EPTReinhart-Rogoff scandal - research on debt economy - Page 3
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aksfjh
United States4853 Posts
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Sermokala
United States13926 Posts
On April 30 2013 00:18 aksfjh wrote: Why would a nation default on it's debt if it isn't beholden to US politics or a central bank they don't own? I don't understand your question. Are you asking why a nation would default on its debt when it can't pay the debt? are you asking why it would default on its debt when the people giveing them the bailout have conditions so that they'll be able to pay back the debt? | ||
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aksfjh
United States4853 Posts
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Sermokala
United States13926 Posts
On April 30 2013 00:43 aksfjh wrote: I'm asking why a country would willingly default on their debt obligations. What would have to transpire for that to happen? Why would it not be able to pay it back? What is stopping the government from paying their debt, in a place like the UK, US, or Japan? What about countries like Spain and Italy, and how did they deal with debt before the Euro? Are you asking why a country without any money to pay its debts is unable to pay its debts? | ||
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shmget
118 Posts
On April 29 2013 22:31 paralleluniverse wrote: They didn't establish causation, nor did they even attempt to. Hell, they didn't even calculate correlation, they just wrote about the dangers of high debt based on the means and medians they calculated and this 90% number they arbitrarily chose (the number wasn't chosen based on the data, it was chosen a priori). That remind me of a recent TL Forum thread about the correlation between a certain arbitrary number of windows mine (10) and the rate of victory of terran. It seems to me that Harvard Economist should post on TL, they would get harsher and more in depth review of there work here :-) | ||
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aksfjh
United States4853 Posts
On April 30 2013 00:46 Sermokala wrote: Are you asking why a country without any money to pay its debts is unable to pay its debts? I'm asking what I asked. Answer it and I'll respond in kind. | ||
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Sermokala
United States13926 Posts
On April 30 2013 00:48 aksfjh wrote: I'm asking what I asked. Answer it and I'll respond in kind. I don't understand what your asking thats why I asked what you were asking. No one willingly defaults on their debts so I was trying to figure out what you ment by that. | ||
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mprs
Canada2933 Posts
On April 20 2013 02:40 AnachronisticAnarchy wrote: Still not a good idea to have debt, least of all 15 digits of it. It's just common sense. I don't think debt is bad. It's similar to how a business might take out a loan so that they could grow. But you shouldn't burrow with the intent of not paying back. This was a systemic problem that dragged on for a long time for a lot of countries, and now they're in this hole. | ||
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Pelopidas
Canada225 Posts
"Stimulus" is just doublespeak for inflation since massive unmonetized deficits destroy the capital markers. Keynesians never advocate unmonetized debt. The essential claim of modern Keynesianism is that wages are somehow downwardly rigid and thus inflation is required to reduce real wages. The Keynesians conclude that this will restore full employment. However, public intellectuals who advocate Keynesianism, such as Paul Krugman and Bradford Delong, obscure this fact. They babble on about "demand," when the problem has nothing to do with demand and has to do with price coordination. There are numerous problems with this approach that make it inadvisable. 1. Inflation is a crude weapon. The non neutrality of money means that the injection will favor some at the expense of others. Ben Bernanke's inflation has resulted in a wealth transfer to the holders of equities, the holders of mortgage backed securities and treasury bonds. This has resulted in rage about the success of the "one percent". Even if inflation succeeds in sparking another boom, it will also cause distortions to the structure of production which will result in an even worse collapse later on. 2. If the inflation is disseminated through public works and infrastructure projects it will prevent the prices of capital goods from falling to a level in which they can be profitably used for private production. This will prolong the stagnation. 3.In the cases where potential costs increase at a similar rate as income, inflation will be completely ineffective. The unemployment caused by Obamacare or the large Spanish severance payouts cannot be eliminated by inflation even if hyperinflation annihilates the currency system. If businesses are somehow duped into hiring because their income increases unexpectedly they will soon be forced to discharge the new employees or suffer losses. 4. Entrepreneurs make speculative decisions when investing. If they believe that they will be "liquidated" as "bourgeois" by Syriza, attacked by an angry mob, or have their profits seized they will not invest. In this way the rioters have brought on there own misery. 5. If inflation comes to be expected it will fail miserably. The inflationary depression will emerge. In order to correct the problem, governments must abstain from propping up any wages or prices. It must reform its labor markets, in order to reduce the costs of hiring. It must be prepared to defend "scabs" from harassment by labor unions. It policies should not encourage the formation of monopolistic cartels. It must allow bankrupt institutions to be liquidated and their capital to be deployed in profitable endeavors. It must refrain from any easy money policy that will merely sow the seeds of another crisis. | ||
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aksfjh
United States4853 Posts
On April 30 2013 00:54 mprs wrote: I don't think debt is bad. It's similar to how a business might take out a loan so that they could grow. But you shouldn't burrow with the intent of not paying back. This was a systemic problem that dragged on for a long time for a lot of countries, and now they're in this hole. I must have missed the part where those countries didn't pay their debt obligations. | ||
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acker
United States2958 Posts
