Fix the Debt's Fuzzy Math

Quote from DJPlayer : even at the current rate we've been warned: http://www.bloomberg.com/news/201...ising.html now that's on electronic money that is used to buy bonds.. The fed defending any form of extreme inflation.. because they're not PRINTING MONEY AND PUMPING IT INTO THE ECONOMY. So their defense on why inflation will NOT go out of control, is your suggestion to fix everything... ??

yes, they need to be pumping it into the economy.

Quote from jplayland : Really? And you think that is a good idea? You think that will be efficient and effective?

it will be more effective in boosting the economy than not doing it.

Quote from Radeck : a failure in basic economics that couldn't stay alive if it weren't for ideologically driven donors...I certainly would not be taking advice on economics from such an economic failure of an entity, as you seem to be doing. They can't figure out how to keep their doors open, yet want to preach to the rest of us how to run the country? That's simply hilarious

Except they did figure out how, for 150 years.

Quote from 124nic8 : Except they did figure out how, for 150 years.

So your recommendation is to follow their example. Find a couple people rich enough to fund the entire USA indefinitely? I'm guessing that won't work.

He has a damn good point. The paper doesn't deserve much for credibility.

Quote from jplayland : So your recommendation is to follow their example. Find a couple people rich enough to fund the entire USA indefinitely? I'm guessing that won't work. He has a damn good point. The paper doesn't deserve much for credibility.

What paper? We're talking about "The Nation" [thenation.com] magazine.

Who said they were ever trying to make a profit?

Quote from thikthird : yes, they need to be pumping it into the economy.

wasn't that effectively what the payroll tax holiday did? It pumped money into consumers pockets to spend back into the economy. That lasted for any entire 2 years.. and we still have essentially the slowest recovery in history.

Quote from DJPlayer : wasn't that effectively what the payroll tax holiday did? It pumped money into consumers pockets to spend back into the economy. That lasted for any entire 2 years.. and we still have essentially the slowest recovery in history.

it's the "no true scottsman" fallacy. Communism and Socialism have (and will) fail throughout history, but the proponents of such folly always claim that it failed in such-and-such a country because they didn't do it the right way, they didn't go far enough, they weren't socialist/communistic enough, etc etc, and the answer is to do it again, but with MORE zealotry.

Quote from thikthird : yes, they need to be pumping it into the economy.

here's a quote from your hero John Maynard Keynes, whose policies you and Obama hold as gospel...even he says what you are advocating will destroy the country...but then that is your goal, isn't it?

Quote : There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.

Quote from thikthird : i've explained it in those other threads you allude to. print money -> spend money -> hire people -> increase production

Who prints? How much?

Who hires? Public sector? Private?

Who produces as a result of this magic equation?

Quote from thikthird : no, it seems that people who solely think that more money means more inflation don't know how this stuff works. hyperinflation only occurs, and has only occurred in history, at times when demand has far outpaced production. the fact that money was printed is only incidental.

Demand for what? Credit? Issued by whom?

When and where has this "only occurred?"

Quote from Radeck : really? in under 4 years the debt will be over $20 trillion. If the interest rates were to rise to a historically low 5% (it was higher than that about 10 years ago, I remember buying a 1 year CD at 7%),

You are horribly confused and clueless if you think the interest rate you get on a CD has any bearing on what the US pays on its debt. Likewise if you think the interest rates the US will pay will jump significantly any time soon.

Quote from travathian : You are horribly confused and clueless if you think the interest rate you get on a CD has any bearing on what the US pays on its debt. Likewise if you think the interest rates the US will pay will jump significantly any time soon.

thanks Captain obvious. The two ARE related...you can't have a CD paying 7% if a T-bill was paying 1%...while one doesn't necessarily drive the other, the root behind them both is the same: the general interest rate market conditions. I was using that as an illustration because I remember what CD's were paying back then compared to what they are paying now.

and interest rates can jump over night if the market deems it necessary. Any number of events can cause T-bill holders to demand higher yields before they buy any. T-bills are sold in auctions, and if investors don't feel conditions warrant a certain yield, they can bid accordingly.

The only reason you are not seeing that now is because the FED is manipulating the market by buying up 90% of new treasuries that are issued. [bloomberg.com], artificially driving up price (and hence lowering yield, and hence the interest rate the government (ie taxpayer) must pay on the borrowed money). Problem is, they can't keep doing that forever. Sooner or later it will be time to pay the piper, and it will not be pretty.

Quote from Radeck : here's a quote from your hero John Maynard Keynes, whose policies you and Obama hold as gospel...even he says what you are advocating will destroy the country...but then that is your goal, isn't it?

Good times

Quote from travathian : You are horribly confused and clueless if you think the interest rate you get on a CD has any bearing on what the US pays on its debt. Likewise if you think the interest rates the US will pay will jump significantly any time soon.

Have you ever taken any sort of Finance course?

Virtually every bond calculation I've seen revolves around what (at least at the time) was called the 'risk-free rate'. All growing up, that was the going rate of Treasuries.

If you raise or lower the 'risk-free rate', then you absolutely affect every rate that is built off of that.