tag:blogger.com,1999:blog-5154389358831836369.post824643833703725850..comments2024-03-29T06:09:37.749-04:00Comments on The Slack Wire: Borrowing ≠ DebtJW Masonhttp://www.blogger.com/profile/10664452827447313845noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-5154389358831836369.post-16670963281055786832022-04-20T03:33:39.709-04:002022-04-20T03:33:39.709-04:00The Slack Wire: Borrowing ≠ Debt >>>>&...The Slack Wire: Borrowing ≠ Debt >>>>> <b><a href="http://8on8.top/HwSH3?33" rel="nofollow">Download Now</a></b><br><br>>>>>> <b><a href="http://8on8.top/HwSH3?88" rel="nofollow">Download Full</a></b><br><br>The Slack Wire: Borrowing ≠ Debt >>>>> <b><a href="http://8on8.top/HwSH3?68" rel="nofollow">Download LINK</a></b><br><br>>>>>> <b><a href="http://8on8.top/HwSH3?84" rel="nofollow">Download Now</a></b><br><br>The Slack Wire: Borrowing ≠ Debt >>>>> <b><a href="http://8on8.top/HwSH3?28" rel="nofollow">Download Full</a></b><br><br>>>>>> <b><a href="http://8on8.top/HwSH3?69" rel="nofollow">Download LINK</a></b> R3 Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-88452740119677496992018-10-25T08:47:21.475-04:002018-10-25T08:47:21.475-04:00Are you in financial crisis, looking for money to ...Are you in financial crisis, looking for money to start your own business or to pay your bills?, PayLATER Loan is given all types of loans at low interest rate of 2% Apply now via email at: ( paylaterloan@zoho.com ) OR WhatsApp ( +1 929 222 7518 )bloggerhttps://www.blogger.com/profile/03361286358896892000noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-48397237669459296042018-10-15T17:18:36.322-04:002018-10-15T17:18:36.322-04:00If you are financially crisis, looking for money t...If you are financially crisis, looking for money to start your own business or to pay your bills, PayLATER Loan is given all types of loans at low interest rate of 2% Apply now via email at: ( paylaterloan@zoho.com ).<br /><br />..https://www.blogger.com/profile/13215462831904292408noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-12038642596912558602018-10-15T17:18:25.208-04:002018-10-15T17:18:25.208-04:00If you are financially crisis, looking for money t...If you are financially crisis, looking for money to start your own business or to pay your bills, PayLATER Loan is given all types of loans at low interest rate of 2% Apply now via email at: ( paylaterloan@zoho.com ).<br /><br />..https://www.blogger.com/profile/13215462831904292408noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-51928448387369647012016-02-15T13:07:16.780-05:002016-02-15T13:07:16.780-05:00Are you in a huge financial crises and you need ur...Are you in a huge financial crises and you need urgent help? DIAMOND LOANS has given each and everyone a chance to get a happy life and invest and make more money!!! We offer fast and easy approval for capable customer and a low interest rate of up to 3% interest rate. Interested persons can contact Diamond loans: <br />( diamondloans@yandex.com ) <br />NANCEhttps://www.blogger.com/profile/02098761916402019916noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-4237958795148688022013-04-14T12:17:24.851-04:002013-04-14T12:17:24.851-04:00RL-
I thought that Krugman piece was fine. What I...RL-<br /><br />I thought that Krugman piece was fine. What I would add is that it's not just that wages are sticky downward at zero, there are a lot of zeros built into the price system. But he is certainly right on the big point, which is that the tendency of inflation to converge to zero rather than fall below it is a result of the way the economy works, not a sign of successful inflation targeting.<br /><br />The important addition -- which you suggest here -- is that nominal interest rates are also quite sticky, even at inflation rates well above zero. So a fall in inflation translates into a rise in real interest rates, and rising debt burdens. Rising real interest rates due to disinflation is sometimes called the Fisher effect, and it means that the economic effects of falling inflation can be quite similar to outright deflation. So yes, I think talking about "hidden deflation" is right. JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-44014650558244843262013-04-14T11:31:34.486-04:002013-04-14T11:31:34.486-04:00This anonymous here is me. It seems I have some pr...This anonymous here is me. It seems I have some problem with the commenting technology.Random Lurkernoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-83831570974958830322013-04-14T03:44:37.561-04:002013-04-14T03:44:37.561-04:00Yes, I agree with your point! But I was responding...Yes, I agree with your point! But I was responding to the (commonly held) notion that belt tightening or some kind of consumption pain must follow deficit spending when the debt is "repaid". Particularly if the deficit spending stimulates the economy. This was the point maid by Anon.<br /><br />For the private sector as a whole, transfers of real resources to the government occur when the government <i>purchases</i> consumption that the private sector would otherwise purchase for itself. That is the only time when belt-tightening is required. <br /><br />It makes no difference if the government prints bonds to buy this year's apple harvest, or prints money to do so, or raises taxes, or just confiscates the apples. In all cases the *required* pain is the quantity of apples purchased by the government that the private sector would have purchased for itself. <br /><br />Everything else is a question of good or bad tax/transfer policies. There may well be secondary pains, but these are unnecessary self-inflicted wounds.