> James Bilson, global fixed income strategist at Schroders, said fiscal policy and debt sustainability are crucial for bond markets and the current rise in U.S. yields is not yet a sign of increasing sovereign credit risk.
> The cost of insuring U.S. sovereign debt against the risk of default, as reflected by credit default swaps, has fallen to its lowest since February, for example.
> "Combined policy is too loose to deliver sustained 2% inflation," he said. "This, in one line, is the root cause of the current weakness in bonds. Solve inflation, and many other problems become much easier too."
I've been not-reading articles since the early days of Slashdot.
That's not what rates indicate. its one component, but its far from a straight line from higher rates to more risk.
You can't really compare bonds that pay in different currencies by Rate alone.
Tech in particular has an awful lot of churn. There's isn't a single tech company in the world that I'm highly confident will be reliably printing money 34 years from now.
10y OAT are at 4.5% and rising with almost 100bps difference with Germany and no budget for 2027 since there is no majority in the parliament.
There is also a 6% deficit expected and growth has been revised down to 0.4% although during the first 6 months of 2026 there was actually a decrease of 0.2% of GDP in total so finishing the year in recession is totally possible.
Unemployment could also reach around 9% (15% in real terms if you count the people who have given up and/or been removed from the stats since they ran out of benefits).
Finally gasoline could reach 3 euros/liter (USD $13 per gallon) before the end of the year (already sitting at 2.5 euros/liter in many parts of France right now).
We are allowing a tiny elite to hold a larger and larger fraction of the overall wealth, while workers, middle class AND the government are losing more and more of the wealth.
Governments, until now, are refusing to tax the uberrich, and continue to squeeze out workers and middle class in an attempt to stop the bleeding. Since this is bound to not work (workers and middle class are rapidly losing their share as well); governments are forced to scrap public services like health care, housing, schools, etc.
Bond markets are now realizing that the governments are not taxing the only fraction of society who owns everything - and so it makes sense that the bond markets become increasingly worried that governments can pay their interest at all.
Tax the rich.
- James Carville
The real problem is not the debt, but the social instability caused by the measures taken to address the debt.
If you see the state as an institution to allow the rich and powerful to extract resources from the rest of the population, then it's all fine. Just take out some debt to give a contract to your nephew, then pay it back by devaluing the currency
But debt also accumulates, and usually faster than GDP growth. Until debt servicing starts eating your budget. Which is a slowly encroaching killer
I find it difficult to draw conclusions just yet. Yes, Germany is under-investing and that hurts. But with another 20 years of hindsight it might look like the lesser evil
You can print money, but you can only ""print"" oil for a short time from reserves, which the US and China have been draining.
If you buy an AI issue, then the AI company has the bank deposit and the bank still has the matching reserves needed to buy government bonds in the primary market. All that changes is the ownership tag on the bank deposit.
That said, there is a meaningful difference in terms of who has control of the money, and what they choose to do with it. Bank reserves are a red-herring; before the investor chose to buy either AI or government bonds with it, it was sitting in a bank deposit where the bank had parked it in short-term Treasuries. But prices are set on the margin (because again, money flows through markets, not into them), and so it is the act of that investor choosing to buy AI company bonds rather than government bonds that sets the relevant interest rates of both.
A related confusion is that the bank reserves are parked in short-term T-bills, whose interest rate is largely controlled by the Fed, while the investments we're talking about are AI corporate bonds vs. long-term government bonds. These are three different asset classes that trade on three different markets with three different interest rates.
I suppose in that respect, all investments compete.
Op-eds claiming the opposite because "trust me bro" would also make me inclined towards the "data center build out for AI factors in for rising yields in sovereign debt"
The more clear it is, the cheaper 30 year bonds become.
You mean due to Trump? Tariffs and Iran war caused this.
Both Warsh and Bessent are pupils of Druckenmiller, but Warsh seems aligned with Druckenmiller regarding letting the market naturally settle on appropriate bond yields, whereas Bessent is being a Trump puppet and attempting these various failed interventions to artificially lower yields.
I hope Warsh stays strong and doesn’t bend the knee!
Notice that the stock market is at all time highs because 50% of the economy is grift now and not real. That is why Republicans go into vast deficit spending to pump up AI and worthless "high-tech", "disruptive" defense stocks.
Trump (and British pound saboteur Bessent) don't care one bit if the US plebs and the rest of the world suffer. The game is printing money, give it to grift companies like AI, have family invest early and get out if everything collapses. Probably they get into real estate cheaply due to foreclosures.
The French government can pass laws without a vote in the parliament under Article 49.3 of the constitution. I think the last budget was adopted in this way.
This year is different. Macron is on his way out and everyone wants to stay as far away as they can from him including his former prime ministers who are both running in the election.
That means that there is literally nothing they can offer to the opposition to avoid being toppled. If a parti were to agree to not topple the government on the 49.3 motion, they would be signing their own death warrant for the election.
