U.S. Debt discussion

[oilyfan]

Originally Posted by Shazam

Sure, tell me why then.

Sure, change your comment

Low inflation is okay. You'll always have some inflation just because our current economic system is inflationary by nature. Having said that it would be preferred to have an economic system that didn't have inflation. Wanna win a Nobel Prize?

But inflation caused by excess printing of fiat money is beyond stupid.

You saying this proves you don't have a good understanding of economics. Economists believe that inflation provides a tool for monetary policy to manage growth and capital investments, that is why central banks usually have an inflation target. An economy that grows will always include inflation.

[HPLovecraft]

Originally Posted by Shazam

Money only loses value because it... inflates. So if you can get rid of inflation/deflation (I have no idea how to do that, BTW), then you can really stabilize supply/demand. Hypothetically it would mean that there would be no demand caused by inflation.

No economist is really "okay" with inflation - it exists because our system is flawed.

Again, I don't know much about economics, but I was always under the impression that it was supply/demand that created inflation in the first place, not the other way around. Inflation is just the name given to the process caused by these other things. Stabilize supply/demand, and get rid of inflation/deflation, not get rid of inflation/deflation, and stabilize supply/demand? Now I've gone and confused myself. I knew I should have paid better attention in economics class . . .

[Shazam]

Originally Posted by oilyfan

You saying this proves you don't have a good understanding of economics. Economists believe that inflation provides a tool for monetary policy to manage growth and capital investments, that is why central banks usually have an inflation target. An economy that grows will always include inflation.

Inflation is not a tool. Inflation is the result of friction between demand and that demand being met.

Within our current economic framework, inflation is a given. I've already said that.

This is basic macro-econ. Why do I have to explain this to you?

[oilyfan]

Originally Posted by Shazam

Inflation is not a tool. Inflation is the result of friction between demand and that demand being met.

Within our current economic framework, inflation is a given. I've already said that.

This is basic macro-econ. Why do I have to explain this to you?

I understand basic macro-econ, you don't have to explain it to me. And I don't fully agree with your definition of inflation, the most widely taught definition (and the one I was taught) is that inflation is too much demand for money and not enough supply of it.

I never said inflation is a tool, I said it provides a tool, there is a key difference there. It allows monetary policy to work, otherwise interest rate changes by central banks would never work. And to say that no economist is ok with inflation is a misstatement, most favour a low rate of inflation.

[afc wimbledon]

Originally Posted by oilyfan

I understand basic macro-econ, you don't have to explain it to me. And I don't fully agree with your definition of inflation, the most widely taught definition (and the one I was taught) is that inflation is too much demand for money and not enough supply of it.

I never said inflation is a tool, I said it provides a tool, there is a key difference there. It allows monetary policy to work, otherwise interest rate changes by central banks would never work. And to say that no economist is ok with inflation is a misstatement, most favour a low rate of inflation.

Wouldn't a low supply of money cause deflation, I always thought it was the profligate expansion of the money supply causing the currancy to lose value, which causes prices to rise.

[oilyfan]

Originally Posted by afc wimbledon

Wouldn't a low supply of money cause deflation, I always thought it was the profligate expansion of the money supply causing the currancy to lose value, which causes prices to rise.

Sorry you are right I had a brain fart, it should read the opposite, inflation is caused by too much money supply...

[photon]

"Too much money chasing too few goods" = inflation

[Azure]

Originally Posted by Shazam

But inflation caused by excess printing of fiat money is beyond stupid.

Especially when you do it to tackle what is fundamentally a government spending problem.

Of course, given who they're picking to serve on the super committee, I'd venture a guess and say no real cuts will happen, and printing more money will come out as the 'only' viable solution.

[Azure]

Although there have been calls to reform the tax code and lower the overall rate to broaden the base, which in turn would increase revenue.

Who knows if they'll have time to get it done though.

[Calgaryborn]

Originally Posted by Azure

Didn't some high ranking Fed official say they could just print more money to pay their debts?

Allen Greenspan said it. He basically was saying why America wouldn't/couldn't default:


http://en.mercopress.com/2011/08/10/...o-pay-any-debt

It was announced today that Obama has borrowed 1.1 trillion this year as of the end of July. One has to wonder with no TARP or stimulus bill this year where all the money went. The debt is for the last ten months beginning last October:

http://news.xinhuanet.com/english201..._131041614.htm

[afc wimbledon]

Originally Posted by Calgaryborn

Allen Greenspan said it. He basically was saying why America wouldn't/couldn't default:


http://en.mercopress.com/2011/08/10/...o-pay-any-debt

It was announced today that Obama has borrowed 1.1 trillion this year as of the end of July. One has to wonder with no TARP or stimulus bill this year where all the money went. The debt is for the last ten months beginning last October:

http://news.xinhuanet.com/english201..._131041614.htm

40% is debt service, a huge chunk is military, both the wars themselves, then the huge cost of equipment replacement that has been used up over the last 5 years, unemployment payments, these have no doubt risen hugely in a depressed economy, higher take up of collage grants as troops leave the military due to lack of work etc. Then there is the massive loss of tax revenue due to the depression and the Bush tax cuts.

