Comments for More Debt Fearmongering at the Washington Post at http://www.cepr.net , comment 1 to 18 out of 18 comments http://www.cepr.net Thu, 23 May 2013 20:43:48 +0100 FeedCreator 1.7.3 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-668 grand watches [url=http://www.watchesfan.com/]replica watches[/url] swiss watches [url=http://www.pocwatches.com/swiss_rolex-watches.html]swiss rolex watches[/url] jules audemars watches - replica watches Tue, 25 May 2010 15:06:15 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-270 "The serious scenario is high interest rates." In a fiat currency regime (which we have), the central bank controls interest rates. "The high interest rates would mean that more money would be flowing out of the country to foreign entities." Huh? It would mean more money flowing into the country to buy our bonds, assuming we decide to issue a bunch of them. "If the flow got too high, then it would have serious impact on the quality of life for Americans." We can print money at will. What will have serious impact is foregoing current social investments such as education and maintaining full employment. A failure here will have big impacts in the future, not who owns our treasury bonds. - bobbyp Mon, 26 Apr 2010 18:16:53 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-268 Maybe not so original. Please see Godwin's Law: http://en.wikipedia.org/wiki/Godwin's_law - Melissa Mon, 26 Apr 2010 13:42:14 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-261 Suppose our grandparents had made the decision not to incur massive, all time record deficits to fight WWII. Would we be better off today because they decided to be thrifty and save us from the terrible debts that they saddled us with? The entire debate about the federal debt is absurd. - OriginalThought Mon, 26 Apr 2010 08:55:23 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-260 [i]serious budget problems[/i] What is a [i]serious budget problem[/i]? What is the scenario? We can always instantly pay off our debt by (abstractly) printing money to off all treasuries. (This is the 'inflate away' solution.) The serious scenario is high interest rates. The high interest rates would mean that more money would be flowing out of the country to foreign entities. If the flow got too high, then it would have serious impact on the quality of life for Americans. If this happened as a shock, then oil price would skyrocket and there would be angry mobs in the streets. Sounds crazy, but Americans get real touchy about their oil.(Ask any Iraqi) - vorpal Mon, 26 Apr 2010 08:07:55 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-259 [b]Dean said,[/b] [i]Over the long-term, if we don't fix the health care system, we will face serious budget problems,[/i] I'm not sure this statement is true, at least as it was intended. The problem with inefficient health care is that it makes the US less competitive and it squanders resources. The US uses a lot of imported resources and products. An inefficient health care system erodes the US's ability to compete for our share of those resources. Another example of inefficiency would be the Defense industry. The defense industry utilizes a substantial chunk of the best resource a nation has, brain-power. Intead of smart people working to develop exportable products, they are engineering various ways of killing people. Americans may enjoy killing people, but it doesn't help pay for that Samsung TV, or Honda Civic. The meaning of the Federal Budget Deficit, and the National Debt is not as cut and dry as people think. This is due to the dynamic nature of the economy and the close connection between the treasury and the fed. - vorpal Mon, 26 Apr 2010 07:51:26 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-254 CEPR has a nice calculator that compares the U.S. deficit under current projected health care trends, the U.S. deficit with a lowering of health care costs and deficit projections around the world. It's not a pretty picture, just because of health care. Click on the countries you want to compare. http://www.cepr.net/calculators/hc/hc-calculator.html - FoonTheElder Mon, 26 Apr 2010 07:08:07 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-252 Just for kicks, the debt in 1956 dollars, the end of the baby boom years,$1,088,182,661,358.65, or 13% of the nominal debt "a few days ago". The Washington Post has become the Pravda of the US, mimicking the daily ebb and flow of the political dickology that is DC. Allowing a former National Geographic science writer and commentator on National Public Radio (Achenbach) to wax eloquent about national fiscal policy sets the bar below the stool. Perhaps a person [i][b]Captured by Aliens[/b][/i][url]http://home.earthlink.net/~exetermw/achenbach.html[/url] has a more