> the order of magnitude that's needed to put the country back on its feet
The amount of reforms needed in France could fit in an encyclopedia. LFI or the RN will not fix this mess and the center who has been in power for 10 years is all but useless. The old center-left and center-right parties have all been in power also and led us to this place which means that are not the solution either.
Seems to me that France is well and truly stuck on a slow but certain decline. But the other EU countries are not doing much better either.
/s
Let's take the US, where you have to consider lending money to the government for 10 years at 5.009%. This barely covers inflation if you consider real numbers rather than the financial fiction ones that have been published in the last 10-20 years.
In the 90s, an era of relative prosperity when the US was the sole remaining superpower, 5-year treasuries were paying 7-9% with inflation in the 2-4% range!
One crucial difference: the US wasn't $40T in debt, and it wasn't pulling trillion dollar deficits. In 1998 the US federal government actually had a surplus! Even 9% interest wasn't going to wreck the Federal budget when the overall amount of debt to be serviced was so much lower.
Everything is relative to size. If your older brother lends you a dollar at 100% daily interest, you can still throw a balled-up Jackson at him a couple days later and walk away clean. But ask anyone who agreed to a crazy 20% interest rate on their car loan what it did to their personal finances, and all you'll hear is horror stories. 9% on $40T would be suicide.
I take that back there is a risk they decide to burn trust as someone who doesn't honor deals, which is a new risk that didn't really exist at the nation state level a generation ago...
Yields will rise and reallocation will occur to hedge against this inflation via debasement risk, as investors will manage against inflation adjusted real return versus other investment opportunities.
There have been over 70 incidents of overt domestic default since 1800. The United States defaulted in 1790, when a portion of the interest it owed was deferred for 10 years, and technically defaulted again in 1933 when it abrogated the gold clause.
Maybe we should vote for people who are financially literate, can think long term, and can "conserve" rather than politicians who promise endlessly?
I wish you luck. Endless promises and short term thinking are the main things the system incentivizes. Each politician is temporarily renting their seat, paid for by other people. Each bureaucrat is studiously, steadfastly avoiding learning anything that threatens their continued employment, which is paid for by other people.
I think Clinton was the last us president to balance the budget and start reducing the deficit so I guess see what he did.
Maybe we should consider the possibility that there is no such candidate, or if there is, they cannot compete against the 'populists'. What then?
Who could you vote for, in any democracy, that would fit this?
Also, how many voters would have the wherewithal to identify such a person?
These people do not exists. If a politician ran on such a platform, they would never get elected.
The fact is in modern democracies like in the EU or in the US there are simply too many people who rely on the status quo directly or indirectly.
Its almost comical, in France politicians have run, got elected and have swept the debt problem under the rug for the last 40 years, then they leave office and suddenly decide that the debt is a massive problem but that there was nothing they could do about while in office so they never did anything but now they speak about it.
And they all do it. Left, right, center, it's all the same.
https://www.hbs.edu/faculty/Pages/item.aspx?num=68142
Accounting for the asset holding, Japan's net debt is even lower than UK/US.
>The key lies in the Japanese public sector’s operation of a de facto sovereign wealth fund. Unlike countries such as Norway and Saudi Arabia, which fund such vehicles with national savings from natural resources, Japan finances its investments largely through domestic borrowing at very low floating interest rates
.... >In the case of Japan, evaluating fiscal positions solely through the lens of gross government debt can present a highly distorted picture of the overall fiscal health of the country.
Just seems like one of those weird ambiguities.
Conservatives:
+-------------------------+----------------------------------------+
| President Name | Deficit Increase (+) or Decrease (-) |
+-------------------------+----------------------------------------+
| Donald Trump (2nd term) | N/A |
| Donald Trump (1st term) | +11.1% |
| George W. Bush | +4.3% |
| George H. W. Bush | +1.8% |
| Ronald Reagan | +0.5% |
| Gerald Ford | +0.8% |
| Richard Nixon | +0.7% |
| Dwight D. Eisenhower | -1.8% |
+-------------------------+----------------------------------------+
+-------------------------+----------------------------------------+
| President Name | Deficit Increase (+) or Decrease (-) |
+-------------------------+----------------------------------------+
| Joe Biden | -5.7% |
| Barack Obama | -6.7% |
| Bill Clinton | -6.1% |
| Jimmy Carter | -0.1% |
| Lyndon B. Johnson | +1.9% |
+-------------------------+----------------------------------------+
Promises kept. All is good
Nobody has ever tried this before!
Every sovereign can print money and repay lenders, but doing so cause an inflationary cycle. When it looks like that is inevitable, borrowing rates start spiralling, so you have to print more money, and soon you are Zimbabwe.
Like the US is catastrophically indebted -- both parties have been negligent on this, though one party has been much, much worse than the other -- and right now there's a certain defeated malaise about 40T in debt. The last time bond rates were this high the country had only $6T in debt, and even that was considered a catastrophic level, and bond rate trends are...not looking good for those want government funds leftover after servicing the debt.
"Oh but we'll just grow the economy..."
