Ray Dalio's comments on Meet the Press this week are worth a look to those interested in global economics IMO. Hit the nail on the head repeatedly as far as what has been worrying me . Trigger warning: It's not flattering of you know who. But then economics is not exactly "that guy's" strong suit.
At least one of Dalio's points is neither new, or partisan. Namely that persistent budget deficits totaling more than about 3% of GDP are not sustainable. 2025 projections are about 6.5% (Dalio quoted 7%). Since 2024 was 6%+ I can only assume the projections in this range do not include any projections for further expenditures for tax cuts, downturns.
The much bigger worry is the effect of concerted monetary policy changes (some might say insane policy changes) in the guise of changing global economic structures. Specifically currency valuations (i.e. a weaker dollar), and a system of finance and trade developed over eight decades that, despite being bought and paid for by (some would say strong-armed into place by, and to suit the naked interests of) the US, which is somehow perceived by some, or at least one, as disadvantageous and unfair. In my opinion, and in the engineering parlance of butt hurt, this viewpoint seems to be more a matter of "not invented here".
Ignoring the question of "fair" one result has been inarguable. namely the fact that the US dollar is, currently, the world's only reserve currency. It is this fact, IMO, that is the sole reason that we are able to run deficits and carry increasingly outlandish levels of sovereign debt that wouldn't pass the laugh test in any other country. It is, also IMO, the principle difference in an economic sense for the world's attitude to the sovereign debt of the US versus, for example, Greece.
Similar to our abandonment of global leadership in diplomacy, security, and science, it's hard for me to see how someone can rationalize that these changes will somehow make the US stronger or somehow "Greater". It is impossible for me to see, politics and perceptions of greatness aside, how this will not, and in very short order, bring our debt fueled (deadbeat?) way of living to an abrupt end. That outcome will undeniably be shocking to the system, including all of its political parties and voters.
Dalio's comments have been picked up by numerous news sites. Take a look. He certainly hit my nerve center. Or, rather echoed my concerns. I would be sincerely happy to have someone explain to me why massive, ever increasing debt, coupled with the end of the dominance of the US dollar, is somehow workable, or desirable. This is one of those things that keeps me awake on quiet nights.