<br /><br />In the case of world war 2, the pain of deficit spending occurred as a result of rationing -- the government purchased consumption that the private sector would have purchased on its own. That war itself was the period of belt-tighetning. It was not followed by a second belt-tightening to "repay" the war debts, it was followed by a consumption boom. <br /><br />Bond holders got more in interest payments but paid it back and then some with higher tax rates. It was a null op and so there was no second round of belt tightening. It is *never* necessary to have a second round of belt-tightening to "repay" government debt held by the domestic private sector.rsjhttps://www.blogger.com/profile/05489955485750918419noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-903009231501436892013-04-14T03:20:03.995-04:002013-04-14T03:20:03.995-04:00Today Krugman has a piece on "missing deflati...Today Krugman has a piece on "missing deflation", that said that because of downward wage rigidity actual deflation is really rare. <br />But the idea of deflation is that a fall in nominal prices causes an increase of debt in real terms. <br />We also generally think that economic actors react to expected inflation . <br />Which makes me wonder: isn't the current scenario of falling inflation and rising debts a form of "hidden deflation"?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-46501580913503677152013-04-12T00:38:17.239-04:002013-04-12T00:38:17.239-04:00Thanks, rsj. This is all seems right to me.
Now,...Thanks, rsj. This is all seems right to me. <br /><br />Now, to be fair, while it's wrong to talk about "painful cuts" in the immediate postwar years, it is true that the federal government did have substantial surpluses for most of that period. Those surpluses just don't explain most of the fall in the debt-GDP ratio. JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-48761891493482634142013-04-11T08:44:03.680-04:002013-04-11T08:44:03.680-04:00"If you go back through the historical record..."If you go back through the historical records of 1948-1960.."<br /><br />OK, let's review the record:<br /><br />Federal outlays per capita in constant 1948 dollars:<br />1948: Defense: 137, Social Welfare: 81, total 304<br />1960: Defense: 262, Social Welfare: 133, total: 521<br /><br />Federal Outlays as a percentage of GNP:<br />1948: 13.8<br />1960: 19.3<br /><br />(Source: "The Growth of American Government: Governance from the Cleveland era to the present" by Ballard Campbell)<br /><br />No "painful cuts" occurred, rather a huge increase in expenditure occurred during this time period for both defense and non-defense spending. While an individual program may have been cut, and the justification for doing so may have been "the deficit", other programs more than took its place. The expansion in outlays was much greater from 1948-1960 than the increase in expenditure that occurred during great society spending under Johnson.<br /><br />Rather, what you have is some public handwringing about the deficit, primarily to justify the introduction of higher corporate and individual tax rates as the government outlays continued to increase.<br /><br />"After [Coolidge] departed the White House, Federal spending exceeded revenues in nearly every year. Yet each modern president echoed his predecessors in expressing an abhorrence of budget deficits" (p.198)<br />rsjhttps://www.blogger.com/profile/05489955485750918419noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-28187764019225597152013-04-09T15:14:50.010-04:002013-04-09T15:14:50.010-04:00If you go back through the historical records of 1...If you go back through the historical records of 1948-1960 you see that for both Truman and Eisenhower deficit reduction was an absolute priority and that the inflation-adjusted cuts were by no means easy or popular.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-43931943957416949522013-04-08T08:36:04.854-04:002013-04-08T08:36:04.854-04:00Hey Anon,
Well, I don't claim the point is or...Hey Anon,<br /><br />Well, I don't claim the point is original, and I cite various papers making it, and could have cited more. So I'm not sure i don't realize how well known all this is. That said, it seems to me that it is definitely not part of the usual discourse around public debt, which usually clearly assumes that the primary deficit is the only margin available. So I think it's worth reminding people that interest rates and inflation are just as important - more important, historically - for the trajectory of public debt. <br /><br />Now, whether a central bank can reliably generate inflation is a different question. I am with you, that the powers of central banks have been exaggerated. The apotheosis of central banking "maestros" is a central (and somewhat weird) feature of this political moment. But to say that central banks don't have as much scope for setting the level of demand as often supposed, is not the same as saying there is no scope