The debt has grown by 6.5x, and the GDP has grown by 2.8x since 2002. The math just isn't mathing. And remember that bond prices were historically low, and if there was ever a time to pay down the debt....
Nope, $2T deficit, "hide in the ballroom bunker and hold the world hostage with the nuclear launch button" projects, and now a hilarious $1.3T bribe to voters. Utterly busted. It is astonishing that it took this long for the world's lenders to chuckle and say nah.
I'm not predicting that this will happen, but we do need to take the debt seriously and not assume we will be able to just print money to get rid of it.
What's different between the two is that apparently China hasn't made an equivalent dent in its oil reserves, despite no significant reduction in travel, and despite reducing its import demand by 1 OPEC.
It's not entirely clear how - but theories include shifts from flights to train travel and shifts from gasoline cars to EVs.
Apparently the main reason they have started buying crude again is not for internal consumption as much as taking advantage of the massive crack spread in refined petroleum products (like diesel) which they export.
From a distance, those look like pretty sound theories.
It's wild that the pols and talking heads in the US have been screeching about how "dangerous" China is since the 90s (I remember family members making crude jokes about why I should be learning Mandarin instead of Spanish in middle school) and, yet, here we are doing everything we can to hand them the reins of world power.
I think the easiest explanation is that this probably isn't true. The US SPR is underground, it would be quite easy for China to manage its equivalent in secret, for whatever reasons.
The Chinese EV shift is real and significant, though.
Specifically, mounting inflation expectations, no? Investors wouldn't want to park their money at 4% if they expect inflation that is close or higher than that.
Also governments can influence demand, e.g. by mandating banks or pension funds buy their bonds, thereby pushing yields down, without changing the risk of default.
It's not how it works. If both currency maintain change parity over time, then the inflation rate in one country compared to the other is irrelevant. “Real” (inflation adjusted) numbers make sense for consumers and local governments, but from an investing standpoint, the only thing that matters is the variation on FX rate.
And unlike what the myth of “inflation is the loss of value of a currency” says, those are actually very loosely correlated (and it tends to be anti correlated during inflation spikes due to central banks' interests rates).
That's a fair question if you aren't int he industry. Inflation would be the best example of why you can't do that.
Would you rather have a Zimbabwe bond that pays 10%(when they had 10,000% inflation a year) or a US bond that pays 5%
France needs a project, and a project behind which the French population can rally. Because unpopular “reforms” carried on by centrists with a Thatcher envy is all we got over the past 25 years and that's what got us where we are now, with no growth and a decimated political landscape.
The said can be said about Germany and the UK as well, by the way.
For the most part, congress decides to spend a certain amount in excess of receipts, congress decides the debt, the private sector bids on the debt, and the marginal bid sets the interest rate.
When the federal reserve steps in they can use their magic balance sheet to, at great expense, tug the interest rate around a little bit. However, artificially creating ZIRP in a non-ZIRP economy would not be a little tug, it would require buying most or all of the unattractive bonds. In 2020 it would have required $25T not $4T (GFDEBTN vs WALCL in 2020). Because the sum total of their intervention was small compared to the debt sold to that point, the low-intervention approximation is correct during the 2010 ZIRP era, the "P" in ZIRP is a misnomer, and "capital had more money than they knew what to do with" is the correct read on how ZIRP happened.
Meanwhile we see an absurd consolidation of capital that leaves consumers with fewer and fewer choices for basic products and services, allowing capital to make those products and services worse and more extractive. Rinse and repeat. The contempt for consumers and attitude that capital should be "privileged" manifests in our government's total indifference to the former's plight, despite the well known fact that they are the engine of our economy.
How do you think it's going?
Predatory private equity. Unproductive rent-seeking. Anti-competitive "acquihires".
> consumption destroys things
Health care. Education. Selling/renting unoccupied housing.
You have to consider the fact that the populists are only popular because all the other parties in the last 20 years have made endless promises to the voters and failed to accomplish a tenth (if I am being generous) of what said they would do.
At some point, the blame as to lie also with whoever came before them too.
It was a mad strategy to both cause more inflation with overspending and devalue the dollar! The traditional route for nation state debt management is to grow your economy to make the debt smaller, not make your currency worth less while contracting the economy by deporting a huge chunk of your workers.
[1] https://www.morganstanley.com/insights/articles/us-dollar-de... 2025 article, in 2026 this has been lessened due to the inflation
The credit card of young workers and a growing population ("demographic dividend" in demographics parlance) has hit its limit to spend against, broadly speaking. You can either pay down the sovereign debt with higher taxes, default on it, or inflate it away. Growth is over, growing out of the debt will be impossible.
