This is Brad DeLong's Grasping Reality—my attempt to make myself, and all of you out there in SubStackLand, smarter by writing where I have Value Above Replacement and shutting up where I do not… For a Normal U.S. Government to Shoulder "Credit Risk" Can Be Fine. But This Is Not a Normal U.S. Government, Is It? is not. Policy discipline mattersChaos monkeys promising unconditional U.S. financial support for unsustainable Argentinian economic policies is a royal road to disaster. Failing to make that transparently clear at the start of.
Chaos monkeys promising unconditional U.S. financial support for unsustainable Argentinian economic policies is a royal road to disaster. Failing to make that transparently clear at the start of the piece is doing a disservice to your readers. So why are you doing this, Matt Klein?
Et tu Matthew? Normalizing chaos monkeys is not a good look:
The next to last sentence is a genuine point. Indeed: the U.S. government should be more willing than it has been to take credit risk for the sake of mitigating balance of payments crises. The sentence before it and the sentence after it, however, are embarrassing. Because it is Trumpist Bessent’s proposal, it is not a good idea at all—not even a “germ”. And because it is the Trump chaos-monkey administration doing it, Argentina is not the best case. As I said a week ago:
Lender-of-last resort operations involve (a) lending freely (b) at a penalty rate (c) on collateral good in normal times. In the international context:
This is smelling like the British Tories’ defense of the pound back in 1992, the thing that made George Soros’s career as he took ten figures of pounds sterling away from the British government. And since that story has been told and retold everywhere in the Soros affinity all the time since, Bessent knows it very well. So what does Bessent think he is doing? And what does Klein—smart, honorable, well-intentioned—think he is doing in providing even half-hearted praise for the “germ of a good idea”, and stating that it is just a question of whether here and now? Maybe Klein thinks, rhetorically, that if he starts his piece sympathetically he will bring more people along to his ultimately negative conclusion. But that is not how this works: that may be what he wants Trumpist and Trumpist-curious readers to hear. That is not what they will hear. If reading this gets you Value Above Replacement, then become a free subscriber to this newsletter. And forward it! And if your VAR from this newsletter is in the three digits or more each year, please become a paid subscriber! I am trying to make you readers—and myself—smarter. Please tell me if I succeed, or how I fail…#for-a-normal-us-governmentPlease forward the email & otherwise share it to everyone you think would appreciate it…
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For a Normal U.S. Government to Shoulder "Credit Risk" Can Be Fine. But This Is Not a Normal U.S. Government, Is I…
Wednesday, 8 October 2025
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