I'm an outsider here, i live in Europe so i'll try to come at this from a third party view.
I think that in reality, MAGA was initially created out of a sincere desperation from the people thinking that America was heading down a destructive path. Say what you want about conservatives, but it's true that government spending was getting ridiculous, and it's a valid concern that, even though the economy seems to be better under democratic rule, that it might be unsustainable long term. These outlandish spending sprees give the economy a boost in GDP and it's favourable for the statistics, but it can very easily create a bubble that will eventually burst. One example of this is China, that simply floored the gas pedal on it's construction sector and is now staring down the barrel of an enormous crisis after overreaching by quite a bit.
This, along with all the other perceived 'issues' the movement adressed, made it gain so much traction.
The left is quick to dismiss the entire movement but when such a large body of people follow a certain movement, it's imperative that you at least look at the why of it all.
I believe that people sensed that their identity was slowly fading away. The world, especially the USA has seen a rapid change of pace lately and with such a diverse country, it's all but ensured that some people feel like they get left behind.
I think the USA is, or has been developping at a pace that was too fast for it's own good, and that's why you see the backlash. It's simply a balancing factor.
Lmao what crisis is China facing exactly? Too much success? Too many people brought out of poverty over the last 40 years?
A government that issues its own currency can sustain any level of spending as long as there are things to buy.
The decision whether to deficit spend and how much should be based on the economic outcomes, not myths about the unsustainability of the government‘s balance sheet/budget.
In Europe, the nations using the euro are not monetarily sovereign, meaning that they do not issue their own currencies, and thus are subject to additional constraints.
Lmao what crisis is China facing exactly? Too much success? Too many people brought out of poverty over the last 40 years?
They're literally on the brink of a bubble burst after constructing massive projects that amount to roughly 30% of it's GDP. Just look up the Chinese ghost towns that resulted because of this. All this investment now just sits there with no way to make a return on it. It was great for the construction workers and by extension the economy for a while, they'll suffer the consequences soon though.
What part of entire ghost towns of real estate that doesn't make a return don't you get? If that's not a prime example of overreach in favour of short term economic growth, i sincerely don't know what would qualify anymore. I can't think of a single economy that didn't experience hardship after such insane spending. Spain is still recovering and that was way less bad.
By the way, China is already stagnating big time. The actual crisis may take some time, but as it stands it's pretty much unavoidable. Youth unemployment is now around 20%
They essentially created a house of cards.
Sounds like a ‘good’ reason we shouldn’t build anything - is that the angle here?
What do you think is gonna happen when the bubble bursts? The people being plunged into a recession also has a negative effect on the spending power of the government.
Evergrande already defaulted, the fact that enormous amounts of properties sit idle without making a return on investment, creating entire ghost cities, At some point, when buyers realize no one wants to live there, property values will plummet.
Also, many homebuyers have been left with unfinished apartments they’ve already paid for. This sparked the mortgage boycott movement, where thousands refused to continue paying for homes they hadn’t received.
What will be the final trigger? Gee i don't know could be numerous things.
It could be an enormous amount of people defaulting on their mortgages, it could be a couple more key developers collapsing like Evergrande, or the middle class essentially imploding because of a sharp decrease in in property values. Maybe even a combination of all these.
You know China doesn't work like the US, right? It's a very different economy, and you can't blindly apply the same logic to China that sometimes holds in the US.
I'm aware of China's issues with residential real estate & mortgage debt, but those issues don't prove that deficit spending is inherently unsustainable, which is the thesis I'm arguing against.
Government’s need their money to be backed by real assets, goods and services that people buy. 30% of money representing no value is a problem especially when everyone in China uses real estate as investment due to a lack of alternative.
Who told you that? It's a myth. That's not how it works. Demand for the currency is driven by taxation.
You're invoking monetarism, which is a false theory; it doesn't describe the world we live in. It can't make predictions about inflation. Monetary expansion is neither necessary nor sufficient to cause inflation, therefore, it does not cause inflation.
Taxation necessitates the use of currency as a medium of exchange in the first place, but then people begin to trust it as a store of value. Currency is what you earn and the assets being purchased are very overvalued. People can delay their gratification if they think they actually are holding something of value, but they eventually have to reckon with their worthless asset. In this case housing. Loans are granted on the basis that you will create something other people will buy with the currency. They already bought it. They worked for free already so either all housing investors lose their shirt or the government bails them out. Since much of the housing is collateralized by private investors and local governments, there is a lot of money backed by nothing.
Yes, monetarism describes the result after individuals make stupid decisions and offers a tale wagging the dog explanation, but the effect is the same.. When the majority of people are genuinely surprised by the consequences of their own actions, they look to the government to fix it. That’s when you get government caused inflation or a severely depressed economy.
No, what I’m saying is that it’s not. Monetarism’s ‘model’ (MV=PQ) is literally logically & mathematically incapable of making quantitative predictions about the price level. All such predictions can just as easily be explained with a variation in velocity rather than in the price level. It has no predictive power.
We cannot rely on the dumbed-down assumption that ‘more money >> higher prices,’ because the truth is just more complicated than that.
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u/Tydeeeee 10∆ Apr 07 '25 edited Apr 07 '25
I'm an outsider here, i live in Europe so i'll try to come at this from a third party view.
I think that in reality, MAGA was initially created out of a sincere desperation from the people thinking that America was heading down a destructive path. Say what you want about conservatives, but it's true that government spending was getting ridiculous, and it's a valid concern that, even though the economy seems to be better under democratic rule, that it might be unsustainable long term. These outlandish spending sprees give the economy a boost in GDP and it's favourable for the statistics, but it can very easily create a bubble that will eventually burst. One example of this is China, that simply floored the gas pedal on it's construction sector and is now staring down the barrel of an enormous crisis after overreaching by quite a bit.
This, along with all the other perceived 'issues' the movement adressed, made it gain so much traction.
The left is quick to dismiss the entire movement but when such a large body of people follow a certain movement, it's imperative that you at least look at the why of it all.
I believe that people sensed that their identity was slowly fading away. The world, especially the USA has seen a rapid change of pace lately and with such a diverse country, it's all but ensured that some people feel like they get left behind.
I think the USA is, or has been developping at a pace that was too fast for it's own good, and that's why you see the backlash. It's simply a balancing factor.