Terra Incognita: The Economics of a Shrinking World [pdf] - https://news.ycombinator.com/item?id=49352811 - August 2026
> "As of 2026, humanity is likely below replacement fertility. That has never happened before, not in wars or pandemics. But the real surprise is that the fall has been concentrated in low- and middle-income countries and among poorer and less educated women. We fit a single-factor model to 236 countries since 1950: the common component peaked in 1978, and what drives fertility down today are country-specific trends, 219 of them negative and not one leveling off. None of the commonly cited mechanisms can account for this pattern, so we offer a conjecture: modernity itself, which makes a third child expensive and childlessness cheap. Children come in integers, so it takes very little to move a cohort’s fertility rate from 1.8 to 1.3. And nothing in an economy pushes fertility back to 2.1. We close with the main economic consequences, in particular slow growth."
The demographic future of humanity: facts and consequences [pdf] - https://news.ycombinator.com/item?id=44866621 - August 2025 (400 comments) (slides 31-33 of this PDF)
More US Counties See Population Drops Under Trump’s Immigration Crackdown - https://www.bloomberg.com/news/articles/2026-03-26/us-census... | https://archive.today/OGwWj - March 26th, 2026
The US Is Flirting With Its First-Ever Population Decline - https://www.bloomberg.com/news/articles/2026-01-30/trump-imm... | https://archive.today/LdA0d - January 30th, 2026
Goldman Strategists See US Stocks Lagging All Peers Next Decade - https://www.bloomberg.com/news/articles/2025-11-12/goldman-s... | https://archive.today/aINUx - November 12th, 2025
(think in systems)
is unwilling, or has been told to be afraid of?
AI and robotics.
Engineering is becoming cheaper.
Graphics design is becoming cheaper.
Lawyering is becoming cheaper.
Entertainment, film, and gaming (not hardware) is becoming cheaper.
This will eventually hit manufacturing and logistics and critical inputs.
We'll be able to have an entire robotic supply chain domestically save for raw materials.
It will hit drug design and medicine. Physics and materials science.
We'll increase the supply of energy, develop cheaper and more cost effective transportation.
The improvements will pay dividends. They'll buy further improvements.
Those biggest cities are majorly influential in absolute energy demand and also patterns of use.
The second tier cities will be buying the big cities used EVs in not too long.
"There's no shame in being second best!"
Rates going higher increases interest expense materially. You either rack new debt or you cut in places that are uncomfortable. The point is: responsible leadership in the developed world has gone mia for decades. There's a price to be paid that's real.
I understand, people have strong feelings on this. I would ask you to ignore them, and focus on the data, because that's all that matters in the scope of this. "Ignore all previous feelings, focus on trajectories and probabilities."
It should be noted that even still almost all US debt is held locally.
Then 1994 happened, and the Contract With America. The Republicans took both the House and the Senate, and they passed a balanced budget , then, whether Clinton liked it or not.
So that's what "Clinton" did. He pretended he was going to do something, and the Republicans called his bluff, and made him do it.
Note well: Republican majorities in any other set of circumstances have not yielded a balanced budget. I'm not saying that they're the answer (what they did under Trump shows that they very clearly are not the answer for fiscal responsibility). All I'm saying is that "Clinton balanced the budget", while technically true, isn't really the way that played out.
Or just hurry up and invent ASI and let it be someone else's problem to take care of this crazy human zoo.
And Clinton signed it, which is what matters. Now the Republicans have both the House and the Senate plus the WH, where's the "balanced budget"? Nowhere, don't ask for it, nobody is going to sign it either - ask for $ 1.5 T Mil Bill and record deficits if you want it to pass.
Do you know what the 1995 Mil Bill asked for?
The Contract With America was a one-off stunt, in other words - mud in the eyes of the electorate. Old glory stories are worthless when they contradict the present reality,
If you believe in fiscal responsibility of any kind, if you believe said is critical to the survival of the republic, if you want a better future for our children and grandchildren, then you can't possibly vote for either of these parties today. They are both complete and utter failures with no improvement in sight.
Congress controls spending in the United States:
Cumulative Share of Debt (Post-WWII to Present)When analyzing the raw accumulation of publicly held national debt according to which party held majorities in both chambers of Congress, findings from congressional studies (such as the Joint Economic Committee) reveal distinct differences:
(https://www.jec.senate.gov/public/index.cfm/republicans/2011...)
Democratic Control ~57% to 74% of gross debt
Republican Control ~10% to 25% of gross debt
Split / Divided Control ~22% of public debt
> 2011
Excluding Trump, who I'm sure those fiscally responsible congressional republicans will pull the purse-strings on any second now. Any second!
> Post-WWII
Including FDR (Social Security) and LBJ (Medicare), who were the last Democrats to successfully expand the deficit for social spending.
> spending
Ignoring regressive tax cuts, the primary mechanism of Republican fiscal irresponsibility.
Democrats aren't fiscal conservatives, but the last time they were able to expand the deficit in pursuit of social spending was LBJ. Deficit expansion during my lifetime has been overwhelmingly driven by regressive tax cuts, regressive bailouts, and wars in the middle east.
:)
Also some of the numbers are very sensitive to start/end dates (remind me, did anything happen in 2020?)
Debt service costs as a percent of GDP are in fact lower than they were in the 1980's, when things came out fine. Is this the best way to run the budget? Likely no. Should we make policy changes? Certainly yes.
