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Old 11-17-2011, 10:11 PM
 
2,931 posts, read 1,844,968 times
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Quote:
Originally Posted by MTAtech View Post
You are welcome. Actually, it's negative real interest rates. Inflation is about 2% while 10-yr Treasuries are below that.

On the parable of the broken window, in a liquidity trap normal laws of economics do not apply. As Krugman writes, "Thrift leads to lower investment; wage cuts reduce employment; even higher productivity can be a bad thing. And the broken windows fallacy ceases to be a fallacy."
So if inflation is 2% and the government sells it financials at 1.9%, then the government is actually ahead of the game? Something doesn't pass the smell test.

I respect an economic scholar like Krugman, but I find it a little farfetched that he touts debt over savings. If I understand the broken window parable,..the broken window supposedly started the economic wheels rolling in that now the owner of the shop had to spend money with a glazier,..who in turn took that money and created more goods and services. The theory was that destruction of the window was actually a good thing because it boosted the economy.

It seems that the downside would be the shopkeepers the expenditure for the glass probably hindered other aspects of the business.
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Old 11-18-2011, 08:17 AM
 
Location: Long Island, NY
19,711 posts, read 11,062,915 times
Reputation: 5600
Quote:
Originally Posted by sol11 View Post
So if inflation is 2% and the government sells it financials at 1.9%, then the government is actually ahead of the game? Something doesn't pass the smell test.
It's not that the government sells it financials at 1.9%, it's that investors demand those bonds in such great numbers that they bid down the interest rate to 1.9%. It's a sign of confidence in U.S. debt -- regardless of what the rating agencies say.

Quote:
Originally Posted by sol11 View Post
I respect an economic scholar like Krugman, but I find it a little farfetched that he touts debt over savings.
...
The nature of economics is that there is no one policy fits all model. In times of high inflation, government borrowing in those times crowds out private borrowing and drives up interest rates.

But in times like we have now, with high unemployment and under-utilized capacity due to low demand, it's appropriate to spur demand with government borrowing. The fact that interest rates are at record low rates, all the better. Even better, it has virtually no pressure to drive interest rates up.

Here is some reading material:

Today's column is about the divide that we see in this thread;
Quote:
Republicans and Democrats don’t just have different priorities; they live in different intellectual and moral universes.

In Democrat-world, up is up and down is down. Raising taxes increases revenue, and cutting spending while the economy is still depressed reduces employment. But in Republican-world, down is up. The way to increase revenue is to cut taxes on corporations and the wealthy, and slashing government spending is a job-creation strategy. Try getting a leading Republican to admit that the Bush tax cuts increased the deficit or that sharp cuts in government spending (except on the military) would hurt the economic recovery.

Moreover, the parties have sharply different views of what constitutes economic justice.

Democrats see social insurance programs, from Social Security to food stamps, as serving the moral imperative of providing basic security to our fellow citizens and helping those in need.

Republicans have a totally different view. They may soft-pedal that view in public — in last year’s elections, they even managed to pose as defenders of Medicare — but, in private, they view the welfare state as immoral, a matter of forcing citizens at gunpoint to hand their money over to other people.
Additional reading material:

http://www.nytimes.com/2011/10/31/op...rssnyt&emc=rss

The Arithmetic of Near-term Deficits and Debt - NYTimes.com

The Return Of Secular Stagnation - NYTimes.com
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Old 11-18-2011, 04:28 PM
 
Location: The Internet
355 posts, read 734,929 times
Reputation: 426
Exclamation Urgent: U.S. debt now over $15 trillion

U.S. National Debt Clock : Real Time

Way to stick it to the future America!

The only thing I see coming are austerity measures, currency devaluation, the Social Security trust fund IOU's not being paid back, and further U.S. credit downgrades.

Not a good time to have a balanced budget amendment fall through:

Balanced budget amendment falls 23 votes short in House - CSMonitor.com
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Old 11-18-2011, 04:39 PM
 
29,988 posts, read 35,978,503 times
Reputation: 12725
$15,000,000,000,000
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Old 11-18-2011, 04:42 PM
 
Location: Great State of Texas
86,093 posts, read 70,127,848 times
Reputation: 27525
Well, us peons can only sit and watch the numbers increase
Our government has no intention of cutting back. Neither D nor R want cuts. Oh they may SAY they do but when something is presented, by either side, it's either tabled (Senate) or rejected and finger pointing starts along with public statements of "the other guy is blocking me".

Personally I think they are quite happy that no cuts are happening and have no qualms about lobbing "blame" back and forth to each other(D and R) every few weeks.
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Old 11-18-2011, 05:02 PM
 
Location: The Internet
355 posts, read 734,929 times
Reputation: 426
Quote:
Originally Posted by lifelongMOgal View Post
Thanks for the link.
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Old 11-18-2011, 05:09 PM
 
Location: The Twilight Zone
773 posts, read 391,091 times
Reputation: 363
Quote:
Originally Posted by RottenChester View Post
U.S. National Debt Clock : Real Time

Way to stick it to the future America!

The only thing I see coming are austerity measures, currency devaluation, the Social Security trust fund IOU's not being paid back, and further U.S. credit downgrades.

Not a good time to have a balanced budget amendment fall through:

Balanced budget amendment falls 23 votes short in House - CSMonitor.com
You're a little late on this:

$15,000,000,000,000
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Old 11-18-2011, 05:36 PM
 
17,752 posts, read 15,083,249 times
Reputation: 6378
Quote:
Originally Posted by sol11 View Post
Either America has a debt, or it doesn't. Your comment about "literally print the money needed to pay said debt",..is troubling. Advocating making the dollar worthless on the world market is financial suicide for the USA.

"...the government investment in the economy is far more valuable than a small bit of inflation",....was tried by FDR and was a dismal failure. Did we not learn anything from the Great Depression?

Then why aren't you complaining about 0 interest rates which is behind the world wide ballooning asset prices and weakening of the dollar?

And the US could literally print money to pay its debt. To stop it from being inflationary, they could tax principle on debt or dump the FED in the river and switch to full reserve banking. If there were still too many dollars, they can tax them back in.

And what would this silly little thing do?

I'd guess it would save our society trillions from the financial parasites who just love for you to chase around the billions that our government wastes while they steal trillions every year.
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Old 11-18-2011, 08:55 PM
 
Location: The Internet
355 posts, read 734,929 times
Reputation: 426
Quote:
Originally Posted by Heritage Member View Post
You're a little late on this:

$15,000,000,000,000
Yep, glad I'm not the only one who noticed this new and unpleasant milestone.
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Old 11-18-2011, 08:58 PM
 
Location: The Internet
355 posts, read 734,929 times
Reputation: 426
Quote:
Originally Posted by Heritage Member View Post
You're a little late on this:

$15,000,000,000,000
Your post is also ironic since lifelongMOgal beat you to it:

Quote:
Originally Posted by lifelongMOgal View Post
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