ValueArb

There is no such thing as economic war, thats conflating two vastly different things. Its not war when another country works hard to provide your country with cheaper goods.

Not true. People aren't going to starve themselves to make a buck, in fact the problem in society is that people don't save enough. Inflation was and is always a monetary phenomena. There was no major war in the 1970s, not for the US. Vietnam spending was over by 1975, and during the 1970s US military spending as a percentage of GDP was substantially lower than it was in the 1960s and had been declining since 1953. https://www.usgovernmentspending.com/defense_spending_history This is a straw man, no one claimed "NO oNe WiLL EvER INveST IN ThE US aGAiN!". The Marshall Plan constituted about 5% of US GDP in 1949. Germany has been the recipient of over a trillion dollars in assistance from the US in present day dollars, not just from the Marshal Plan, but also from US defense forces staffed in Germany to protect it from the USSR. We still spend tens of billions a year on forces in Germany to protect them allowing them to reduce military spending below 2% since the fall of the USSR, an enormous peace dividend they've received. So they've been sailing with a large wind at their back since 1950. Again, if you had actually read what I wrote, inflation raises real capital gain tax rates which reduces capital investment here and pushes investors overseas. Another straw man. No one claimed deflation is preferable to inflation.

The real irony is that Trump was just as terrible at fiscal leadership as Biden. When Republicans controlled both houses while he was president, the spending spigots were wide open. The only difference was that spending was directed to a different set of friendly political supporters. Neither president has done anything to make the Feds job easier, they've both made it extremely difficult.

Inflating away debt might be the more likely solution, but its not any better than defaulting on it. It will drive borrowing costs through the roof for everyone, and make it far harder to borrow in the future even if inflation declines as inflationary expectations will remain high for generations (fool me once, etc). It will bleed many people who don't have inflation indexed businesses. Any business that requires forward contracts will take massive losses and have a difficult time using them in the future. Any workers that don't have rapid inflation adjustments will end up with lower standards of living. Most specifically, investors will see their real capital gains tax rates sky-rocket as their reported gains will be far higher than their inflation adjusted gains. For example, assume inflation is 14% annualized for 5 years, halving buying power. Lets say you bought $100k in stocks at the start of that period, and sold them at end of it for $300k, which appears to be a 25% annualized return. But you owe 25% in federal capital gains plus state income taxes, or $50k, leaving you with $250k. But the buying power of $250k is now only $125k, so your real after tax economic profits is $25k, or less than 5% annualized. So will you be anxious to invest in stocks again? Maybe, you might not have a choice as what will offer a better return? Or maybe you'll invest overseas in a country with low inflation. Certainly foreign investors are going to think twice about investing in the US, so over time inflation will bleed us of capital which drives productivity gains. Go back and read up about the 1970s and how awful investing and the economy was when we dealt with high rates of inflation.

What if a new bridge has an economic value of $5B in terms of the benefits it will bring to reducing travel times, would you pay $20B for it? How much of that $20B would you consider an "investment" in productivity? Google the Davis-Bacon act for just one example of why governmental construction projects are economic sinkholes, not investments. If Baltimore needs a new bridge, why don't they pay for it if it has net economic benefits? Why doesn't Maryland? If neither can afford it, why not make it a privately funded toll bridge? The reason is why should they when we have a massive federal infrastructure spending so that every politician from the Senate down to the local mayors and city council members can get hooks into the projects to direct money to their favorite contractors/lobbyists, and none cares if it means paying double or quadruple market rates because that's the entire point of the process. Their contractors make huge profits, their contractors make big re-election contributions, and the wheel keeps spinning. Sure any military spending beyond whats necessary to maintain our freedoms is wasted, but a huge amount of the rest is wasted as well. Before Ike's huge mistake in taking over national road construction the federal government got by spending only 16-17% of GDP, with 50-70% going to the military. Today federal spending is now bouncing between 22% and 28% of GDP, with less than 15% going to the military. https://fred.stlouisfed.org/series/FYONGDA188S https://en.wikipedia.org/wiki/Expenditures_in_the_United_States_federal_budget#/media/File:US_Federal_Government_Outlays.png Baltimore should make a reasonable economic decision without any handouts from the federal government. Most likely they should sell the bridge to a private business and let them rebuild it as a toll bridge. That eliminates billions in government spending that would be entirely new debt with heavy interest levels, and instead creates tax revenues that can be spent on government services far more core to the citizens needs, like policing, social programs, etc. Turning costs into income improves economics rapidly.

