Least Bad

🌈 Abstract

The article discusses the persistent narrative of America's imminent decline and the author's perspective on why this narrative is unfounded. It examines various economic indicators and compares the US to other countries, arguing that the US is doing better than commonly portrayed.

🙋 Q&A

[01] Predictions of America's Decline

1. What are some examples of past predictions of America's imminent decline?

• In the 1980s, there were concerns about Japan surpassing the US economically in areas like computers and cars.
• In the early 2000s, books like "Dark Ages America: The Final Phase of Empire" and "Are We Rome? The Fall of an Empire and the Fate of America" predicted the US was in decline.
• Today, there are claims that events like January 6th and Russia's invasion of Ukraine signal the "beginning of the end" for the US.

2. How does the author view these predictions of decline?

• The author sees these predictions as "click bait" that the public continues to fall for, despite the data not supporting the narrative of imminent decline.
• The author argues that these predictions are not accompanied by credible alternatives to the US's dominance.

[02] Concerns about the US Dollar

1. What is the argument around "dedollarization" and the US losing its reserve currency status?

• Some believe the US is ceding its status as the world's reserve currency due to unsustainable spending and loss of global faith.
• Figures like Ray Dalio argue empires win and lose hegemony based on reserve currency status, and the US is nearing "freefall" in this regard.

2. How does the author respond to these concerns about the US dollar?

• The author argues the data does not support the narrative of the dollar's decline. The dollar's share of global reserves has fluctuated over decades but remains dominant.
• Alternatives like the yuan or cryptocurrencies have not come close to challenging the dollar's status as the preeminent global reserve currency.

[03] Concerns about US Debt and Creditworthiness

1. What are the main concerns raised about US debt and creditworthiness?

• Increased US borrowing and debt levels are seen as leading to higher interest payments, crowding out private/public investment, and eventually default.
• Ratings agency Fitch recently downgraded the US credit rating due to "fiscal deterioration" and "erosion of governance."

2. How does the author respond to these debt and creditworthiness concerns?

• The author argues creditworthiness is relative, and the US remains the safest option for creditors compared to other nations.
• The bond market barely reacted to Fitch's downgrade, suggesting it was not seen as a meaningful shock.
• The author compares the US debt-to-GDP ratio to other countries, showing it is less dire in relative terms.

[04] Overall Economic Outlook

1. How does the author characterize the US economy and its global position?

• The author argues the US economy is doing "just fine, better than fine" by many measures - GDP, innovation, stock market performance, etc.
• The US maintains unique advantages like the best universities, military, rule of law, and culture of embracing risk.

2. What is the author's overall conclusion about the state of the US?

• The author believes the "glass is half-full" and that the US remains the "least bad of our kind" when compared globally.
• The author acknowledges political biases but still sees the data as showing the US in a relatively strong position compared to predictions of imminent decline.