So much for the "risk-free" nature of Treasuries

[Pointedstick]

What do corporations do better than government today in ways that are fundamentally different than a long time ago.

The way I see it, the more population density we see, the more entangled the state will be in our daily lives... Though not as overtly cruelly coercive ( I would hope we're done with mass genocides).

I think this happens to a point, but eventually the government-provided municipal services you're thinking about seem to stagnate at around a 1970s level of technology. High-density areas tend to attract or create population of people who are demanding and interested in making their city better but want to do it by offering services for purchase rather than going into government. Once this happens, these entrepreneurs inevitably run up against cronyistic laws and regulations that are transparently NOT in the public interest (Uber vs NYC taxi commission, for example).

If people were satisfied with the level of service that the government provided, there'd be no problem. But this implies either a continually improving level of government services or a stagnant set of expectations. Neither are true of the country's wealthy metro areas.

[Lowe]

What do corporations do better than government today in ways that are fundamentally different than a long time ago.

The way I see it, the more population density we see, the more entangled the state will be in our daily lives... Though not as overtly cruelly coercive ( I would hope we're done with mass genocides).

That sounds feasible.  In the developed world, state involvement in everyday life has grown along with population, but so has everybody's involvement in each other's lives.  So the public sector may be riding an unrelated trend.

Speaking of trends, in developed nations the native birth rate generally falls below the replacement rate, with immigration taking up the slack.  One can't help but think the future may have fewer people than the present.

...

As to what public services are better provided by the private sector, hasn't the public sector already decided it's all of them? That defective Federal healthcare website was made by an IT contractor, right?  Also turns out a contractor did the background check on Snowden.  That company handles the majority of Federal background checks for the OPM.

[Marc De Mesel]

Maybe the best result of a default would be that the MR enthusiasts would finally have to admit that the government can indeed default. 

We've always said that the government can't default unless it chooses to default. There aren't too many fiat governments that choose to default (although Russia did).

So you have to believe they will never choose to then. You have to believe the consequences of defaulting will always be worse than not defaulting.

Here's a list of a bunch of governments that defaulted in their own FIAT currencies since '75 (I have not verified these): http://hnn.us/blog/110246

Question, why would they default if it's always better to not? They could have just printed their way out of it right? Did they not get the memo?

Another great post. You are right, governments have defaulted even with fiat currencies. Thanks for pointing that out.

[MediumTex]

We've always said that the government can't default unless it chooses to default. There aren't too many fiat governments that choose to default (although Russia did).

So you have to believe they will never choose to then. You have to believe the consequences of defaulting will always be worse than not defaulting.

Here's a list of a bunch of governments that defaulted in their own FIAT currencies since '75 (I have not verified these): http://hnn.us/blog/110246

Question, why would they default if it's always better to not? They could have just printed their way out of it right? Did they not get the memo?

Another great post. You are right, governments have defaulted even with fiat currencies. Thanks for pointing that out.

Gumby has provided a detailed analysis of these cases before, but basically every one of these "defaults" coincided with either an ill-conceived currency peg or some kind of political disaster like a military coup or war (or both).

None of the factors driving those defaults have anything to do with the U.S. 

The U.S. is the currency other nations attempt to peg their currencies TO, and the U.S. has the most powerful military in the history of the world, so virtually any foreign U.S. military adventure is unlikely to affect the value of U.S. debt too much (this thesis was pretty well validated in the 2001-2011 period when the U.S. basically fought two stupid and costly wars on the other side of the planet and a U.S. debt default was never even considered as a side effect--in fact, interest rates fell over the entire period).

[Gumby]

[align=center][/align]

Modern hyperinflations always happened after the exogenous events listed above. In other words, the hyperinflation of the currency was typically the last gasp of a dying government.

[Marc De Mesel]

So you have to believe they will never choose to then. You have to believe the consequences of defaulting will always be worse than not defaulting.

Here's a list of a bunch of governments that defaulted in their own FIAT currencies since '75 (I have not verified these): http://hnn.us/blog/110246

Question, why would they default if it's always better to not? They could have just printed their way out of it right? Did they not get the memo?

Another great post. You are right, governments have defaulted even with fiat currencies. Thanks for pointing that out.

Gumby has provided a detailed analysis of these cases before, but basically every one of these "defaults" coincided with either an ill-conceived currency peg or some kind of political disaster like a military coup or war (or both).

None of the factors driving those defaults have anything to do with the U.S. 

The U.S. is the currency other nations attempt to peg their currencies TO, and the U.S. has the most powerful military in the history of the world, so virtually any foreign U.S. military adventure is unlikely to affect the value of U.S. debt too much (this thesis was pretty well validated in the 2001-2011 period when the U.S. basically fought two stupid and costly wars on the other side of the planet and a U.S. debt default was never even considered as a side effect--in fact, interest rates fell over the entire period).

In other words: this time is different.

I urge the critical reader to think about the arguments given here why this time is different and whether these arguments are bullet proof?

I also think it wise to estimate what the consequences would be for your portfolio if this time proves to be not different.

