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On April 30 2013 02:58 cozenage wrote:Show nested quote +On April 30 2013 02:37 henkel wrote: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. 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.
He is actually quite right here. A stimulus for greece would be a waste of money but a stimulus for spain might just make the difference. Austerity is a measure to force reforms in the southern countries and not meant as a permament solution to the economic problems of these countries.
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On April 30 2013 03:08 BioNova wrote:
I'm no fan of Keynesian policy, but less of a fan of austerity. Austerity imho is punishing the wrong people. If you're unwilling or unable to prosecute banks, regulators and lobbyists who as a industry have profited from one crisis/scandal after another... Well, what else is there. I'm not arguing it's morality. I'm arguing what other option fits the purpose. Reducing excessive debt and financial accountability/responsibility.
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.
It's impossible for the US to default because it can always, as a last resort, print money to cover its debt. The social cost of inflation doesn't compare to the long term costs of default. Heck, it's not even close.
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On April 30 2013 02:58 cozenage wrote:Show nested quote +On April 30 2013 02:37 henkel wrote: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. 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.
We seem to be on the same line then, misunderstanding because using a term as big government implies a negative view of government interaction. Not to mention you use only the government spending as a negative example no austerity examples of "teams". Hope you understand why it seemed that way to me.
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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?
if you choose to not pay back the debt, barring a military invasion, then you get to keep your money.
but good luck ever getting a loan from anyone ever again.
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On April 30 2013 03:25 Sbrubbles wrote:Show nested quote +On April 30 2013 03:08 BioNova wrote:
I'm no fan of Keynesian policy, but less of a fan of austerity. Austerity imho is punishing the wrong people. If you're unwilling or unable to prosecute banks, regulators and lobbyists who as a industry have profited from one crisis/scandal after another... Well, what else is there. I'm not arguing it's morality. I'm arguing what other option fits the purpose. Reducing excessive debt and financial accountability/responsibility.
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. It's impossible for the US to default because it can always, as a last resort, print money to cover its debt. The social cost of inflation doesn't compare to the long term costs of default. Heck, it's not even close.
Not just the US, but any modern, diversified economy that prints its own money. Krugman's sentiment isn't exceptionalism, but rather a model of modern macroeconomics.
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On April 30 2013 03:44 henkel wrote:Show nested quote +On April 30 2013 02:58 cozenage wrote:On April 30 2013 02:37 henkel wrote: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. 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. We seem to be on the same line then, misunderstanding because using a term as big government implies a negative view of government interaction. Not to mention you use only the government spending as a negative example no austerity examples of "teams". Hope you understand why it seemed that way to me.
I wouldn't worry, your bullshit detectors were right on target with this one. Take a look at this blog and then consider whether or not this cozenage guy is on a team or not 
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On April 29 2013 22:31 Skilledblob wrote:
having a huge debt is still bad this will never change. Only thing that got shown now is that in theory more than 90% debt should be managable. Economics is hardly a science. all you can do is make educated guesses, so going now and saying "haha we can make as much debt as we want" is just silly.
They never said that you can have as much debt as you want. It's even right there in the easy to read article with bolded titles and an inviting picture of the student.
The gist of their argument is that debt has pros and cons, and in the context of a recession, debt has more pros than cons.
Part of the error of the 2 economists, if I have this right, is that the data from recent times is not in line with the conclusion that debt about 90% is categorically a 'bad' thing.
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On April 30 2013 04:11 farvacola wrote:Show nested quote +On April 30 2013 03:44 henkel wrote:On April 30 2013 02:58 cozenage wrote:On April 30 2013 02:37 henkel wrote: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. 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. We seem to be on the same line then, misunderstanding because using a term as big government implies a negative view of government interaction. Not to mention you use only the government spending as a negative example no austerity examples of "teams". Hope you understand why it seemed that way to me. I wouldn't worry, your bullshit detectors were right on target with this one. Take a look at this blog and then consider whether or not this cozenage guy is on a team or not
nah he just tells a nice bed time story for when the kids have misbehaved 
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On April 30 2013 03:58 aksfjh wrote:Show nested quote +On April 30 2013 03:25 Sbrubbles wrote:On April 30 2013 03:08 BioNova wrote:
I'm no fan of Keynesian policy, but less of a fan of austerity. Austerity imho is punishing the wrong people. If you're unwilling or unable to prosecute banks, regulators and lobbyists who as a industry have profited from one crisis/scandal after another... Well, what else is there. I'm not arguing it's morality. I'm arguing what other option fits the purpose. Reducing excessive debt and financial accountability/responsibility.
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. It's impossible for the US to default because it can always, as a last resort, print money to cover its debt. The social cost of inflation doesn't compare to the long term costs of default. Heck, it's not even close. Not just the US, but any modern, diversified economy that prints its own money. Krugman's sentiment isn't exceptionalism, but rather a model of modern macroeconomics.
Thats just plain silly. So the solution to exponentially increasing debt is hyper inflation? Just keep Printing money until its worth nothing and everyone's savings are worth nothing? All put on the alter of Keynesian models that the great recession proved where rotten from the start.
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On April 30 2013 03:14 acker wrote:Show nested quote +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. Show nested quote +
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.
That's not a model that's just demonstrating that the financing is cheaper. It's incomplete.
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As long as the gdp growth has a higher percentage then the interest percentage paid on debt times debt/gdp there is no problem. This is a mathematical indisputable fact.
I could even refine this formula with only considering the amount of debt held by "foreigners" since all interest paid on debt wich is held by non foreigners basicly stays in the economy, its only a redistribution.
Economic growth is basicly not effected by the amount of debt at all, this is a verry important concept to understand.
