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Setting economic policy based on fighting 1970's inflation battles instead of accepting the evidence that the US economy is finally near or at full employment b

Setting economic policy based on fighting 1970's inflation battles instead of accepting the evidence that the US economy is finally near or at full employment by sustaining a low interest rate environment contrary to evidence and experience. Full employment is good for workers and less-good for asset owners. Governments can borrow money to build infrastructure that make people's lives better, I don't know how you can dispute that this policy option exists or say that it "doesn't work that way" when you know, governments do that stuff all the time. When in doubt, and you have low interest rates, build a sewage treatment plant!

gridlockd 7y ago
> Setting economic policy based on fighting 1970's inflation battles instead of accepting the evidence that the US economy is finally near or at full employment by sustaining a low interest rate environment contrary to evidence and experience. Full employment is good for workers and less-good for asset owners. You can always point to numbers that are supposedly good (such as questionable government-issued employment statistics) and I can always point to numbers that are bad (the PMI, the Russell 2000, the unprecedented levels of sovereign and individual debt). If the economy really was that great now for people on main street, why is Trump losing approval among the people that voted for him to fix this exact issue? > Governments can borrow money to build infrastructure that make people's lives better, I don't know how you can dispute that this policy option exists or say that it "doesn't work that way" when you know, governments do that stuff all the time. When in doubt, and you have low interest rates, build a sewage treatment plant! I'm not against emergency measures by any means, but the tendency with governments is to make the emergency measure of today the status quo of tomorrow. This idea that you can spend yourself wealthy at the national level is just as flawed as the idea of trickle-down-economics. Sure, in the short term, debt-financed government programs can stimulate the economy, but that debt has to be paid off. You have moved demand from the future into the present. It will be missing from the future, because money spent on debt service cannot be spent on anything else. That is unless you don't pay off the debt, or you erase it through inflation, in which case that is still money missing from someone's pocket, and it's not just foreign pockets - most US debt is internal. It's also not going to be the rich guys' pockets, because they saw it all coming and bought up all the hard assets already.
- JamisonM 7y ago
  IDK, the closest approximation of full employment we've seen since the second world war has been the product of low interest rates. Conversely fretting about debt in the way you describe, with a concern about the value of present investment in physical infrastructure for the future, has proven over and over again to be unfounded (tax cuts are otherwise clearly a case of leaving money on the table now that will not benefit the future). You'll see.
  - gridlockd 7y ago
    > Conversely fretting about debt in the way you describe, with a concern about the value of present investment in physical infrastructure for the future, has proven over and over again to be unfounded Not true. If you want to see that idea of economic policy fail, look at Turkey under Erdogan: https://en.wikipedia.org/wiki/Turkish_currency_and_debt_crisis,_2018 https://en.wikipedia.org/wiki/Turkish_currency_and_debt_cris... The reason that Erdogan couldn't pull off this con for as long as the US is that he can't print Dollars or Euros. However, even those "reserve currencies" eventually can lose investor faith. You're just speculating that they never will.
    - JamisonM 7y ago
      Yeah, don't borrow in someone else's currency is a pretty important point, the 10 year Danish Krone Bond is at a -0.48%. If you have to borrow in someone else's currency then you are absolutely /not/ the same position that Denmark is right now.
      - gridlockd 7y ago
        The reason Turkey has to borrow in someone else's currency is that their own currency doesn't have the credibility it needs to support low interest rates, so if they want to borrow at affordable rates to boost their economy, they need to use foreign currency. If the US keeps up the deficit spending, it will either need to pay a huge amount of money on debt service, or it needs to monetize its debt - which means credibility will be lost and new debt will be more expensive. Either way, it's not a free lunch.

gridlockd 7y ago

> Setting economic policy based on fighting 1970's inflation battles instead of accepting the evidence that the US economy is finally near or at full employment by sustaining a low interest rate environment contrary to evidence and experience. Full employment is good for workers and less-good for asset owners. You can always point to numbers that are supposedly good (such as questionable government-issued employment statistics) and I can always point to numbers that are bad (the PMI, the Russell 2000, the unprecedented levels of sovereign and individual debt). If the economy really was that great now for people on main street, why is Trump losing approval among the people that voted for him to fix this exact issue? > Governments can borrow money to build infrastructure that make people's lives better, I don't know how you can dispute that this policy option exists or say that it "doesn't work that way" when you know, governments do that stuff all the time. When in doubt, and you have low interest rates, build a sewage treatment plant! I'm not against emergency measures by any means, but the tendency with governments is to make the emergency measure of today the status quo of tomorrow. This idea that you can spend yourself wealthy at the national level is just as flawed as the idea of trickle-down-economics. Sure, in the short term, debt-financed government programs can stimulate the economy, but that debt has to be paid off. You have moved demand from the future into the present. It will be missing from the future, because money spent on debt service cannot be spent on anything else. That is unless you don't pay off the debt, or you erase it through inflation, in which case that is still money missing from someone's pocket, and it's not just foreign pockets - most US debt is internal. It's also not going to be the rich guys' pockets, because they saw it all coming and bought up all the hard assets already.

JamisonM 7y ago
IDK, the closest approximation of full employment we've seen since the second world war has been the product of low interest rates. Conversely fretting about debt in the way you describe, with a concern about the value of present investment in physical infrastructure for the future, has proven over and over again to be unfounded (tax cuts are otherwise clearly a case of leaving money on the table now that will not benefit the future). You'll see.
- gridlockd 7y ago
  > Conversely fretting about debt in the way you describe, with a concern about the value of present investment in physical infrastructure for the future, has proven over and over again to be unfounded Not true. If you want to see that idea of economic policy fail, look at Turkey under Erdogan: https://en.wikipedia.org/wiki/Turkish_currency_and_debt_crisis,_2018 https://en.wikipedia.org/wiki/Turkish_currency_and_debt_cris... The reason that Erdogan couldn't pull off this con for as long as the US is that he can't print Dollars or Euros. However, even those "reserve currencies" eventually can lose investor faith. You're just speculating that they never will.
  - JamisonM 7y ago
    Yeah, don't borrow in someone else's currency is a pretty important point, the 10 year Danish Krone Bond is at a -0.48%. If you have to borrow in someone else's currency then you are absolutely /not/ the same position that Denmark is right now.
    - gridlockd 7y ago
      The reason Turkey has to borrow in someone else's currency is that their own currency doesn't have the credibility it needs to support low interest rates, so if they want to borrow at affordable rates to boost their economy, they need to use foreign currency. If the US keeps up the deficit spending, it will either need to pay a huge amount of money on debt service, or it needs to monetize its debt - which means credibility will be lost and new debt will be more expensive. Either way, it's not a free lunch.