Rapacious corporations sometimes put out interesting infographics. I wonder what it takes to get a job like this in one of these corporations, where I assume most jobs are not like this. Anyway, this entry from Goldman Sachs has some interesting ones. I’ve screenshotted a few interesting graphics – this is fair use and I am steering people to your publicly posted info, please don’t sue me guys!

What the heck are stablecoins?

So basically, a bank or bank-like entity is allowed to take a dollar and issue you a digital currency that you can spend just like a dollar. Crucially, it appears that they have to keep your dollar as a dollar or invest it in U.S. Treasury bonds while they are holding it. So they can make interest on your dollar and you cannot, but they can’t actually create new money by issuing more stablecoins than people give them dollars.

U.S. government debt interest payments are historically high

We often hear “debt is X percent of GDP”. But this is comparing a stock and a flow, so there is no reason 100% has any meaning as a benchmark and it certainly does not mean the entire economy is being spent to service the debt. This measure is really a proxy for interest payments as a percent of GDP. This is really the “hangover” from past spending – what we are spending on interest can’t be spent on anything else, and we can’t really control it in the short term. What is really concerning here is that the high interest payments of the 1980s might be explained by high interest rates, but the debt payment level never came down as interest rates came down during the historically low interest rate period since then. Now interest rates are spiking, and this is directly sucking dollars away from real priorities. So clearly, we have to either “grow our way out”, reduce spending, and/or increase taxes (and/or tariffs) if we want to reduce this number. But reducing spending, increasing taxes, and putting up trade barriers all tend to decrease growth in the near term so this is the conundrum. The government can just create money of course, but this tends to be inflationary and at the moment, we appear to be in the midst of a spiral of inflationary expectations that is not going to go away soon. Thanks Biden…but really thanks Obama, Trump and Biden administrations for making the necessary hard choices to stimulate the economy and head off panic during the financial and Covid-19 crises. This has left less slack to deal with the next crisis though – the current number may be sustainable absent an external shock, but of course external shocks happen. The only good thing about external shocks is they sometimes tend to reduce interest rates. By the way, this section of the publication concludes by showing that government debt is not a uniquely U.S. problem.

The Federal Reserve has a Geopolitical Risk Index

Basically, it is just counting the number of newspaper articles mentioning geopolitical conflict in a specified number of “papers of record”. I suppose it provides a somewhat objective measure to ground discussions on interest rates for them. But it could be useful for the rest of us to gauge whether our impressions of geopolitical instability are matching the evidence.