The debt and the interest paid on it are merely taxes on the gdp, taxes collected by the debt holders.
Reinhart is a complete idiot for not seeing this and not worthy of the title "economist"
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On April 30 2013 04:22 Sermokala wrote:Show nested quote +On April 30 2013 03:58 aksfjh wrote:On April 30 2013 03:25 Sbrubbles wrote:On April 30 2013 03:08 BioNova wrote:
I'm no fan of Keynesian policy, but less of a fan of austerity. Austerity imho is punishing the wrong people. If you're unwilling or unable to prosecute banks, regulators and lobbyists who as a industry have profited from one crisis/scandal after another... Well, what else is there. I'm not arguing it's morality. I'm arguing what other option fits the purpose. Reducing excessive debt and financial accountability/responsibility.
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. It's impossible for the US to default because it can always, as a last resort, print money to cover its debt. The social cost of inflation doesn't compare to the long term costs of default. Heck, it's not even close. Not just the US, but any modern, diversified economy that prints its own money. Krugman's sentiment isn't exceptionalism, but rather a model of modern macroeconomics. Thats just plain silly. So the solution to exponentially increasing debt is hyper inflation? Just keep Printing money until its worth nothing and everyone's savings are worth nothing? All put on the alter of Keynesian models that the great recession proved where rotten from the start.
Lol, great strawman you've got there. No one is advocating exponentially increasing debt and hyperinflation isn't even close to being on the table for discussion.
Heck, I didn't even mention these issues at all (and neither did aksfj who responded to my post)! I just said a default by the US government is impossible.
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United States3824 Posts
Evergreen State College Hwaiting!
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On April 30 2013 04:30 JonnyBNoHo wrote:
That's not a model that's just demonstrating that the financing is cheaper. It's incomplete.
Of course it's a model, it's a simplification of reality into discrete elements. Every model pertaining to reality is incomplete.
What matters is that it shows financing is discounted by approximately 80%, assuming long-run treasuries yield 3%, current long-run bond treasuries yield 0%, and the government can finance investments with long-run treasuries. If you have issues with any one of these assumptions that would significantly change the conclusion, that investments that need to be done sooner or later are cheaper to finance now rather than after a full recovery, then you should post a more accurate second-order solution.
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If austerity is never a good thing, when we do repay our debts though?
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On April 30 2013 04:58 XenOmega wrote:
If austerity is never a good thing, when we do repay our debts though?
After the economy has recovered, of course. Or was your question rethorical?
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On April 30 2013 04:37 Sbrubbles wrote:Show nested quote +On April 30 2013 04:22 Sermokala wrote:On April 30 2013 03:58 aksfjh wrote:On April 30 2013 03:25 Sbrubbles wrote:On April 30 2013 03:08 BioNova wrote:
I'm no fan of Keynesian policy, but less of a fan of austerity. Austerity imho is punishing the wrong people. If you're unwilling or unable to prosecute banks, regulators and lobbyists who as a industry have profited from one crisis/scandal after another... Well, what else is there. I'm not arguing it's morality. I'm arguing what other option fits the purpose. Reducing excessive debt and financial accountability/responsibility.
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. It's impossible for the US to default because it can always, as a last resort, print money to cover its debt. The social cost of inflation doesn't compare to the long term costs of default. Heck, it's not even close. Not just the US, but any modern, diversified economy that prints its own money. Krugman's sentiment isn't exceptionalism, but rather a model of modern macroeconomics. Thats just plain silly. So the solution to exponentially increasing debt is hyper inflation? Just keep Printing money until its worth nothing and everyone's savings are worth nothing? All put on the alter of Keynesian models that the great recession proved where rotten from the start. Lol, great strawman you've got there. No one is advocating exponentially increasing debt and hyperinflation isn't even close to being on the table for discussion. Heck, I didn't even mention these issues at all (and neither did aksfj who responded to my post)! I just said a default by the US government is impossible.
If you follow context clues you will find out that I responded to a post referring to "any modern diversified economy that prints its own money" and not the US government.
On April 30 2013 05:00 Sbrubbles wrote:Show nested quote +On April 30 2013 04:58 XenOmega wrote:
If austerity is never a good thing, when we do repay our debts though? After the economy has recovered, of course. Or was your question rethorical?
Literaly no one ever says this ever. When times are good people just want to spend the surplus's more so they can have more surplus's. When things are bad are the only times when anyone thinks of paying down their debts.
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The answer to that is realy simple:we never repay our debts, we just replace them by other debts.
Though i thought this would be obvious as in the past 100 years of debt accumulation the debt has only gone one way, wich is up. Still some people seem to think that one day we will pay off our debt, this despite the fact that the debt has been rising for over 100 years.
The only way we will pay of our debt is if there is a financial revolution wich changes the current system.
Austerity can be a good thing, it all depends on the situation.
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On April 30 2013 05:02 Rassy wrote:
The answer to that is realy simple:we never repay our debts, we just replace them by other debts.
Though i thought this would be obvious as in the past 100 years of debt accumulation the debt has only gone one way, wich is up. Still some people seem to think that one day we will pay off our debt, this despite the fact that the debt has been raising for over 100 years ><
Austerity can be a good thing, it all depends on the situation.
Exactly. No one is saying that austerity is the new world order, just that for nations that are on the cusp of default its the only sensible choice in order to bring about any order.
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On April 30 2013 04:58 XenOmega wrote:
If austerity is never a good thing, when we do repay our debts though?
Your debts are my savings. If the government is running a budget surplus then someone else is running a deficit, be they foreigners or the citizens who themselves. So on a certain level the government always will be in debt -- unless we undo 30 years of conservative tax cuts or undo the modern state.
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EPT