Universal understanding of debt and is pushing a galactic "Big Short" for (should I?) [s]Godman Sux[/s]. Nice call out, Dean. - Larry Signor Mon, 26 Apr 2010 05:54:46 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-248 Andrew, 1. Pre-revolutionary France. I don't know much about this one, but I suspect there was both a currency debasement and an artificial link to gold, something modern fiat currency systems do not have. 2. Weimar. The US does not have a foreign power occupying its industrial heartland, nor does it have onerous bills (war reparations) that must be paid back in a foreign currency or gold. 3. Russia. They could not sustain the artificially high peg for their currency, nor could they meet their foreign currency denominated debt obligations. The US does not peg its currency. The US is not on the gold standard. The US government does not issue debt denominated in foreign currency. The examples cited do not apply. Thanks. - bobbyp Mon, 26 Apr 2010 03:37:00 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-247 10-year treasuries are going for 3.77%. Maybe the Post knows something the market doesn't know. You'd think that if Joel Aschenbach really believed that the debt was creating a risk of default he'd be shorting treasuries and be on his way to becoming rich instead of writing propaganda for Pete Peterson. - Bloix Sun, 25 Apr 2010 21:13:06 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-246 There are many historical examples of bad consequences to using borrowing for spending. (France before the revolution, Germany after WWI) but more recently, take a look at the Russian experience in 1998: http://research.stlouisfed.org/publications/review/02/11/ChiodoOwyang.pdf - AndrewDover Sun, 25 Apr 2010 16:47:14 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-245 Andrew, 1. My cash paid for a bond today goes into the general fund. This is the same fund that pays interest on the debt and may (but not necessarily) help pay for redemptions. I believe your assertion is not quite correct. 2. The US has run deficits throughout its history. Andy Jackson paid it off, but for the most part, we have had deficits, which implies growing total debt burden. This has been offset by the growth of the economy, which is "able" to easily handle that debt, generally speaking. In fact, when you review sustained periods to pay off the public debt, you will note they were followed by recessions and/or depressions. I agree that this is not a crisis now. It doesn't strike me as a crisis in the future either. Government spending is not financially constrained. The constraints are political. This is where deficit "doves" actually assist deficit hawks and conservatives to roll back social spending because "we can't afford it". Please see billyblog.com for further details. Thanks again for your reply. - bobbyp Sun, 25 Apr 2010 14:56:53 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-241 bobbyp, Yes, the government received cash when those bonds were issued. But no, that does not help the current budget pay the current interest due, and the portion of the bonds that mature during this budget year. By arranging that taxes are less than expenditures, the U.S. will run a deficit each year, and the total size of the debt increases. That is, the deficit is the first derivative of the debt with respect to time. http://www.treasurydirect.gov/govt/reports/ir/ir_expense.htm shows that interest was 383 billion in 2009. I judge the situation to be a long run problem, not a crisis. But if nothing is done over the next ten to twenty years, there probably will be a crisis then. diesel, But eventually people catch on, an the taxes go back up, I hope. - AndrewDover Sun, 25 Apr 2010 07:20:15 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-239 Andrew says: "Still, around seven trillion dollars is not associated with intergovernmental holdings."...."the cost of the Iraq and Afghanistan wars...will also continue to impact the next generation through interest on that debt." This is what makes America such a great country. You can use your money to lobby Congress for low corporate, income and inheritance taxes, and with your savings you can then buy a T.V. station from which you broadcast "news" that persuades a gullible public of the necessity for waging a local war on labor and a distant war that secures your ownership of and rights to distribute the most essential commodity in the world's economy. You also own the very companies the government needs to wage war, those that build the weapons and supply the logistics through no-bid or rigged contracts. And government, having too little revenue from its inadequate tax base must pay for the war by borrowing from the only people who have money to loan. And who would that be? You again! The