You will also notice the need for statists to make everything into a morality play. This tendency will increase as default approaches.
If you feel the need to atone after a career in milking hapless taxpayers and running to the internet to support said milking, please seek your nearest place of worship (besides the state memorials).
As a statist, I do not attend church. I worship at the temple of the Congressional Budget Office and hang on their every prophecy, published quarterly in PDF format.
What about personal responsibility; isn’t that supposed to be kind of a thing with conservatives? You look a man in the eye, your word is your bond, you pay a man what you owe him, stuff like that.
I try to save you a click when I can, Will, but I don’t know the answer here.
Some of us would appreciate it if you’d start an IMHO thread and lay out your Manifesto. I’m curious how contract disputes are settled. If by judges, where do the judges come from? If I win a court case but still get no satisfaction, am I supposed to hire my own jack-booted thugs?
Me? Not sure that I have one. I just think that WillFarnaby’s suggestion that the U.S. should default on it’s debt is a betrayal of traditional principles. Either our word means nothing, or he’s trying to distance today’s taxpayers from our duly elected representatives of years past, in which case our national unity means nothing.
You are aware that interest rates are at least partially related to risk, aren’t you?
If we defaulted on our debt, no country who’s a holder of said debt would ever loan us money again, and neither would the IMF. At least, not anywhere near the interest rates we enjoy right now. Nobody would trust us.
But hey, we have the nukes, so fuck you!
Oops. It was WillFarnaby I was asking to post his Manifesto. We’ve had exciting glimpses of his ideal politico-economic structure, but I can’t fully connect the dots. From where I sit, some of his ideas seem to contradict each other, but I’m sure that’s just my own ignorance showing. If he wants us to learn from his teachings he should give us a clearer picture. For example, how do judges and police get chosen, or are they unnecessary?
I am torn and should just accept your judgment. Though stories like with Cambridge Analytica make me all the more suspicious that shadowy forces are manipulating the minds of the public for the largest of political ends.
Then again, the whole question reminds me of that line from The Federalist 1:
Sure. I’ll want to hear about central banking too.
I’ll have to think about it. It is a pretty white phenomenon, but maybe it is more of a cultural/economic demographic? I don’t know for sure either. I do know that the top levels of government have a way of deflecting attention away from sound expert advice (or even econ 101 in this case), and so the question becomes how to keep the public’s attention refocused on the relevant facts and contexts surrounding any given public issue.
Maybe we need a bumper sticker slogan? Put Econ 101 Back In The Budget Debate! :shrug:
I want to emphasize here that I don’t think this was either 1) easily predictable in advance, or 2) a guide to future electoral strategy.
Imagine some kids who aren’t allowed to play ball in the house because of a very nice heirloom vase that they almost destroyed earlier. So they’re being good, and they’re outside, and it just so happens that there’s a window open, and the ball sails perfectly, almost mystically, through the window, off a wall, into a different room with the vase, off another wall, and finally into the vase itself. Which crashes to the ground. (This is not a perfect analogy – Fivethirtyeight pretty much always had Trump with a respectable albeit small chance of winning – but it gets the point across.)
Even after reconstructing the strange series of cause-and-effect bounces, that does not mean those bounces could have been previously predicted, and it also does not mean that we should fear a similar thing happening in the future. The last-minute Comey announcement might possibly have been another bounce of this ball – quite plausibly, without this announcement, Trump would not have gotten a last minute boost to win. But that was also something not especially predictable, and not likely to happen again.
What I find interesting about this particular bounce of the ball is, well, that there were certain states that actually flipped from 2012. And this bounce of the ball might explain those particular states and why they flipped, at least for this particular election cycle.
Based on what I’ve read, I just don’t think it’s a coincidence that Hillary lost states to Trump that she previously lost to Bernie. But I also don’t think this is any kind of guide to future political “planning” or whatever. It was just a weird bounce. Trying to wrangle this discussion back to the main topic of the thread: I think politics is based a lot more on strange bounces than people generally credit – changes in demographics, the economy, candidate-specific factors, etc., that no one can predict in advance – and all of those random bounces don’t leave a whole lot of room leftover for rational policy analysis. So pretty simple economic ideas, like, “Hey, maybe it’s a good time to pay down debt during a boom, because deficits will explode again next recession” get thoroughly ignored.
Until the pressure becomes too great.
There was actually a pretty durn solid economic discussion of debt in this thread, at least before another poster entered and basically suggested that we fire a tactical nuclear weapon at Bozeman, Montana.
Since that moment, the discussion has mostly been people stating, correctly and sternly, that it is not in fact a good idea to nuke Bozeman.
As if that actually needed to be pointed out.
Total wealth in the United states is about $100 trillion. GDP is about $19 trillion.
Debt held by the public is 15 trillion.