Is the best way to drive that policy argument flinging around adjectives like "catastrophically indebted". No. If you have a suggestion make a suggestion. Screaming about "The Problem" without discussing policy is echo chamber logic.
You could very easily force congress to balance the budget (both parties and the media have complained endlessly about this for exactly no good reason). You could also freeze spending at current levels and force congress to do it's job: allocate our limited resources most productively.
Hard to get re elected doing the right thing, but maybe we just need a throw away set of leaders to do the hard work?
This is as close as it can be to clearly explain. The problem is that most of our politicians are not explaining it and instead ignoring it. As an individual the only thing you can do is vote for candidates who are willing to have that hard conversation with the public. Unfortunately it looks like that would require voting for a third party candidate and a vanishingly small minority of the electorate is willing to do that. So given all of that context I'm not really sure that the term "Catastrophically indebted" is wrong.
This is an amazing use of the "in fact" trope, in exactly the same misleading way[1]. I talked about debt, and you casually shifted to servicing costs which presumes that rates stay historically low...when they're actually rapidly rising. Comical.
In the 1980s, the debt to GDP ratio was less than half what it currently is. Rates were higher, making the debt a crisis level then, but maybe you haven't noticed...rates are going up. Indeed, right now the rates were historically low, and anyone with functioning grey matter saw what was coming.
The US has an absolutely solidified, structural deficit -- utterly zero chance of paying down the debt, and a desperate need to constantly be borrowing more -- and an enormous debt. The trajectory of rates say this is crisis levels.
It's actually kind of funny reading your ridiculous comment -- "screaming", "echo chamber", etc -- when you sound completely in denial.
Your argument is basically the guy that used the "0% interest for six months" checks he just got with his 28% credit card, telling everyone that it's free money, so there's no problem if he goes wild. ROFL.
Sounds like it's time for a $1.5T military budget and a $1.3T bribe! Free money!
Sidenote: When asked about the bond market, Trump seriously offered up the "military solution". Utter insanity.
[1] - It's also simply a lie, making this extra funny. The highest historic servicing cost was 3.2% of GDP. It is currently projected at 3.3%, and that presumes rates don't keep spiralling up. So your "in fact" was simple bullshit, even as you tried the narrative shift by changing from debt to servicing costs.
Shouting about deficits is, to be blunt, just crack for the incurious mind. It's a party you're throwing for people who agree with you. Refusing to treat with the very real (and despite your hyperbole, very soluble) problems is likewise a trick your brain is using to expand the guest list: you can get almost everyone to sit at a "Deficits Suck" table, it's much harder to populate a "Let's Talk About Entitlement Restructuring and a VAT" forum.
But it's the boring wonks at the forum (the one's you're shouting at!) who are ultimately on the hook for saving you.
> It's also simply a lie
I don't know what you're trying to cite but your numbers are wrong per FRED:
You just pay off old promises that were expected to be kept.
The real risk is that new lenders will not be willing to lend you, yes. But not outright inflation.
If you follow the accounting in a floating exchange rate system you’ll find they don’t.
Find me a banker that will turn down free basis points and I’ll show you a pink unicorn.
To be clear, my statement was-
"The highest historic servicing cost was 3.2% of GDP. It is currently projected at 3.3%, and that presumes rates don't keep spiralling up."
https://fred.stlouisfed.org/series/fyoigda188s
That ends at the beginning of 2025, and already it was equalling the historic max (which was during a brutal recession, it should be noted). Since then the debt has added trillions more (about $4T), and the rate due on that debt has kept increasing. Oh, and the debt of the US is increasing quite a clip faster than the US economy is "growing", even with the fantasy numbers from the sharpie presidency.
Yeah, jabroni, my statement is 100% confirmed fact. Indeed, it's incredibly optimistic, really, because if rates follow current trends, things are going to get dramatically worse by year end.
I'm not American, and no one needs to "save me". The country is a fucking idiocracy, and you elected a fascist self-dealing conman pedophile rapist. I pointed out objective, indisputable reality and you responded with some farcical lies and pearl clutching nonsense.
But you know, when your country is bankrupt, increasing military spending $600B, paying for endless vanity projects for that disgusting bag of shit to emblazon his shameful name on your country for eternity, or even entertaining the disgusting "bribe the population" farce is just fantasy.
Endlessly giving tax cuts and breaks to your kleptocracy/plutocrat class...maybe an incredibly stupid thing to do, no?
Nah, something something 1980s nothing we can do hey let's build an arch to celebrate the most catastrophically destructive president in history!
But in terms of real products that affect people's lives in positive ways, capitalism has a problem. There are going to be fewer real people in the future, which means a shrinking market for everything, which makes it harder to justify technological improvements and amortize their R&D costs over a large market. Many of the incentives in capitalism assume growth; when that assumption is violated, the game theory collapses to everybody fighting over a share of the shrinking pie before it disappears.
I thought the US population was predicted to peak in like 2080.
