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Home Publications Blogs Beat the Press People Driving West Are Getting Closer to Falling Into the Pacific Ocean

People Driving West Are Getting Closer to Falling Into the Pacific Ocean

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Saturday, 23 February 2013 08:51

That seems the obvious response to the comment by Federal Reserve Governor Jerome Powell on the prospect of the United States government facing a debt crisis:

“We don’t know where the tipping point is, but wherever it is, we’re getting closer to it.”

Needless to say, the concern seems more than a bit silly given the problem of unemployment facing the country and the fact that both interest rates and the interest burden of the debt are near post-war lows.

But hey, at least worrying about the debt keeps these economists employed and off the streets. We can think of it as being like Keynes tongue in cheek proposal to bury pound notes and then let people dig them up. It might be pointless activity, but in a badly depressed economy it still can create jobs and increase output.

Comments (7)Add Comment
Tipping points
written by bakho, February 23, 2013 8:27
There is an ocean in the other direction called the atlantic.

Backing away from inflation means backing toward deflation and recession which are a non-trivial risk.
...
written by JSeydl, February 23, 2013 9:15
The last paragraph is priceless. Nice one, dean.
...
written by John Yard, February 23, 2013 11:15
We don’t know where the tipping point is, but wherever it is, we’re getting closer to it.”

Why are economists paid? If you were an engineer, and said such things as part of a project analysis, you would be fired asap.
Deficit
written by sherparick, February 23, 2013 12:21
And the deficit is declining this year, next year, and in 2015. Further, much of the increase in the deficit after 2015 is based on an assumption of higher interest rates, that the U.S. economy will escape the depressed, zero bound it currently slogs forward on. With the increased Fiscal austerity thisy year and next, and the experience of Japan to teach us, we may well stay near ZIRP through the decade. https://www.cbo.gov/sites/default/files/cbofiles/attachments/43907-BudgetOutlook.pdf

The political propaganda machine on deficit spending is primarily about keeping taxes down on the rich, shrinking public goods available, and keeping downward pressure on real wages for the middle and working classes through prolonged unemployment.
You can only cry wolf so often
written by Jennifer, February 23, 2013 12:57
It might be possible to take some of there economists seriously if they had not been parroting the same nonsense for so long with nothing to show for it. They have been yelling WE ARE BECOMING GREECE THE DEFICIT WILL SWALLOW US ALL (Lol Rick Santelli) or some version of this for the past four years. It's well known at this point that many of the Important People with a lot of money who bet big on interest rates going high (the real sign of an unmanageable deficit) like Bill Gross lost a lot of money. In poll after poll people's biggest concern is the economy but 99% of the time that means employment. It would be great to see CNBC and the like spend their time on that topic instead.
...
written by watermelonpunch, February 23, 2013 1:44
In poll after poll people's biggest concern is the economy but 99% of the time that means employment. It would be great to see CNBC and the like spend their time on that topic instead.


+1

1) "Important people" seem to assume that when "average people" say they're worried about the economy, that they mean they're worried about government debt, when really they're worried about their own debt & their own inability to raise more revenue, personally.

2) Unfortunately some "average people" now believe unemployment is actually caused by the deficit, because of loud people yelling out crazy stuff. (not limited to Rick Santelli (lol) unfortunately!)
Questioningly
written by Jeffrey Stewart, February 23, 2013 5:51
“We don’t know where the tipping point is, but wherever it is, we’re getting closer to it.” -J. Powell


This is confusing. If we don't know where the tipping point is, how is it possible we know we're getting closer to it? We could be just as easily be getting farther from it.

That's an ideologue for you. He knows what he believes, just not why he believes it.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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