Trifecta! Low taxes, high-paying contracts and interest on the loan you supply to the junkie who needs your smack. It just doesn't get any better than that. - diesel Sun, 25 Apr 2010 06:55:51 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-238 Andrew, If I pay cash for a newly issued 30 yr. treasury today, how is that a "burden on the current budget"? Isn't the government in effect getting cash to pay for current expenditures, the same kind of cash raised by collecting taxes (i.e., dollars)? If I die tomorrow, my offspring have a safe asset that pays interest for 30 years. How is that a burden to them? Presumably at maturity the bond is redeemed, and the government merely credits bank reserves by a like amount. It is also highly likely that, due to productivity increases, the real effort to "pay back" the par amount in the future will be a great deal less than now (cp). Thanks. - bobbyp Sun, 25 Apr 2010 06:04:00 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-235 Hold on here, the debt number quoted, 8.37 trillion is wrong. We can all go back to sleep, as the actual number is 8.35 trillion as of April 22. But wait again, if you add back the debt owed to the trust funds and the Federal Reserve the number come to 12.8 trillion: 04/22/201012,872,601,270,864.44 Now there are two ways that the U.S. has been talked into this debt. Half-truth #1) If we cut tax rates, the resulting increase in growth will actually increase tax revenues. Half-truth #2) If we increase spending by borrowing, the stimulus to demand will boost the economy more than the subtraction from private capital through borrowing. Both are true in narrow circumstances, such as when tax rates are extremely high, say 85%, or when there is available labor or excess capacity such as during a recession. But both are lies when extended to low tax rates, or a relatively normal economy. Free lunches are rare in economics, not plentiful. Most of the time spending on aircraft carriers or to destroy used cars, gets you no benefits other than an aircraft carrier or less high mileage cars. Dean says "much" of this debt is held by the Fed. Looking at "Ownership of Federal Securities" from http://www.fms.treas.gov/bulletin/index.html we see that the Federal Reserve does hold some, but less than a trillion at the end of 2009. Of the 12 trillion in debt, 5.2 trillion is held by the Federal Reserve and Other Intergovernmental holdings. The Social Security Trust funds hold about 2.5 trillion, and as Dean has argued elsewhere, the bonds in the Social Security Trust fund must be honored as the bulge in the population retires. Still, around 7 trillion dollars is not even associated with intergovernmental holdings, and is a real burden on the current budget. The costs of the Iraq and Afghanistan wars to the U.S. are not just the over 5,000 dead, or 31,000 wounded from Iraq, it will also continue to impact the next generation through the interest on that debt. - AndrewDover Sun, 25 Apr 2010 04:46:31 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-234 Everything Dean says about large debts is empirically true - both Britain and the US (for example) have had long periods of prosperity after running up much larger debts and the debts were ultimately irrelevant. This is not something that is dependent on economic theory or any particular manipulations by central banks. Also medical costs are are a threat for the future, although they not a major cause of the present deficits, but we know empirically how to reduce them because most other developed nations have systems with superior outcomes and much lower costs. The health-care bill just passed is unlikely to reduce costs, which we know empirically because of the experience with the similar Massachusetts plan. But if current deficits are considered to be excessive the cause of this is simple - insufficient taxes. And again, we know empirically that higher tax rates are not harmful to the economy because some of our most prosperous years in the past had much higher tax rates than at present. - skeptonomist Sun, 25 Apr 2010 04:37:20 +0100 http://www.cepr.net/index.php/beat-the-press/more-debt-fearmongering-at-the-washington-post/#comment-232 Hi there commie, this is Papa Limbaugh, Speaking from Costa Rica, with my $2T cents, See you're at it again, glorifying sin, Ginning up debt, at expense of common sense, We know you hate America, and all that stands, For freedom to live and die in the promise land, Think you're really clever, a socialist shill, Nationalized health and SS sleight of hand. Before it's all over, you'll move to Costa Rica, Where freedom rings, with love and kisses. Come and live with me, who feels right at home, Among Giant Cockroaches that bite with hisses. - izzatzo Sun, 25 Apr 2010 03:38:34 +0100