KRUGMAN: This Is The Chart That Debunks What Everyone Says About The National Debt
I know we have a bunch of Krugman fans here. :)
I thought this might be interesting to discuss. The link here is actually Business Insider expanding (slightly) on Krugman's post.
The argument made is that, in a country with their own currency and the power to print currency, that long term rates on government securities are a function of expected growth and future interest rates. The argument goes that national debt does not play into it, "credibility" not being an issue because the risk of default is next to nothing.
Thoughts?
I thought this might be interesting to discuss. The link here is actually Business Insider expanding (slightly) on Krugman's post.
The argument made is that, in a country with their own currency and the power to print currency, that long term rates on government securities are a function of expected growth and future interest rates. The argument goes that national debt does not play into it, "credibility" not being an issue because the risk of default is next to nothing.
Thoughts?
In the end, banking is a political game. The Community Reinvestment Act was Carter's reaction to natural interest rates in the face of honest monetary policy following the second world war. The depression was over, millions died in the resulting wars, and Americans wanted a clean slate run honestly. We got it up to the 1970s.
The negro neighborhoods were not keeping up with their counterparts. Asians and
Europeans were coalescing well and prospering. Racism must have been the cause
. It certainly was not because of choices made by most individuals in either group. A perfect excuse for wealth redistributive legislation.
The CRA is a club held over the heads of banking institutions in this country. With this club, growth opportunities are doled out to the better behaved money men. Instruments like requests and permissions are not needed to control men that make their living predicting the value of other mens plans. The CRA is the political club that lets the USA ignore the price of borrowing from our progeny!
Or, at least it gives that illusion!
The central bank (The Fed) is the root of all interest in the USA. It is the Charybdis to the CRA's Scylla. In any case, quoting artificially low government controlled interest rates as evidence is double speak in the extreme. This sleight of hand has earned Mr. Krugman a nomination for the Bertram Scudder Lifetime Obfuscation Award!
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I've been thinking hard about all this and have noticed that many young people have dropped out of political interest all together and rather spend all their time playing online video games. So what's the reason...............? Video games and online activity are not regulated. The imagination is not captive to the Paul Krugman's of the world in those games. In many ways todays youth are Shrugging. Instead of working hard to start businesses and fight their way up a corporate ladder, they just sit in their parents basement till their 40's playing 'Call of Duty' day in and day out. What is their incentive to do otherwise? Real life is simply too regulated. The computer world doesn't have all these stupid regulations to deal with designed to give people like Krugman a title of respect when in fact he knows little of nothing but broken theories and ancient taboos.