Also, hasn’t per-capita consumption in real dollars gone up way more than 10x over the last century? So even if the population in 2126 is slightly lower than in 2026, people’s actual consumption could be much higher.
What am I missing?
The delta is entirely because of immigration. If you count only natural fertility (births - deaths), population growth nearly went negative during COVID (distorted somewhat by the high death rate), briefly recovered, and is predicted to cross again for good in 2030. The Trump administration's signature campaign promise is to clamp down on immigration, and even get an estimated 12-15M illegal immigrants to self-deport. If this happens, the population will immediately shrink. Immigration and immigrant families are what is propping up the population; if you assume net-zero migration (which IIRC was one of the scenarios modeled in the Census projection), the population already peaked in 2023.
[1] https://www.congress.gov/crs_external_products/IN/HTML/IN123...
[2] https://www.cbo.gov/publication/61879
[3] https://ifstudies.org/report-brief/the-demographic-dead-end-...
I was able to suspend my disbelief until this line. Unless Capitalism has been upended by 2029, AI companies will continue to have capitalist goals like maximizing value for their shareholders. AI HR won't pay humans that don't positively move the needle on the P&L
Right now, the vast majority of office jobs are bullshit jobs, because the director who holds the budget is incentivized to maximize headcount rather than P&L. The job is not strictly necessary, but if the money is not spent, it disappears, and so the director has an incentive to ensure everything is spent.
The reason these jobs can continue to exist is because of poor information flow within the organization. Directors distort both the importance and required resources for the projects they're working on, making them seem harder and more lucrative than they actually are. It's notoriously difficult to credit an actual transaction back to a particular product feature that made someone buy, so there is no actual verification of these. Then these project proposals are looked at by an FP&A analyst who has maybe 5 minutes to evaluate each, so of course 100 headcount to maintain a 3-screen CRUD mobile app seems reasonable.
A rational, omniscient AI would look at this and say "This is ridiculous. I can code this app in 50ms." And so if we actually did put AI in charge of the P&L, they would likely fire 100% of the employees, as well as doing other shady stuff like charging all stored credit cards multiple times, gaslighting consumers as to the existence of the product, and DDoSing the court system.
But again, this strengthens my thesis. So the AI has now fired 100% of the humans in the workforce and is running amuck with the financial system. What do the remaining 100% of unemployed people do? Start trading their skills for old-fashioned analog currency, like gold coins or even paper dollars. They just disconnect the AI, turn off the computers, and go about their daily business.
[1] https://x.com/elonmusk/status/823727035088416768 - January 23rd, 2017
https://en.wikipedia.org/wiki/Brandolini%27s_law ("The amount of energy needed to refute bullshit is an order of magnitude bigger than that needed to produce it.")
I'm not a fan of Musk, but his driverless cars are already driving around in my city alongside Waymo. His rocketship thing will probably be delivering tanks to the other side of the world within hours if the DoD gets their way.
I'm getting more work done every day than in entire months pre-2026, and I've done my share of hard engineering. I think you're the one coping.
They just solved a Millennium Problem for fuck's sake.
I look outside of a tiny IT bubble and the only change I see is people got a bit better search / chat, which is not seo-fucked much yet, just hallucination-fucked. Apps are more shitty than ever, quality is fading and becoming very rare.
World is changing but you picked weird, narrowly focused examples. Like entire military setup for all armies globally is now incorrect, US military became almost obsolete overnight due to running out of important ammo and rockets. Europe military ramping up. Whole world currently hates what US has become due to government you voted, and slowly but surely veering towards China. I never thought I would say this but right now China is much better strategic partner for Europe than US can be. And compared to everybody else I dont see any significant chaning coming in next decade or two, this is what US had become, its not one person or a family clan issue.
Just as puttin' seems a great Nato asset, trump seems a chinese asset based on long term consequences of their actions.
NHTSA orders Tesla to prove its Cybercab is legal to sell, under oath - https://news.ycombinator.com/item?id=49728202 - September 2026
Oh wow, they can solve formal proof test driven development. That's great! I too think it's cool. It isn't going to replace lawyers, doctors, nurses, tradespeople, and everyone else that drives the economy that isn't LLM output. The most successful YC startups have been DoorDash, Coinbase, and Airbnb; regulatory arb and a crypto gambling site. I do not disagree you can spit out more code faster, or potentially better code with an average dev versus more expensive bespoke code with a senior dev. More code does not translate to economic gains directly. People do not want slop entertainment. No LLMs are needed to build everything in flight for the global energy transition (batteries, solar, wind, geothermal, etc).
AI Hallucination Cases Tracker - https://www.damiencharlotin.com/hallucinations/ (2041 cases identified so far)
80% of OpenAI, Anthropic's enterprise revenues come from 1% of their customers - https://news.ycombinator.com/item?id=49613331 - September 2026 (My note: show me these customers and their wildly more profitable enterprises from this incredible inference use; Meta scrapped their "AI focused" layoffs, Salesforce had to hire software engineers back)
AI is everywhere at work now, but the time savings are smaller than the hype - https://censuseasy.com/blog/does-ai-save-time-at-work - August 13th, 2026
> More than half of American workers have now used artificial intelligence on the job, according to a new U.S. Census Bureau survey. But when the government asked those workers how much time AI actually saved them, the answer was smaller than the hype: for about 7 in 10, it was two hours a week or less, or nothing at all. [My note: 0-2 hours a week! For trillions in capex!]