[Xan]

Bullet-proof?  Aren't you the guy who got talked into putting LTTs back into his better than bullet-proof portfolio by a single post, not several minutes after calling everyone an idiot for having any?

[MediumTex]

In other words: this time is different.

I urge the critical reader to think about the arguments given here why this time is different and whether these arguments are bullet proof?

I also think it wise to estimate what the consequences would be for your portfolio if this time proves to be not different.

Actually, it's just the opposite.  I would say that this time it's the same--debt defaults by governments will continue to be driven by ill-conceived currency pegs and the end stages of governmental collapse.

Productive economies with strong protection of property rights will continue to be able to service their debts.

[Gumby]

In other words: this time is different.

No. No one is saying that. The future is unknowable. But the fact of the matter is that none of the exogenous triggers of hyperinflation is currently happening in the US. We don't have foreign-denominated debt. We don't have a brutal civil war or a tumultuous regime change happening. All of that may change one day.

Obviously the dollar can and will eventually fail one day, but it likely won't be because we simply printed too much money on building bridges and aircraft carriers, etc. If the dollar fails, and we use other modern hyperinflations as a guide, it will be because of some other exogenous trigger — such as foreign-denominated debt, a brutal war or a tumultuous regime change.

[moda0306]

In other words: this time is different.

No. No one is saying that. The future is unknowable. But the fact of the matter is that none of the exogenous triggers of hyperinflation is currently happening in the US. We don't have foreign-denominated debt. We don't have a brutal civil war or a tumultuous regime change happening. All of that may change one day.

Obviously the dollar can and will eventually fail one day, but it likely won't be because we simply printed too much money on building bridges and aircraft carriers, etc. If the dollar fails, and we use other modern hyperinflations as a guide, it will be because of some other exogenous trigger — such as foreign-denominated debt, a brutal war or a tumultuous regime change.

Exactly... so we're essentially saying "this time it's the exact same." it'll survive if we're productive and powerful, it might fail if we lose a war, owe tons of foreign debt, have massive corruption, etc.

[Libertarian666]

In other words: this time is different.

I urge the critical reader to think about the arguments given here why this time is different and whether these arguments are bullet proof?

I also think it wise to estimate what the consequences would be for your portfolio if this time proves to be not different.

Actually, it's just the opposite.  I would say that this time it's the same--debt defaults by governments will continue to be driven by ill-conceived currency pegs and the end stages of governmental collapse.

Productive economies with strong protection of property rights will continue to be able to service their debts.

So the US is in big trouble then.

[Pointedstick]

Productive economies with strong protection of property rights will continue to be able to service their debts.

So the US is in big trouble then.

There's something to be said for being the best-looking horse in the glue factory.

[MediumTex]

Productive economies with strong protection of property rights will continue to be able to service their debts.

So the US is in big trouble then.

There's something to be said for being the best-looking horse in the glue factory.

Many Americans have this tic of constantly focusing on the areas in which the U.S. is in apparent "decline" without ever stepping back and comparing the U.S., with all of its strengths and weaknesses, to other developed nations in the world.

If I were an entrepreneur who enjoyed political freedom as well as making money, I'm not sure there is any place in the world I would rather be than the U.S.

There are literally hundreds of millions of people around the world who would be dumbfounded to hear some of the things that Americans like to gripe about and cite as evidence that our entire society is falling apart.

If you were fighting to get out of some shithole ghetto in India and make it to the U.S. to start a small business, what would you think about a sour-faced guy in Kansas City bemoaning the requirement that he buy a health insurance policy and citing this requirement as evidence that the world was about to end?

If I were that Indian guy, I would think to myself: "Holy shit!!!  This place is even better than I thought it would be!  The ONLY thing that people here can find to complain about is that they all have to buy health insurance...and if you're poor the government will buy it for you!"

From a historical perspective, and compared to 99% of the rest of the world, we have it pretty good here.  I think that many of us are too quick to forget this fact (and the media doesn't help in their incessant desire to declare that the sky is falling).

[moda0306]

So the US is in big trouble then.

There's something to be said for being the best-looking horse in the glue factory.

Many Americans have this tic of constantly focusing on the areas in which the U.S. is in apparent "decline" without ever stepping back and comparing the U.S., with all of its strengths and weaknesses, to other developed nations in the world.

If I were an entrepreneur who enjoyed political freedom as well as making money, I'm not sure there is any place in the world I would rather be than the U.S.

There are literally hundreds of millions of people around the world who would be dumbfounded to hear some of the things that Americans like to gripe about and cite as evidence that our entire society is falling apart.

If you were fighting to get out of some shithole ghetto in India and make it to the U.S. to start a small business, what would you think about a sour-faced guy in Kansas City bemoaning the requirement that he buy a health insurance policy and citing this requirement as evidence that the world was about to end?

If I were that Indian guy, I would think to myself: "Holy shit!!!  This place is even better than I thought it would be!  The ONLY thing that people here can find to complain about is that they all have to buy health insurance...and if you're poor the government will buy it for you!"

From a historical perspective, and compared to 99% of the rest of the world, we have it pretty good here.  I think that many of us are too quick to forget this fact (and the media doesn't help in their incessant desire to declare that the sky is falling).

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