The Incessant Irrational Fear of Debt continues by Republican's even amidst Good News

Laugh out loud. Good luck getting anyone to believe that the trillions of dollars the Fed is pumping out to buy up Obama's debt is somehow a fiction.
Ben Bernanke one this issue is about as believable as Charles Manson trying to explain what really happened at the Spohn Ranch.

I give you credit for pure chutzpah, at least.

 

You don't understand our system. I wouldn't expect you to believe it. You guys are conservatives and believe whatever you are told to believe.

 

http://www.cnbc.com/id/101062461
What a convenient and cowardly cop out. If you are trying to convince me the well known phenomenon of Quantitative Easing is somehow all due to my misunderstanding of things then you are inordinately desperate to "win" here.

We are now in QE3...but I suppose that's also a conservative fiction? http://en.wikipedia.org/wiki/Quantitative_easing

 

Your response didn't warrant an actual thought out comment.

Many .com sites believe this is quantitative easing. The Fed has gone through this for years and it will never change some peoples views.

"What the purchases do… is… if you think of the Fed’s balance sheet, when we buy securities, on the asset side of the balance sheet, we get the Treasury securities, or in the previous episode, mortgage-backed securities. On the liability side of the balance sheet, to balance that, we create reserves in the banking system. Now, what these reserves are is essentially deposits that commercial banks hold with the Fed, so sometimes you hear the Fed is printing money, that’s not really happening, the amount of cash in circulation is not changing. What’s happening is that banks are holding more and more reserves with the Fed." - Ben Bernanke

If you understand high level banking like I do, you would understand what Ben Bernanke is saying. But since you don't, you will be left scourging through baloney .com sites believing anything you read.

 

Well you can play the "I know so much more than you do" card but I'm not the only person holding the view that QE, in all it's cycles, is buying up and holding onto toxic Obama debt to lower interest rates and give the impression all is well.

"QE is not harmless however.

First, lots of short-term debt makes the US more vulnerable to bad news, just as it made Bear Stearns and Lehman vulnerable to bad news. Suppose a day of reckoning comes – perhaps with a default in California and Illinois, or a breakdown of long-term US deficit-reduction efforts. Investors lose faith in the US government, even temporarily, and want to dump its debt. If the US has sold a lot of long-term debt, long-term bond prices fall, but there is no crisis. There is time to address the issues, and reestablish a solvent government. If instead the US is constantly rolling over short-term debt, then we will be unable to borrow new money to pay off maturing bills. This is what happened to Greece. Our current moment of exceptionally low long term rates is a golden opportunity for the US to issue long-term debt, not to buy it back."

You go ahead and believe what you want, however. You think you know more than these guys? http://www.theguardian.com/business/2010/nov/15/us-economists-open-letter-qe2
Not a chance.

 

The guardian?

Please stop. They just compared us to Greece. That's a clear sign that whoever wrote that has literally no clue what they are talking about.

 

You assert much and justify very little. If you want to show how this economist is wrong go ahead. If you just want to disparage the source then I'm afraid if looks bad for you.

 

he's right, anyone that compares the usa to greece has no clue what they're talking about



…people with a clear political agenda are doing their best to confuse the public and claim that a crisis created by the collapse of the housing bubble is really a crisis of excessive government spending. Their goal is to gut Social Security, Medicare and Medicaid, and they are prepared to use their money and their influence over the media to achieve it.

The analogy to Greece is a farce from the word go. Greece had chronic deficits even in the good years. Its debt-to-GDP ratio was rising in the years before the crash, when its economy was experiencing strong growth. It now has a debt-to-GDP ratio approaching 150 percent. By contrast, in the United States, even with the Bush tax cuts, the wars in Iraq and Afghanistan, and the Medicare prescription drug benefit, the debt-to-GDP ratio was stable during the housing bubble years. It is now just above 60 percent.

The second key difference between Greece and the United States is that we borrow in our own currency. At the end of the day, if we cannot tax or borrow the money needed to pay our bills, we can print it. That may not be pretty (it could lead to inflation), but as long as our debt is denominated in dollars we will never have the IMF dictating terms to us.

However, the most important difference is that the United States is a huge, diversified economy. If we ever saw the flight from the dollar that the deficit hawks threaten, it would be terrifying—to our trading partners. Suppose the dollar fell so that there were $2 to a euro, or it took $1.50 to buy a Canadian dollar. The US market for imports of European and Canadian goods would collapse, and our exports (we still export more than $1 trillion a year) would be hyper-competitive in Europe and Canada, seizing large chunks of their domestic markets.

This would be an intolerable situation that Europe and Canada would not allow. They would have no choice but to support the dollar and prevent a collapse. What’s the comparable story with Greece—more people taking vacations in the Aegean islands? The people who use the Greek analogy—like former Comptroller General David Walker and former Senator Alan Simpson—deserve to have their arguments ridiculed, not treated as pearls of wisdom in serious debates.

The S&P downgrades, with perhaps similar downgrades to follow from Moody’s and Fitch, are similar in nature to the Greek joke. Remember, this is a credit rating agency that, like the other two, gave investment-grade ratings to hundreds of billions of dollars in subprime mortgage-backed securities. It also gave Lehman Brothers and AIG A-level ratings right up until their demise. Of course, S&P was paid millions for these ratings, leaving open the question of whether the problem is corruption or incompetence.

It is likely both. The Treasury Department officials working with S&P discovered a $2 trillion error in its calculations. Correcting this error meant that the deficit reduction package was actually larger than the $4 trillion figure (measured against the wrong baseline) that S&P had wanted. It didn’t matter; the agency downgraded the debt anyhow. Like the Iraq War, the downgrade decision was made independent of the evidence.