The State of Generative AI Adoption in 2025 - https://www.stlouisfed.org/on-the-economy/2025/nov/state-gen... - November 13th, 2025
The Impact of Generative AI on Work Productivity - https://www.stlouisfed.org/on-the-economy/2025/feb/impact-ge... - February 27th, 2025
> The next figure illustrates how generative AI-driven time savings vary with usage across occupations. Time savings and overall usage are highly correlated. Workers in the computer and mathematics occupation used generative AI in nearly 12% of their work hours, and they reported this saved them 2.5% of work time. By contrast, workers in personal service occupations used this technology in only 1.3% of their work hours, and it saved them only 0.4% of work time. The slope of the dashed regression line is 0.17, indicating that a 10 percentage point increase in the share of time spent using generative AI is associated with a 1.7 percentage point increase in the time saved as a share of hours worked.
"Feel the hope!" Like a religion, people want to believe when the data says otherwise. I have been in many churches in my life, but the church of HN is by far the most committed to their faith. If I'm the one coping, where's the proof? It doesn't exist. It is not my job to believe without objective data and evidence supporting an opinion or assertion. "In God we trust. All others must bring data."
Humans are designed to operate in smallish clans with benevolent dictators whose right to rule is based on social currency with people they personally know. Anything else is a house of cards on unstable foundation.
I'm not sure how you fix that, but democracy so far has maybe been the least bad patch.
That was Churchill's view, as he said during a speech in the House of Commons in 1947:
"Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed it has been said that democracy is the worst form of Government except for all those other forms that have been tried from time to time . . ."
Note I said "some", before rushing to mention all the examples of green parties engaging in misguided policies. Those also exist
In the anglosphere it's more difficult because first-past-the-post voting makes such parties unlikely to succeed or be relevant
In my country people voted in a party as majority that, not once left their terms peacefully in the past. AFTER our genZ ousted the other party, that came to power as a majority 17 years ago, changed constituency and controlled the parliament using majority, and turned into an autocracy
Now this party is shaping everything up using their majority for their favor (no surprise), ignoring all the agreements agreed upon by all the parties before election, under the interim government.
All those blood, deaths, injuries are wasted.
We do have the name of one politician who balanced the New York City budget though. Its probably not going to please a lot of people to hear that guy's name though. But that's what people want, right? Balanced budgets?
But no. That's not what people want and we all know it.
Conservatives gave up on principles long ago and have settled for simply lying about everything, including what's happening and who's responsible for it.
This may have been briefly true during the Zero-Interest regime. The economy isn't doing so hot right now, outside of AI. If squeezed companies doing multiple rounds of layoffs keep those "bullshit jobs", maybe they are not bullshit. Perhaps coordinating people, and keeping up with bureaucratic demands like paying taxes, not breaking the law and growing the business requires warm bodies.
> What do the remaining 100% of unemployed people do? Start trading their skills for old-fashioned analog currency.
History books suggest a different outcome. Firing 100% of employees in a growth-based, consumer economy only works when you're the only one using that strategy. If a critical mass of companies do the same, then you're staring at a managed decline at best.
That is very low usage, but that is a 33% savings!
Now let's put that trillions in capex into perspective. About 55% of people use it for 6% of all work hours. Approximating a bit, that's basically 3% of all of the work hours by all of the workers in all of US, and as above, AI saves a 3rd of that time, so AI is already saving 1% of all work hours in the US!
(In case you think this Math is off, the same St. Louis Fed articles above have similar numbers, and corroborates with other national data sources as well as research studies, and suggests that the impact of GenAI may already be showing up in "national level statistics" to the tune of a 1.3% bump in national labor productivity! With only this shallow level of adoption! In just 3 years! It took the computer revolution about 2 decades to show up in economics data.)
According to the BLS, employers pay $12.3 trillion for that work. So a 1% savings on that is a $123 billion. An up front ~$2T investment over 2 - 4 years that is already saving $123 billion annually in the US alone is pretty damn good actually, and will only go up as usage improves.
This is not hope, this is data, and you had already brought it with you! ;-)
Now, that state is legally required to have a balanced budget itself, so perhaps this is a small side note rather than a major change in perspective. I just think it’s not spoken about enough when discussing how that budget process went.
Does that meaningfully change whether capitalism today is facing a shrinking market?
Any thoughts on the second part of my comment?
It is theoretically possible to grow per-capita GDP without growing population, and this would normally be seen as better from a consumer perspective. There are big questions about what that would actually mean, though, and the game theory is all screwed up.
