China’s economy the worst in 27yrs!

[lustylad]

Originally Posted by friendly fred

I don't think deficits matter - inflation will eventually occur which will enable paying the debt with even more dollars that we create electronically. I would rather have deficits than pay more in taxes.

You're not thinking things through, fred. Higher inflation will cause investors to demand higher interest rates on new government debt (to compensate for the faster erosion of purchasing power). If the Federal Reserve and the Treasury want to continue to have access to credit markets, they will have to pay more for it. This will drive up the cost of servicing the national debt and crowd out other federal spending priorities. Alternatively, if the Fed just prints money instead of borrowing, we will eventually find ourselves in a vicious cycle of upward spiraling inflation. Think Weimar Republic.

If that's what you're advocating, you're no better than AOC and those other far-left lunatics who subscribe blindly to MMT (Modern Monetary Theory) - a truly evil and repugnant "doctrine" with no intellectual substance or respectability that will lead us down the road to economic perdition as surely as munchy's drinking leads him to post incoherent comments in this forum.

[Chung Tran]

Originally Posted by lustylad

You're not thinking things through, fred. Higher inflation will cause investors to demand higher interest rates on new government debt (to compensate for the faster erosion of purchasing power). If the Federal Reserve and the Treasury want to continue to have access to credit markets, they will have to pay more for it. This will drive up the cost of servicing the national debt and crowd out other federal spending categories.

yup, this is exactly what my Business School Teachers said, too. it is completely THEORETICAL. it is a true statement, but it is presumptive.. higher inflation WILL cause investors to demand higher rates, but where is the higher inflation? why has inflation been dormant throughout this massive debt run up? the real economy is not run out of Business School textbooks. friendly fred is right.

[lustylad]

Originally Posted by Chung Tran

too long to repeat here, so I will ask... with such huge deficits, why is inflation so low? why is the 10 year Treasury yielding under 2%? if deficits are a problem, these metrics should be through the roof.

Originally Posted by Chung Tran

yup, this is exactly what my Business School Teachers said, too. it is completely THEORETICAL. it is a true statement, but it is presumptive.. higher inflation WILL cause investors to demand higher rates, but where is the higher inflation? why has inflation been dormant throughout this massive debt run up?

Already asked and answered, Chungy:

https://eccie.net/showpost.php?p=106...7&postcount=58


Are you talking about the Conference Room? I'll go back there if/when CaptainMidnight returns.

[Chung Tran]

Originally Posted by lustylad

Already asked and answered, Chungy:

https://eccie.net/showpost.php?p=106...7&postcount=58


Are you talking about the Conference Room? I'll go back there if/when CaptainMidnight returns.

ok, I'll bite.. why did the velocity of money decline so steeply?

[Tiny]

Originally Posted by Chung Tran

yup, this is exactly what my Business School Teachers said, too. it is completely THEORETICAL. it is a true statement, but it is presumptive.. higher inflation WILL cause investors to demand higher rates, but where is the higher inflation? why has inflation been dormant throughout this massive debt run up? the real economy is not run out of Business School textbooks. friendly fred is right.

What LustyLad wrote has been proven true, time and time again, in the real world. He mentioned the Weimar Republic. More recent examples are Argentina, Brazil, Venezuela and Zimbabwe. Turkey's on the cusp of making the same mistake. The whole world thinks Erdogan, who believes the cure for high inflation is low interest rates, is an idiot. You keep interest rates below the inflation rate and print money and you end up with hyperinflation

[lustylad]

Originally Posted by Chung Tran

ok, I'll bite... why did the velocity of money decline so steeply?

That's the $64,000 question. Partly because much of the cash created by the Fed's QE just made a quick round trip and wound up as member bank reserves deposited back at the Fed instead of being loaned out into the real economy.

I wish Milton Friedman was still around to explain it more fully.

[Chung Tran]

Originally Posted by lustylad

That's the $64,000 question. Partly because much of the cash created by the Fed's QE just made a quick round trip and wound up as member bank reserves deposited back at the Fed instead of being loaned out into the real economy.

I wish Milton Friedman was still around to explain it more fully.

but if it did that, the stimulus wasn't real, the money, and thus the deficit never materialized. so why are y'all on Obama's case about huge deficits?

