tag:blogger.com,1999:blog-3240565408401956331.post1169182573006357322..comments2023-07-08T05:49:38.333-04:00Comments on Larry Davidson's Thoughts on Macro and Other Stuff: National Debt InsanityUnknownnoreply@blogger.comBlogger6125tag:blogger.com,1999:blog-3240565408401956331.post-3536236687817755122015-04-17T10:55:34.897-04:002015-04-17T10:55:34.897-04:00Welcome back to the pond Tuna. Looks like we agree...Welcome back to the pond Tuna. Looks like we agree on the debt. The market has a way of changing voters minds. Maybe once the signs of fiscal irresponsibility show up in the economy, politicians will have to act just to save their own jobs. We survive because other countries are worse than we are. That can always change...but for now we get a breather. Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-50695774933240404472015-04-17T09:25:16.045-04:002015-04-17T09:25:16.045-04:00Dear LSD. The debt is the really big elebunt in th...Dear LSD. The debt is the really big elebunt in the room but our pols are too busy batting aside the pink elebunts they see floating in the room, hung-over and hallucinating from too much hubris and gorging at the taxpayer buffet.<br /><br />I think the debt is the most troublesome aspect of our govomit but no one . . . . not even conservative fiscal hawks mention it. No stomach—not a one of them—to step away from the buffet and say “enough!” Rather, too concerned about reelection. Always a cynic of politics I now sense the debt will soon hit the tipping point, and with interest payments consuming most tax revenue, we’ll be in an irreversible financial death spiral. Ah-h-h-h-h, that great sucking sound once again—‘cept this time it’s not yobs going out but resources being consumed internally like a black hole.<br />Tunahttps://www.blogger.com/profile/10963127416474394394noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-10049349806216521302015-04-14T17:19:07.559-04:002015-04-14T17:19:07.559-04:00Dear Professor Yachts,
According to what I am re...Dear Professor Yachts, <br /><br />According to what I am reading, the compromise among the parties is aiming to reduce the annual deficit to zero percent of GDP in 10 years. But the truth is that will not necessarily reduce the debt relative to current plans. It is lazy and half-hearted. The spirit of debt reduction has flown out the window of reelection 2016. People are not demanding debt reduction so why should politicians? Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-33738277190327530072015-04-14T15:43:00.675-04:002015-04-14T15:43:00.675-04:00Reducing debt or the rate of debt creation, cuts t...Reducing debt or the rate of debt creation, cuts the numerator in the debt to GDP ratio but it may also cut the denominator. Those who argue that debt is no problem will no doubt claim that the spending plans increase GDP growth. Still, I wonder what happened to the pressure that produced Simpson Bowles which would have limited or reduced the debt/GDP? I thought it was sensible plan and Alice Rivlin said something similar was supported in numerous focus groups. Customers Yachtshttps://www.blogger.com/profile/16138097396249967343noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-81224948028499042722015-04-14T11:38:01.387-04:002015-04-14T11:38:01.387-04:00Thanks Fuzz. Most of our debt is held domestically...Thanks Fuzz. Most of our debt is held domestically but much is held by foreigners. Thus there are two issues right now,. One -- once the Fed reverses course and won't buy so many government bonds -- US interest rates are expected to rise. This is partly because the lack of bond demand by the Fed means the government has to compete with private bond sales. This rise will cause the value of the dollar to increase even more than it has. Rising interest rates and exchange rates will not help improve the US economy. .Larry Davidsonhttps://www.blogger.com/profile/10028971586654033347noreply@blogger.comtag:blogger.com,1999:blog-3240565408401956331.post-90896228573939179362015-04-14T11:30:56.521-04:002015-04-14T11:30:56.521-04:00It's strange that the Keynesians whose hero is...It's strange that the Keynesians whose hero is John Maynard seem to forget he said that debt should not exceed something like 25% of GDP. Too inconvenient so we'll just kick it under the rug. Could this be another reason the Fed insists on holding down interest rates? Most of the debt we owe is to ourselves, I believe.Fuzzyhttps://www.blogger.com/profile/11438679628562995612noreply@blogger.com