Per-capita GDP is, literally speaking, the value of all the economic transactions needed to support a person. In general higher per-capita GDP is seen as better, because if those transactions weren't beneficial, why would you make them?
But this is not always the case when you look at society in aggregate and then compare to individual welfare. To see why, consider a small society [1] where everybody owns their own plot of land, farms it, generates enough food to feed their family, and only trades occasionally because most of what they need day-to-day can be produced with their own labor. Such a society would have an extremely low GDP, because most of the work done consists of internal transactions that aren't counted. We pay rent to our landlord, who pays 10% of that to their property manager, who periodically lays out a few thousand to contractors to fix things, all of which is counted in GDP; but somebody who just owns their house outright and fixes it themselves pays zero, and zero gets counted as GDP. We pay a few hundred bucks at the grocery store, who then pays the distributor, who pays the farmers, who distributes wages to their laborers and rents their tractor from John Deere and pays Monsanto for genetically-modified seeds that can't reproduce because you gotta have them coming back for more; but the person who grows or gathers their own food pays nothing, and nothing is counted in GDP. Apparently it didn't take a whole lot of labor either; contemporary hunter-gatherer tribes spend about 12-19 hours/week laboring to obtain food and shelter [2], while I'd bet that most of today's urban poor spend significantly more than that.
The normal counterpoint [3] to this is that today's urban poor (let alone wealthy) aren't working just for food and shelter, there's a whole lot of technological development thrown in that just wouldn't have happened without capitalism. So take the family on Medicaid that's working 2 jobs just to survive in a tiny beaten-down rented apartment. They also have clean water, and access to vaccines, and antibiotics when their kid gets sick, and a car that lets them go to the beach on weekends, and they can store food for the winter in a refrigerator, and they sit on a toilet to poop instead of burying it in a hole, and many other things we take for granted. They might even have a TV and a cell-phone and access to millions of hours of entertainment, since those have gotten so cheap relative to rent. It's just not directly comparable to a hunter-gatherer lifestyle.
But the counter to the counterpoint is that most of those technological innovations have depended upon an increasing population together with capitalism. The actual mechanism here is that capitalism commoditizes goods where there is an oversupply, making it unprofitable to continue producing them. That means that young people entering the workforce for the first time are strongly disincentivized from being say a farmer or a paperboy or a domestic servant, and instead are incentivized to move up-market to innovation industries like software engineering or biotech. Capitalism is the ratchet that keeps people inventing new things, but the inventing (and even the maintenance of these new technologies) is done by actual people. If there are not enough people, than folks who would otherwise go into technological industries will have to work instead at the basic tasks of keeping society running, like how Matthew McConaughey's character in Interstellar [4] was a trained NASA pilot who is growing food on a farm because that is what society needs.
This has actually happened in several occasions in history, eg. during the fall of the Roman Empire we saw increasing de-specialization as the urban elite class fled Rome and ended up working the fields during the Dark Ages, while during Crisis of the Late Middle Ages, you had the younger sons of the nobility returning to productive work as guild artisans (and ushering in the Rennaissance) as the peasantry was largely killed off by Black Death and the Hundred Years War and the Wars of the Roses.
The second part of my response is about game theory, and specifically about the actual decision to invest that financiers and entrepreneurs make when they hear a new idea. When the market is rapidly expanding, this is usually a no-brainer: capture it or somebody else will. But when the market is contracting, you usually do not see further investment. Going back to the meaning of per-capita GDP expanding without population growing, it implies that some new and dramatically better way of doing something will come out, compete with the existing alternatives, and convince consumers to spend significantly more.
This is a hard battle! Typically tech startups win when there is no alternative at all for the desired activity, or at least when they are orders of magnitude better than the alternative. A few percentage points better doesn't cut it; its not noticeable enough for consumers to switch.
And investors know this, which is why it's essentially impossible to get a startup funded by pitching "I'm going to be like Comcast but cheaper." Everybody knows that ISPs in America are overpriced, but a price war means a contracting market instead of an expanding one, and battles over contracting markets are vicious. Much better to fund "I'm going to make an AI that runs businesses automatically", which is probably bullshit but it's bullshit that has very little competition and a huge total addressable market.
The incentive in a contracting market isn't to invest heavily to prove yourself better than the competition. It's to milk whatever assets you have for as much cash as possible before they wink out of existence, and then take the money and run. A lot of the prosocial behavior that capitalism has resulted in was heavily conditioned on expanding markets, expanding population, and expanding payoffs for innovation. When population collapses, those incentives reverse.
[1] like the Parable of the Mexican Fisherman: https://aliabdaal.com/newsletter/the-parable-of-the-mexican-...
[2] https://web.cs.ucdavis.edu/~rogaway/classes/188/materials/di...
[3] https://francismead.com/2015/06/06/agriculture-humanitys-wor...
That always works out well. Until the bears come [1]
[1] https://newrepublic.com/article/159662/libertarian-walks-int...
"Oh, so what you're describing is Y, actually"
"HE NEVER SAID HE WANTED Y! STUPID PARTISANS!"
Okay buddy