[Slava]

Originally Posted by Calgaryborn

Allen Greenspan said it. He basically was saying why America wouldn't/couldn't default:


http://en.mercopress.com/2011/08/10/...o-pay-any-debt

It was announced today that Obama has borrowed 1.1 trillion this year as of the end of July. One has to wonder with no TARP or stimulus bill this year where all the money went. The debt is for the last ten months beginning last October:

http://news.xinhuanet.com/english201..._131041614.htm

Its good that you were able to locate this on such a well known site and didn't have to search high and low for a source!

[Calgaryborn]

Originally Posted by Slava

Its good that you were able to locate this on such a well known site and didn't have to search high and low for a source!

Listen if I accused you of being a liar I would expect to back it up. I backed up the assertion that Micheal Moore is a liar. What I'm not going to do is back up every assertion you Libs make. It's not my job.

[Vulcan]

Originally Posted by Calgaryborn

Listen if I accused you of being a liar I would expect to back it up. I backed up the assertion that Micheal Moore is a liar. What I'm not going to do is back up every assertion you Libs make. It's not my job.

I look at it this way, Moore manipulates the facts to suit his purposes, right wingers like Limbaugh just make up their facts.

[Slava]

Originally Posted by Calgaryborn

Listen if I accused you of being a liar I would expect to back it up. I backed up the assertion that Micheal Moore is a liar. What I'm not going to do is back up every assertion you Libs make. It's not my job.

I'm not accusing you of lying, so don't take it that way. I just thought it was funny that you were saying it was released today and get some link for a website which I've never heard of before and my guess is neither have many others. How does that really pass as news?

[Calgaryborn]

Originally Posted by Slava

I'm not accusing you of lying, so don't take it that way. I just thought it was funny that you were saying it was released today and get some link for a website which I've never heard of before and my guess is neither have many others. How does that really pass as news?

I didn't think you accused me of lying. I thought you were impling that I should research someone elses assertion about Rush being a liar again.

I just picked the first site that came up on a google search which had the story. I heard it reported today on the John Gibson radio show.

[Slava]

Originally Posted by Calgaryborn

I didn't think you accused me of lying. I thought you were impling that I should research someone elses assertion about Rush being a liar again.

I just picked the first site that came up on a google search which had the story. I heard it reported today on the John Gibson radio show.

Well despite the fact that we probably disagree on most things political, I don't think that you are a liar. I find it bewildering that you can believe some of these things, but I suppose you think the same about some of my positions!

[HotHotHeat]

There was just a hilarious joke on The Daily Show about the US having credit problems under their first black president.

[oilyfan]

A great interview with Roubini today on WSJ:

http://tinyurl.com/3ehd5ur

[Flames Fan, Ph.D.]

In regards to the previous brief discussion about mortgages, fraud, personal responsibility, here is a post from Calculated Risk. For those unfamiliar, this site was all over the mortgage crisis, in depth and in detail as it was occurring, through commentary by a very knowledgeable insider.

Anyways, money quote from the article:

The court ruled that even though someone with industry knowledge could figure out the details, the teaser rate wasn't properly disclosed: The root of the alleged deficiencies in defendant‘s disclosures is defendant‘s use of a significantly discounted teaser rate rather than an initial rate set near the rate that would result from the application of the variable rate formula in the Note (an index plus 3.5/3.25 percent). The teaser rate creates an artificially low (compared to the actual cost of credit) initial payment schedule and guarantees that the actual applicable interest rate (after the first month of the loan) will exceed the interest rate used to calculate the payment schedule for the initial years of the loan. If the initial interest rate were set using the Note‘s variable rate formula, it would actually be possible that interest rates would adjust downward (or stay the same) after the first payment and no negative amortization would occur. In other words, the disclosures‘ conditional language is accurate absent a significantly discounted rate. An Option ARM loan without a teaser rate would result in a higher initial interest rate, higher initial minimum payments pursuant to the payment schedule, and a much narrower gap (even if interest rates increased) between the borrower‘s payment ―options. Of course, without a teaser rate, the surface attractiveness of Option ARMs would have been greatly diminished precisely because the stated (initial) interest rate and (initial) payment would be higher. (emphasis added).