The deficit-hawk crew were crowing that the August 8 market panic vindicated their scare stories and S&P’s judgment. Wrong! The market’s response to S&P’s downgrade actually underscored the creditworthiness of US government bonds: their prices soared that day, as interest rates on US Treasuries fell to the lowest levels since the peak of the financial crisis.

The obvious explanation for both the rise in bond prices and the fall in the stock market is the fear of a euro meltdown. If the eurozone were to break up, it would lead to a world financial freeze-up that could be even worse than the post-Lehman panic. Desperate investors are fleeing to the safety of US Treasuries, a move that is 180 degrees at odds with the downgrade story.

The real problem in the US economy is a lack of demand resulting from the fact that 28 million people are unemployed, underemployed or out of the workforce. Policy debates should be focused on getting these people back to work. Unfortunately, the people who control the national agenda care little about the devastation they have wreaked with their greed and incompetence. Their philosophy of government is that a dollar that goes to the middle class and the poor is a dollar that should be going to the wealthy. This means that as long as Social Security, Medicare and Medicaid are still providing income and security to ordinary Americans, they will be pushing to pare these entitlements back. And they are prepared to use everything in their power to accomplish their goals.

http://www.thenation.com/article/162671/why-we-arent-greece#sthash.n0ZQUj9l.dpuf

 

Did they really bring up Sarah Palin in that article? Lmao. That was written in 2010, QE2 continued, then QE3 came about. Where is the inflation they all keep talking about?



Here's the federal reserve describing why their monetary actions are not inflationary. And this was written in 2009. I wonder who was correct and who wasn't.

http://www.newyorkfed.org/research/staff_reports/sr380.pdf

 

Yes. They did. Along with Michael Boskin, Economics professor at Stanford University, Harvard professor Niall Ferguson and Geoffrey Wood of the Cass Business School in London among other economics luminaries

No one, businesses or individuals, are borrowing at a significant rate right now. The economy is in a sort of suspended animation. When borrowing starts up again most likely inflation will too. http://www.project-syndicate.org/co...-commercial-bank-reserves-by-martin-feldstein

Certainly not the Fed if you claim their actions are not inflationary. They have not yet been inflationary because unemployment is so high and the economy so sluggish.

"That outcome is more likely if high rates of long-term unemployment and underemployment persist even as the inflation rate rises. And that is why investors are right to worry that inflation could return, even if the Fed’s massive bond purchases in recent years have not brought it about."

 

Great, there are just as many on the other side that say something different. The Fed has detailed what they are doing, they have stated numerous times what the effects are. You linked a paper from 2010 that claimed we would face high inflation due to QE2, the Fed in 2009 said these policies would not necessarily create inflation. 3 years later, we have very low inflation and are on the verge of another recession. Apparently the Fed knows what they are talking about.

Yes, that is common knowledge by everyone including the Fed as said in the paper I sourced. Low interest rates have the potential of creating more lending by banks. That is where inflation can happen, not from your "money creating" QE policies.

So do you think maybe the Fed is doing this because unemployment is so high and the economy is sluggish?

 

Then you entire premise is intellectually bankrupt because you don't understand the process nor the history. "He" didn't spend it, "He" requested less money each and every year than the Democrats authorized, "He" requested rescission Congress refused to pass. Those are facts. And as you see inspite of the Democrat opposition he was able to lower the rate of growth in spending and the deficits were cut remarkably and had they passed Regan's budgets the last three years the deficits would have been under $100B.

So deal with the facts not you fallacious assertions.

ROFL yes even Keynes said there was a limit to how much government "stimulus" could accomplish and it was not a blank check as Obama and the Dems seem to think it should be.

Spare me your silly retorts for lack of substance.

 

you're projecting your own situation

 

Obama took federal office in 2005 he didn't ride into town in 2009, he was part and parcel to the Democrat policies of the Democrat controlled Congress

The recession ended in June of 2009 before his stimulus took effect so exactly how did "he" turn it around? And we have yet to get back on track and into a full recovery because of his failed policies, such as the stimulus he engaged in AFTER the recession had already ended.

And now he wants even more of the same.

 

It is quite different from LOTS of government spending in particular the wealth transfer spending, so much for your dealing with economics.

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Using the wrong data for your argument, you should be using actual dollars not percent change.

 

because of gop obstructionism

 

The Outstanding Public Debt as of 11 Oct 2013 at 07:28:42 PM GMT is:



The estimated population of the United States is 316,825,177 so each citizen's share of this debt is $52,870.99.​

 

The national debt is an asset to the private sector. That means each citizen's share of assets is $52,870.99. You can write your local governor thanking them for their service.

 

Strawman. Keep it up. It suits you well.

Why would I use actual dollars to compare two different time periods? Lol.

 

More excuse making.

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You consider your mortgage and credit card balances assets? ROFLMAO.

 

Go learn what a strawman is.

Because the former includes the increases of the latter.

President A increases the budget from $100 to $110 dollars a $10 increase and a 10% increase
President B increase the budget from $110 to $121 dollars a $11 increase but still just 10% increase.

So when you compare just the actually percentage increase now with 20 years ago it hides the actual dollars being printed.

Here try this one.

 

Here is a good graph of what the QE pumping has actually accomplished (or not accomplished).

 

gop obstructionism is a fact, not an excuse

 

They are? You don't see yourself on this picture, by chance?