It's utterly amazing. But,

Michael Maiello — Thu, 02 Aug 2012 19:35:24 +0000

In reply to Public debt does not matter

It's utterly amazing. But, since understanding the national debt is not intuitive, the flim flam works.

As you say, the world is hurling money at us and telling us to use it for whatever. They are not scared of inflation down the line. They know we're going to "print" the money to pay them back and they don't care. Why we aren't thanking them and rebuilding every bridge and water system while installing free, universal Wi-Fi and renovating every major airport and train station in the country with the proceeds is entirely beyond me.

Borrowing money is only a problem when you need it and nobody wants to lend to you. That's exactly the opposite of the problem we have now.

Public debt does not matter

DF — Thu, 02 Aug 2012 19:07:44 +0000

In reply to Will Romney Raise Taxes On The Middle Class?

Public debt does not matter nearly so much as the overall health of the economy. Public debt after WW2 was over 100% of of GDP. We did not careen over a "fiscal cliff." The economy did not implode. The economy grew, thus the debt shrunk relative to the economy. It's not really about paying it back the same way you or I might pay back a loan.

The bond markets currently reflect an extreme confidence in US public debt. Buyers want it. They want it so badly that the real interest-rate on ten year T-bills has been negative, meaning that investors are willing to pay the US government for a safe place to park their money! Only fools wouldn't take advantage.

But the debt is too important a political cudgel, as you note, for this fact to inform policy in a meaningful way. Never mind that if you actually care about alleviating the debt in the long term, you would do the exact opposite of what those who crow most about the debt prescribe. Methinks they doth protest too much.

There are three phenomena that have contributed significantly to public debt during the course of US history: War, financial malfeasance and Ronald Reagan. He's the bump to the right of WWII. The bump to the left of WWI is obviously the Civil War, the bump at the left end the debt overhang from the revolution. (Y-axis is public debt as % of GDP)

Yet, somehow, the GOP has managed to brand theirs as the party of "fiscal responsibility," with the Gipper cast as the mythical hero of the same. It would be funny were it not so successful a distortion of the truth.

War is peace. Freedom is slavery. Ignorance is strength. Carry on.

dagblog - Comments for "Will Romney Raise Taxes On The Middle Class?"

It's utterly amazing. But,

Public debt does not matter