On April 29 2013 23:01 Sermokala wrote: Whos honestly that dumb that thinks that having more stimulus in america would have resulted in a lower debt. That doesn't take more then 4 seconds to realize is stupid. All stimulus does is gum up the works of recovery and put a nation a ton in debt. It takes 4 seconds to "realize" it's stupid. Unfortunately, it takes 10 seconds to Google "Treasury Real Yield Curve Rates". Link It takes five minutes to realize that the real "cost" of stimulus is not the accounting cost, but the opportunity cost. The debt incurred by infrastructure spending is an accounting cost. And it's almost entirely irrelevant, because accounting makes a comparison between that action and doing nothing. This is a false comparison. Unless you are fine with bridge collapses and brownouts, doing nothing is not in the set of policy options. Link It's easy to use "common fucking sense" or gut instinct. It's difficult to actually think about the matter. Eurozone countries are in a horrific position where they don't have control of their own currency and labor migration is too low to quickly spread unemployment across the member countries. | ||
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On_Slaught
United States12190 Posts
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DeltaX
United States287 Posts
On April 30 2013 00:59 aksfjh wrote: I must have missed the part where those countries didn't pay their debt obligations. I think he was saying that the ideal way for a country to use debt is to borrow in a downturn or war, but then to pay it back when stuff improves. The problem that a lot of counties got into was they were taking on more debt when they should have been paying it off in the 90's and into the 2000's. If you are taking on debt when you are growing and when not growing, you are never going to pay the debt off. I'm actually pretty sure the rational for all the borrowing countries were doing in the 90's/2000's was that between inflation and the growth that the additional spending will cause, you would not have to pay back the money at all. | ||
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JonnyBNoHo
United States6277 Posts
On April 30 2013 00:18 aksfjh wrote: Why would a nation default on it's debt if it isn't beholden to US politics or a central bank they don't own? Because they don't want to pay it :p See Argentina and the ongoing pari pasu saga. On April 30 2013 01:16 acker wrote: It takes 4 seconds to "realize" it's stupid. Unfortunately, it takes 10 seconds to Google "Treasury Real Yield Curve Rates". Link It takes five minutes to realize that the real "cost" of stimulus is not the accounting cost, but the opportunity cost. Link It's easy to use "common fucking sense" or gut instinct. It's difficult to actually think about the matter. Eurozone countries are in a horrific position where they don't have control of their own currency and labor migration is too low to quickly spread unemployment across the member countries. That's a fantastic way to go about things, but someone needs to do the maths on it. | ||
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henkel
Netherlands146 Posts
Also I feel there is way to much attention for the simple spreadsheet error, which could be a simple error. Which is why there are peer reviewed publications....... The selective picking of data I find the way more disturbing part. | ||
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cozenage
21 Posts
People are so easily manipulated, all you have to do is get them on a "team." Once their "team" is big government, they support more government no matter the sense it does or doesn't make. All that matters is their team winning and being right, and the other team losing and being wrong. Austerity vs. Stimulus, Yankees vs. Dodgers. rah rah rah. | ||
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henkel
Netherlands146 Posts
On April 30 2013 02:20 cozenage wrote: I'm always amazed at the public coming up with more reasons for the government to spend more of their children's money. People are so easily manipulated, all you have to do is get them on a "team." Once their "team" is big government, they support more government no matter the sense it does or doesn't make. All that matters is their team winning and being right, and the other team losing and being wrong. Austerity vs. Stimulus, Yankees vs. Dodgers. rah rah rah. LOL In your first sentence you clearly place yourself on the austerity team...... You then continue to blame team picking for people not seeing the good side of the austerity. How more hypocrite can you get in 1 post. | ||
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cozenage
21 Posts
On April 30 2013 02:37 henkel wrote: LOL In your first sentence you clearly place yourself on the austerity team...... You then continue to blame team picking for people not seeing the good side of the austerity. How more hypocrite can you get in 1 post. No, I'm not on any team. I support stimulus when it makes sense, and support austerity when it makes sense. The people on teams stick with their big/small government ideology no matter how absurd things reach. Right now we are spending a future generations money to keep ourselves fat as hogs. | ||
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BioNova
United States598 Posts
No offense, but Krugman asserting that it's not just improbable, but that it's impossible for the U.S to ever default even with continual spending increase and increasing debt? Well, it strikes me as mildy absurd. Almost to the point of economic exceptionalism, the financial parellel of american exceptionalism. It will never happen to us, cause we're better than that. Shame R/R torpedoed their own work. The question should have been does a certain level of debt slow growth. The 90% threshold isn't a red-line. It's where some degree of stagnation becomes statistcally visible. Neither side is 100% convincing. | ||
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acker
United States2958 Posts
On April 30 2013 02:12 JonnyBNoHo wrote: That's a fantastic way to go about things, but someone needs to do the maths on it. Or we could use a model, per the article. Suppose that the real interest rate for the government's long-term debt will average 3 percent over the long run. (This assumption is historically accurate.) The current real interest rate for long-term debt is about zero. Assume, also, that government finances its infrastructure spending with 20-year Treasury bonds. In this simple model, the government saves 80 cents for every dollar it spends on infrastructure by the time the bond matures. With such discounts, the federal government should be completing almost every infrastructure project on its to-do list. Even if there's only a 50 percent chance that such work needs to be done, it makes fiscal sense to do it now. If we're talking about infrastructure or other projects that require replacement or retrofit on a smaller time scale (say, ten years), the situation is obscenely silly, with real interest rates going into negative numbers. The numbers can certainly be adjusted, but it seems clear that discounts now are amazing for projects we'd have to do sooner or later. And I think most people can think of projects that would almost certainly benefit from this. | ||
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