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Nobody Understands Debt
01-02-2012, 03:42 PM
First of all, Paul Krugman is a cocksucker, a shill for big government and big banks.
With that out of the way, he's actually got a point here:
The USA could get away with much higher levels of debt. Between the FED buying bonds, and the rest of the world sinking into a depression, the USA's treasury yields will probably stay at all time lows for quite some time.
BUT they will eventually go up once inflation comes, which is taking it's sweet time due to the banks hoarding the money given to them by the FED. We won't start to see serious inflation until 2014.
I think whether or not the government spends or taxes more is a non-issue. I think the need for increased government spending is a symptom of a much larger cause, which is the banking system having a chokehold on the economy. The banks have ruined so many millions of Americans, the only way to make up for lost spending is for the US government to take over.
Complete bullshit - if Krugman really wanted Americans to spend more, why not just have the FED print money for ordinary Americas? Sure, there would be massive inflation, but at least there would be increased spending and Americans trapped in debt would free up discretionary income.
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Nobody Understands Debt
01-02-2012, 08:33 PM
I'll let Karl Denninger do the honors..
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Nobody Understands Debt
01-03-2012, 03:11 AM
UK isn't a model to aspire to, its a mess over there. USA debt is still largely "cheap" but its a problem that needs to fudementally be addressed.
The issue is that the USA tax base is on a downward spiral. The UK has been lethargically growing along because it has kept a flood gate open for newcomers to come in and take on a piece of that massive debt. USA tax receipts have peaked, it is still widely a destination of newcomers but as things breakdown internally within the foundations and institutional structure of the nation newcomers and investors won;t see USA as a cheap and stable investment for all that long. On paper the mess in the USA is worse than the EU. The EU is on the ropes because they can;t recklessly inflate there way out of it, the USA can and pundits think this is all honky dory when most citizens and at edge as it is? Okay cool debt becomes cheaper to service but nobody likes to sit and factor in how much living prices rise or how much industry gets raped when outside interests come in to grab bargains.
The real truth is that nobody understands that debt is a bill that needs to be paid. Pundits will always try to put roses on a pile of shit, the USA situation isn't panic and frantic as many alarmists paint it but it is from from "stable" or "ideal".
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Nobody Understands Debt
01-03-2012, 11:20 AM
Thanks for your responses Samseau. They saved me. Any time I see anything with Paul Krugman's name on it, and it's not a call for his lynching I go apoplectic.
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Nobody Understands Debt
01-03-2012, 06:08 PM
Krugman's strong background in these issues and his very reasonable arguments make him a fine person to criticize the current economic mess. While I agree with all of his points on austerity in the USA, the true gold about his writing has been the way he handled the EU crisis - and predicted all the consequences of ECB not acting immediately. His points on the crisis in Spain are particularly strong (remember, a country that now needs saving, but it was never a debtor nation, in fact it ran a positive budget before the crisis). Disagreeing with him on some economic point is completely fair, but dismissing his arguments because he's a "pawn of the government" or something is way way out there.
Source: I'm an economist and have been researching the same sphere for years
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Nobody Understands Debt
01-03-2012, 09:45 PM
Quote: (01-02-2012 03:42 PM)Samseau Wrote:
First of all, Paul Krugman is a cocksucker, a shill for big government and big banks.
With that out of the way, he's actually got a point here:
The USA could get away with much higher levels of debt. Between the FED buying bonds, and the rest of the world sinking into a depression, the USA's treasury yields will probably stay at all time lows for quite some time.
BUT they will eventually go up once inflation comes, which is taking it's sweet time due to the banks hoarding the money given to them by the FED. We won't start to see serious inflation until 2014.
I think whether or not the government spends or taxes more is a non-issue. I think the need for increased government spending is a symptom of a much larger cause, which is the banking system having a chokehold on the economy. The banks have ruined so many millions of Americans, the only way to make up for lost spending is for the US government to take over.
Complete bullshit - if Krugman really wanted Americans to spend more, why not just have the FED print money for ordinary Americas? Sure, there would be massive inflation, but at least there would be increased spending and Americans trapped in debt would free up discretionary income.
I think you might gain a greater appreciation for Krugman if you were read some of his technical work, rather than the op-ed pieces. His ideas regarding liquidity traps and currency crises are useful in understanding dynamic situations.