And in Japanese pockets, in Chinese pockets, in UK pockets, in Luxembourg pockets, in Canadian pockets, etc. About a quarter of the US debt is held by foreign investors, including a lot in foreign governmental hands. So we don't owe the debt just to ourselves, and even looking at it that way its still unbalanced. The 1% own most of the debt, while we all will have to pay higher taxes to service its costs. About a quarter of the debt is intragovernmental. Some of it IOUs for benefits "owed" to social security recipients that were never adequately funded during their working years. And some of it is for the massive quantitative easing the Fed ran from 2008 till 2022, essentially IOUs for inflating the money supply. So what happens in a few decades when our children realize how much of their taxes are going to service the debt and retirement benefits that had been underfunded? Do they just accept paying half of federal revenues in interest on the federal debt, to foreigners, to the 1%, to maintain retirement benefits at unsupportable levels? Or does the next RFK/Trump/Sanders sweep into office on a promise to force those evil debt holders to accept less? This path has been trod many times in South America and it never ends well.

I'm very sorry it became a topic on the thread. It should have nothing to do with Ukraine but unfortunately its the reason the US is dropping the ball on our commitments. And unfortunately it can't be solved until after the election since certain politicians don't want to give a PR win to certain other politicians before it. I'm hoping Europe and UK will pick up the slack until we regain our senses.

I wouldn't compare over $1.5 trillion in annual interest payments like peeing in your pants to put out a fire. Gonna be a huge drag on the US economy for decades to come.

My ex just told me she spent $10 on her usual order (burrito, a side nachos/cheese, and side pintos/cheese) at Taco Bell, without a drink. I am so old I remember paying under $3 for her Taco Bell order.

Levine wrote about it again yesterday, its a great story. Essentially his point was at its peak even if all of its portfolio companies returned 10x its NAV still wouldn't get close to its market cap. The way I look at it is that the market for people wanting a piece of these private companies (for bragging rights as much as a misquided idea of future profits) is a lot larger than $50M, so I doubt it ever trades down to anywhere near NAV. At least not until the next tech stock crash, as long as tech is popular this is the purest play for gambling on the most exclusive tech companies.

I don't want a sealed border. I want an immigration policy that helps our sagging birth rates by allowing in a few million hard working and talented new citizen candidates every year, and provides them with legal visas to wipe out the black markets that are the cause of so much crime and misery. I've had enough of the disaster caused by border militarization. When I was a boy migrant workers kept their families in their mexican villages and only spent half the year in the US to bring that money back home and live well. Most never wanted to uproot their families, but we made transiting the border far more difficult so migrant workers started bringing their families in to the US to move here permanently. Just give migrants work visas every year as long as they stay out of trouble, cooperate with US authorities, and return home for at least 6 months a year and problem solved.

