, but that was pre-X era so their reach was always tight as if it was a secret. It also shocked me that the truth was calmly walking there in plain sight all the time yet invisible due to limited reach.
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I'm not understanding your point, could you expand please?
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With thinking on the margins, I'm saying that even relatively small holdings help support a more manageable financing cost for US debt. Over time that adds up and enables more spending. It's not about comparing the impacts of huge aggregates.
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I agree but you used as an example USA bonds and that's what I was saying: the USA use their own people to pay for such massive expenses, not the little 3rd world economies which have the level of just one Argentinian province and we still are underdeveloped and dwarfed against Brazil, not even thinking about comparing to the USA.
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Ok, I didn't get that you were excluding countries like Argentina and Brazil. When people talk about "smaller" economies in the US, they usually mean anything significantly smaller than Russia.
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60 percent of transactions in Latin America are dollars and usdt?
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In the case of Argentina it should be close to 30%, because that's the percentage of international trade respect to total GDP, of which the majority is made in dollars (the sole exception is Brazil, which prefers to transact in its own currency).
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What about domestic commerce? Black market transactions?
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It has to be nearly the same 30%, because that's the USD that's moving. The mass of the people uses Pesos, but that 30% moves when people buys USD to save, or spend it to cover unexpected expenses, and by far and large it's used for greater transactions in the farming and real-state industry, which involves fewer people but greater amounts.
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