Okay, the Russo-Ukrainian Separatists are Fucking Hilarious

AZDuck said:

Krugman's piece was glib, but gets the point across. A more nuanced view is from J. Bradford Delong (econ prof at Cal) who writes:

As long as stock prices are buoyant, business leaders are not scared of future taxes or of policy uncertainty. As long as interest rates remain low, there is no downward pressure on public investment. And as long as inflation remains low, the extra debt that governments are issuing is highly-prized as a store of value, helps savers sleep more easily at night, and provides a boost to the economy as it assists deleveraging and raises the velocity of spending.

Economists, you see, don't watch just quantities--the amount of debt a government has issued--but prices. And the prices of government debt are the rate of inflation, the nominal interest rate, and the level of the stock market as people trade bonds for commodities, bonds for cash, and bonds for stocks. And all three of these prices are flashing green: saying that markets would prefer and it would be better for the economy if government debt were growing at a faster pace than under current forecasts.

There still isn't any evidence of inflationary pressure in the economy yet, and Yellin has pretty much said outright that she is going to raise rates so as to kill off any possible inflation tendencies that might be lurking behind the couch somewhere (I think this is way too fucking cautious, as the economy is only just starting to recover from the Great Recession).

It's a bubble created by the Fed. Pump 50 billion a month into wall street has worked wonders...for Wall Street.

AZDuck said:

MikeDamone said:

AZDuck said:

Krugman's piece was glib, but gets the point across. A more nuanced view is from J. Bradford Delong (econ prof at Cal) who writes:

As long as stock prices are buoyant, business leaders are not scared of future taxes or of policy uncertainty. As long as interest rates remain low, there is no downward pressure on public investment. And as long as inflation remains low, the extra debt that governments are issuing is highly-prized as a store of value, helps savers sleep more easily at night, and provides a boost to the economy as it assists deleveraging and raises the velocity of spending.

Economists, you see, don't watch just quantities--the amount of debt a government has issued--but prices. And the prices of government debt are the rate of inflation, the nominal interest rate, and the level of the stock market as people trade bonds for commodities, bonds for cash, and bonds for stocks. And all three of these prices are flashing green: saying that markets would prefer and it would be better for the economy if government debt were growing at a faster pace than under current forecasts.

There still isn't any evidence of inflationary pressure in the economy yet, and Yellin has pretty much said outright that she is going to raise rates so as to kill off any possible inflation tendencies that might be lurking behind the couch somewhere (I think this is way too fucking cautious, as the economy is only just starting to recover from the Great Recession).

It's a bubble created by the Fed. Pump 50 billion a month into wall street has worked wonders...for Wall Street.

Apologies to Sven for un-redeeming the thread -

Mike- We don't disagree. The bailout and the way this "recovery" has gone, it hasn't really helped the economy as a whole. On a macro level, these bubbles and a few other tweaks (which I won't get into here, because (a) too wonky and (b) you don't care) have carted a shit-ton of wealth from the middle class. Real earnings are flat even with very low inflation rates. Pensions and retirement funds are getting looted left and right.

My beef was simply that the majority of economic thought tends to believe that nation-states are not like households in their approach to debt, nor should they be. While there are upper bounds on what they can do (see 1970's stagflation) government debt is not in and of itself evil. Unless you think government itself is evil, which you might, judging by the tenor of your poasts here.



I wouldn't say government debt is evil, I would say it's not helpful in the long run. It's takes money from productive pursuits that would grow the economy and shifts it to largely non productive and no growth endeavors. Keynesian economic policy has created the mess we see today. And we are trying to get out of it with more Keynesian policy.

And yes, the last five years have seen a shit ton of wealth carted off from the middle class at an accelerated rate.