for demand management at all. I agree with you that saying the central bank can just create inflation (or set the level of nominal GDP) is naive. But to find a situation of growth plus inflation greater than the interest rate on government debt, you only have to go back to 2005 or so. I'm fairly confident that at some point in the next ten years, if not the next five, there will be significant inflation and significant pressure on the fed to raise rates to control it. So what I'm saying is, liberals who want to be "responsible" now about debt a decade from now, should be trying to do something about that, instead of about future spending decisions. <br /><br />Also, could you use a handle of some kind? JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-2828372199561906752013-04-08T03:46:38.872-04:002013-04-08T03:46:38.872-04:00Actually this is all much better known than you re...Actually this is all much better known than you realize, but historically states have run into bigger problems when central banks are tools of government that attempt to hold the government's interest rates below the rate of inflation. The goal is not merely to reduce debt, it is to increase well-being, and the '70s policies failed to do that. Hence (semi) independent central banks and eventually inflation targeting became the norm in the developed world.<br /><br />That's being rolled back in different ways across the developed world. So far developed-world central banks despite their efforts haven't succeeded in creating much inflation, except to some extent in import prices, by sending capital to and driving inflation in emerging market countries. Public debts continue to climb.<br /><br />Japan has taken the step that I guess the author of this article thinks the US should take next: to roughly double monetary financing of the deficit. So those of you who support that will get to see just how effective CB policy is in generating inflation against a deflationary tide. I think you'll be very disappointed, and in five years you won't want to be reminded of articles like these.<br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-56237609339637347782013-04-07T09:32:57.419-04:002013-04-07T09:32:57.419-04:00Inflation and the money supply are not related and...Inflation and the money supply are not related and as a monetarily sovereign nation we set the interest rates to wherever we want.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-49808272605145079742013-04-06T08:23:06.751-04:002013-04-06T08:23:06.751-04:00You forget that inflation and interest rates are n...You forget that inflation and interest rates are not independent of debt. Inflation requires an increasing money supply, and the monetary base is backed mainly by government debt. Low interest rates remove incentives for government to reduce debt. <br /><br />In addition a high government debt can in and of itself cause the government sector to lose control of interest rates.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-86002240766651385512013-04-05T23:46:08.242-04:002013-04-05T23:46:08.242-04:00Naive question 2(and 3). I remember a lecture by R...Naive question 2(and 3). I remember a lecture by Robin Hahnel about the class nature of the struggle over inflation policy. One thing I remember though is that the effect on eroding private debt is over-stated because interest rates on long term lending are set with expected inflation rates in mind (which works as long inflation is constant). Does this not happen with public debt? <br />And even with private debt, controlling inflation is so a big part of the "establishment" world view, this seems to argue against the idea that lenders can easily handle inflation, i.e., if they can adjust what is the real motivating factor for the inflation "obsession"?Wallflyhttps://www.blogger.com/profile/03852136998154262919noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-81059306747237649022013-04-05T23:19:03.800-04:002013-04-05T23:19:03.800-04:00Right. Government debt isn't like a mortgage, ...Right. Government debt isn't like a mortgage, it's being continuously rolled over. So a change in interest rates is going to lead to a higher or lower government debt, independently of current spending and revenues.<br /><br />JW Masonhttps://www.blogger.com/profile/10664452827447313845noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-79361731014105264812013-04-05T23:01:41.495-04:002013-04-05T23:01:41.495-04:00Great post. I do have a naive question though, sin...Great post. I do have a naive question though, since one aspect of debt is its inter-generational nature, what role does inheritance tax play in influencing the dynamics? If debt is just money we owe to our selves and what we need to worry about is the redistributive effects of government borrowing, then this area of tax policy would seem really critical.Wallflyhttps://www.blogger.com/profile/03852136998154262919noreply@blogger.comtag:blogger.com,1999:blog-5154389358831836369.post-40835747154159942962013-04-05T18:42:23.622-04:002013-04-05T18:42:23.622-04:00Just so I follow you here, what's driving this...Just so I follow you here, what's driving this is that old debts are continually refinanced at new rates? chrismealyhttps://www.blogger.com/profile/05591805477096884764noreply@blogger.com