As a metaphor assume you have 100k in wealth, you make 19k a year and you have 15k in debt. Each year you add about $400 a year in debt. Those numbers aren’t pleasant but they are manageable, especially if you have decades to pay off the debt.
We could pay it off if we wanted to. We just don’t want to do what it would take to pay it off (make health care more affordable, raise taxes, cut spending, etc).
It’s just a paper debt because the world isn’t going to demand payment, collapse our economy, and start a planetary wide depression. Heck, actual money has pretty much become electronic numbers shuffled around from one bank to another. Even “real” money is just printed paper that has worth simply because we agree that it does.
Based on that, the debt is meaningless since it will never go down, will always go up and we will spend more than we take in every year.
BTW, it is meaningless simply because the above is true.
The US had a budget surplus in the late 1990s. It seems strange to claim that something will “never” happen, when it has in fact happened during your own lifetime.
Or was that before you were born?
That is not what the word “meaningless” means.
C’mon, man, nuking Bozeman would only interest a small circle of people in Montana. No one else would pay any attention.
That’s Farnaby political science right there.
Yes, the economist spends pages and pages on pop-political punditry I could have heard from any talking head the day after the election, but won’t do some economic analysis. Are you angling for a job at NYT?
Let me ask you the simple question: Do interest rates increase as the demand for loanable funds decreases?
I’m not sure what you mean by “demand for loanable funds” in this context, because on one hand you seem to mean “borrowing” and yet this is a thread basically about bonds… yet your terminology is vague.
Sticking to the topic of the thread, yes, I would generally expect the interest on bonds to increase if demand goes lower.
But if you’re talking about borrowing, it is also possible in certain circumstances. See for example the era of stagflation, with high interest rates and low economic growth.
But that assumes a constant risk environment - which would not be the case under a default scenario.
The interest rates of Bell Bonds used to be published in the New York Times right under treasury bonds since they were considered almost as safe. Until divestiture, that is. Then the risk increased and the interest rates went up.
There is no “but.” We are saying the exact same thing. Higher risk with steady or lower interest on such bonds is the recipe for lower demand.
You guys are both right, of course, about one fundamental issue here: a default completely changes the risk profile of a country. Yes. But it’s not just “risk” that’s at issue here.
When a micro instructor draws a demand curve on the board, they are likely to say something along the lines of “This represents the relationship between the price and the quantity demanded, all else equal”, or “other determinants of demand held constant”, or even back to the Latin “ceteris paribus” if they want to add an old-fashioned touch.
Something similar is said for supply curves. Then the two curves are drawn on the board together, and price and quantity are found from their intersection. This is how micro people do.
But the entire purpose of having two curves – supply & demand, or a budget constraint & indifference curves, or IS & LM – is to recognize that the stuff that pushes one curve around tends not to be the stuff that pushes the other curve around. For simple stylized intro examples on the blackboard, it’s most often the case that only one small thing has changed. That does not describe the US debt. Defaulting on the US debt would nuke the global financial system. In blackboard terms, it would affect both supply and demand simultaneously. In macro, all else is never equal. Ceteris is no longer paribus.
It is a strange question to ask “What happens to demand for loanable funds?” if the entire financial system has been nuked. There are other questions to ask, not least of which is “What happens to the supply of loanable funds, if every bank in the country becomes insolvent overnight?” There are a thousand other things we could talk about, too. What is even meant by “loanable funds”? Is it the primitive graph from intro macro – which ignores the banking sector completely – or is it a deeper concept like the loanable funds doctrine? The majority of the money supply in this country is created and sustained by the private banking system… so why would we be using an abstract market for “loanable funds”, which doesn’t even include an explicit financial sector, when it is that very financial sector that maintains our money supply?
Or what about imports? The US imports more than it exports nearly every year, and we pay for those exports with paper. So what happens to the entire system of world trade if the very same paper that is used as the foundation for the world financial system suddenly were to stop existing? How could the US continue to finance our imports if we suddenly reneged on payment for the imports we received yesterday? Why would anybody else send us more imports tomorrow? What happens to global supply chains for every major manufacturing firm in the country? Why would anyone accept payment in US dollars at all – or the Treasuries that represent future payment of those dollars – if the government broke its promise in such spectacular fashion? And we haven’t even gotten to the role of the US dollar – mostly in the form of Treasuries – as the most important global reserve currency. It’s not just US banks that would suddenly be insolvent. Global banks that use the US dollar for reserves would also, quite suddenly, have an enormous hole blown in their balance sheets. How would they be able to finance their own operations?
The question that’s being asked is what happens if an inaccurately-defined demand curve shifts on a blackboard. But there is no point in talking about a silly micro ceteris-paribus curve when we’re positing macroeconomic catastrophe that affects literally everything else in the world economy.
The only accurate classroom demonstration of the US defaulting on its entire debt is dousing the entire blackboard with gasoline, and then lighting a match.