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Home Publications Blogs Beat the Press There Is a Way to Measure the Money Available for Private Sector Investment

There Is a Way to Measure the Money Available for Private Sector Investment

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Thursday, 17 February 2011 05:46

It's called the "interest rate." The NYT should have made a reference to interest rates in an article that reported House Speaker John Boehner's claim that government borrowing is pulling away money from the private sector, thereby curtailing investment.

The data do not support Mr. Boehner's claim. Interest rates are at historically low levels. For example, the interest rate on Baa bonds, which would be paid by large reasonably creditworthy companies, is lower in both nominal and real terms than it was in the late 90s when the government was running a budget surplus.

If the article had discussed the interest rate, readers would have the ability to assess whether Mr. Boehner's claim is accurate. Instead, the article is essentially just a he said/she said piece.

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...
written by skeptonomist, February 17, 2011 7:42
Again, corporations have been making incredible profits since 2002:

http://research.stlouisfed.org/fred2/series/CP?cid=109

They should have plenty of money and less need to borrow than ever before, although as Dean says they can get the money at lower rates than at any time for the last 50 years or so.

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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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