Empires fall whether a replacement is ready or not. Specifically there was no suitable replacement for the Roman empire. It didn't fall because people lost faith, it did not "become scared", and romans as a whole didn't revolt per se, though Rome was certainly greatly weakened by civil wars. The direct cause of the fall of Rome was because it lacked the economic strength to maintain a strong enough military to guard its borders. Ultimately they were overwhelmed by Goths and Huns and lost their key provinces of France, Spain, and North Africa to barbarian kings, and then Italy itself. I think Gibbon traced the fall back to Julius Caesar, and I agree with that. Rome was never a democracy but it was a republic founded on democratic principles. Once Caesar and his nephew Octavian replaced the Roman Republic with an autocratic Roman Empire, it led to powerful generals and senators vying to become Emperor, leading to a succession of costly civil wars that slowly bled Rome of its troops and wealth. The final blows were Christianity and pandemics. The co-opting of the Emperor into Christianity began even more infighting over religious doctrines. First, most Romans had been polytheistic pagans, that couldn't be allowed by devout Christians, and Theodosius I banned paganism, destroying pagan (and other religions such as Manichean) temples and sites, and even executing adherents. This also helped stoke more civil wars, where some usurpers gathered support from oppressed pagans. Finally pagans were forced to convert to christianity under pain of death or banishment. During and after this there were also more conflict interpretation of Jesus's true nature, causing schisms in which Christian sects like Arianism and Monophysites were considered heretics and frequently purged, stripped of their properties and even executed. Finally the pandemics reduced the populations significantly, and seemed to which hit the heavily concentrated cities of the Roman civilization much harder than it did the more diffuse lands of barbarians. And there were never any Byzantines or a Byzantine empire. They always considered themselves Romans and Constantinople the legitimate capital of the Roman empire for another thousand years. My opinion is that the Roman empire shrunk to the easily defended Constantinople because the rich and powerful (and Christian) constantly set its people against each other. The romans were pretty good at incorporating other peoples into the empire for a long while, barbarian soldiers could rise to become Roman generals, or wealthy Senators, it was in many ways a capitalist system that rewarded mostly based on ability (after the Social Wars that is). If the Republic had continued and continued to be religiously tolerant, Rome would not have been sapped of its economic and military power by civil wars and religious persecutions, and probably would have lasted far longer. Lessons for today would probably be for society to minimize sources of conflict such as religious extremism and class warfare, and strive to make our laws and society as inclusive and free as possible so we can be more unified against external threats. But the reality is that our great war is between MAGA and Progressivism, which the US can never win as which ever side wins will still deficit spend us into a fiscal disaster.

It devalued their currency many times over hundreds of years before the Western Roman empire finally fell for good. One could argue that it fell in a large part because of debasing of the currency. It was done to avoid dealing with fiscal consequences of unsustainable spending and ended up making the currency less trustworthy and it harder to maintain the domestic troop levels it needed, so over time its legions filled with more and more cheaper barbarians. One benefit was the influx of some very talented and ambitious foreigners who improved the Roman army, a few who ended up rising to generals and even emperor. The negative was the influx of many more mercenary recruits who used it as a path to personal power and even foment rebellions to free their own peoples. It would be as if we started recruiting in Mexico, Iraq, China and Central America to fill out our military more cheaply. Then when we are fighting a low level conflict with Iran, a US division heavily made up of middle eastern recruits and led by an Iraqi-American general revolts to conquer Saudi Arabia and put the Persian gulf under their control and naming him the new Shah of Arabia. Its not a perfect analogy because Romans conquered for loot to make themselves far wealthier, and only grudgingly gave conquered Roman rights in order to keep them relatively subservient. The US has hundreds of foreign bases across the world that are all massive cost centers that cost us immense wealth, all in either the idea that we are either making a better world by keeping more of it free or protecting world commerce so that a small percentage of the spending returns to us in trade. So hopefully once we come to the realization that our fiscal spending is unsupportable the answer will be to close most of those bases or require our allies to start contributing more equitably to the costs of keeping the world somewhat freer.

Einhorn is a pure value investor, except when he isn't. I have a theory that clients exhibit a powerful corrosive effect on money managers of all religions. Successful managers outperform being really good at their chosen skills and methods, then when their fund becomes huge and outperformance more difficult, thats when they have that first inevitable stumble that starts to cost them clients. Some can only handle it for a little while before they say "f it" and start following the crowd into the most popular ideas. Or they go off the reservation in other ways, convinced they are still smarter than the crowd so if their methods stop working they cast about for another "smarter than the other guy" methods they would have previously rejected. My theory was created while trying to understand why Buffett gave up his 25% profit share to run Berkshire for nearly free, where he doesn't have to coddle any clients or care when they sell out, just focus on doing his job 363 days a year excepting that one shareholder meeting a year. It probably helped keep him even keeled and outside of one speculation in silver (and allowing Ted/Todd to buy Snowflake at infinite PE) on the same track for 70 years.

You're telling me that politicians wouldn't do the right thing for the country in an emergency even if it cost their jobs? Just one more reason for a permanent two term limit for every elected official.