[Chung Tran]

hey Lusty, since you dig equations.. try this one on:

http://moslereconomics.com/2009/02/1...g-for-dummies/

[bb1961]

Originally Posted by Tiny

What LustyLad wrote has been proven true, time and time again, in the real world. He mentioned the Weimar Republic. More recent examples are Argentina, Brazil, Venezuela and Zimbabwe. Turkey's on the cusp of making the same mistake. The whole world thinks Erdogan, who believes the cure for high inflation is low interest rates, is an idiot. You keep interest rates below the inflation rate and print money and you end up with hyperinflation

Correct Tiny they don't understand this...

https://realinvestmentadvice.com/deficits-do-matter/

[lustylad]

Originally Posted by Chung Tran

but if it did that, the stimulus wasn't real, the money, and thus the deficit never materialized. so why are y'all on Obama's case about huge deficits?

You're conflating fiscal and monetary stimulus. Running a big budget deficit is fiscal stimulus. QE is monetary stimulus. They have very different impacts and ripple effects on the economy. Not sure what you mean by "stimulus wasn't real" - it didn't work?

I don't blame obama for the initial deficit. When an economy tanks as severely as ours did in 2008/2009, the federal budget AUTOMATICALLY swings into deficit as a result of slumping tax revenues and surging safety-net spending. I didn't even have any issue with the size (per se) of ARRA, his $828 billion fiscal stimulus program. What I DID have problems with were 1) how poorly that money was spent and 2) the fact that its stimulus benefits were offset by obama's other policies (ACA, stifling new regulations, etc.). This kept the recovery slow and weak and ensured that the annual deficit stayed over $1 trillion for the duration of his entire first term.

[bb1961]

Originally Posted by lustylad

That's the $64,000 question. Partly because much of the cash created by the Fed's QE just made a quick round trip and wound up as member bank reserves deposited back at the Fed instead of being loaned out into the real economy.

I wish Milton Friedman was still around to explain it more fully.

Kind of like check kitting lusty...
Like my late father said...I won't be around when the chickens come home to roost and I don't think I will be either. Why these people think we can spend our way to prosperity? Why don't we just print enough money to pay the 24 TRILLION dollar debt and start over without ANY debt? At what point does a country become a lone risk...when the liabilities exceed their assets...that's bankruptcy.
Trump wanting to borrow more money because of low interest...CRAZY!!
Hey if I could borrow my way to prosperity I'd be richer than Bozos.
This is political pinheads with their heads in the sand or up their asses.

[Chung Tran]

Originally Posted by bb1961

At what point does a country become a lone risk...when the liabilities exceed their assets...that's bankruptcy.
Trump wanting to borrow more money because of low interest...CRAZY!!
Hey if I could borrow my way to prosperity I'd be richer than Bozos.

but it's Accounting only.. what difference does it make if the Federal Government is "bankrupt"? they control the money supply, just create more. how is Trump crazy? paying back the borrowed money at cheap rates, after the added currency creates spending, jobs, assets? you can't borrow to prosperity, because you don't have Fiat currency power. but the US Government can't either, except to the extent the added spending creates wealth through spending.. it does that, granted it is minimal in today's economic climate. but the economy is very good, all of you agree on that.. so why the furrowed brows over Government spending?

[lustylad]

Originally Posted by Chung Tran

hey Lusty, since you dig equations.. try this one on:

http://moslereconomics.com/2009/02/1...g-for-dummies/

I don't see any equations, just a description of what happens when the federal govt borrows money that is the inverse of what I just described in my post #36 about QE.

I do see you've been supping with the devil.

[Chung Tran]

Originally Posted by lustylad

I don't see any equations, just a description of what happens when the federal govt borrows money that is the inverse of what I just described in my post #36 about QE.

but that description outlines why huge deficits are not negatively impacting the Economy, as Republicans have said they would for 40 years. your Boy Friedman was one of those guys, the Lord took him home before Milt had a chance to reflect on how wrong he was

[lustylad]

Originally Posted by Chung Tran

but that description outlines why huge deficits are not negatively impacting the Economy, as Republicans have said they would for 40 years. your Boy Friedman was one of those guys, the Lord took him home before Milt had a chance to reflect on how wrong he was

40 years? That goes back to when Reagan was elected. He inherited a stagflation mess from Jimmy Carter - do you cut him as much slack as you give obama for the economy Bush handed off? I seem to recall it was democrats who were the ones warning about deficits back then, not Republicans.

I don't oppose deficit spending per se. It's a necessary tool to combat recessions. The problem is the politicians want to run sizable deficits in bad years AND good years. That's reckless, irresponsible and a perversion of what Keynes actually taught - "the boom, not the slump, is the time for austerity." Fucking politicians don't know the meaning of the word austerity.

And Milty wrote a lot of things. He was right much more often than he was wrong, especially on how monetary policy impacts the real economy.