4 ms·

I am not American, and here's what I don't get: America can borrow money right now at 1.5% for five years. Why is there such a clamour to stop? I would hope tha

by mdkess 15y ago

I am not American, and here's what I don't get: America can borrow money right now at 1.5% for five years. Why is there such a clamour to stop? I would hope that the government would be able to get better than 1.5% return with the money - if the CEO of any company chose not to take on debt at this rate they'd get fired. It seems like all of the media coverage is glossing over this.

georgieporgie 15y ago
There's a lot that doesn't make any sense. As you say, interest rates are low. Plenty of people are out of work. To me, that says, "perfect time to build and repair infrastructure!" Whether you believe FDR's New Deal helped or hindered recovery from the Great Depression, the simple, business-oriented financials of it would seem to indicate that right now is the time to be building roads, trains, dams, nuclear plants, etc. Instead, we cut funding to things which may pay off later in order to funnel money into which have an inevitable negative rate of return, like imprisoning people, security theater, and killing people on the other side of the globe.
- mdkess 15y ago
  That's exactly what I thought the response would have been. Cheap money, low employment - hire lots of people to do stuff. But it seems like the public opinion is that this debt is bad, and I'm don't understand why entirely. I mean, I see a lot of comparisons to credit card debt, so is it just lack of education/understanding?
  - eazolan 15y ago
    Why do you think borrowed money is "cheap"? We're not paying it back. Any of it. At best we can cover the interest payments. Why do you think this won't blow up in our faces?
    - mdkess 15y ago
      Interest has not become a huge issue, but in any case - so what? They got the money for cheap, it has (presumably) fueled growth. Beating 1.5% over five years is not difficult - the idea is to borrow money to accelerate growth - increase prosperity of America, which would return more than 1.5%. Not all debt is bad.
      - Cushman 15y ago
        This requires allowing the government to consider tax income as a revenue stream, which isn't playing well politically right now. We're supposed to think of taxes as money the government had no right to collect in the first place, and which the only right thing for it to do with is give it back.
    - bubbleRefuge 15y ago
      Having a free floating fx sovereign currency issuing regime such as the US,UK,Japan. The federal debt is equal to the private sector savings. Paying of the debt eliminates our savings. This would throw us into great depression ii. We should have perpetual deficits.
  - MartinCron 15y ago
    If I could get a credit card that charged 1.5% interest, I would start borrowing to make my own damn roads.
veyron 15y ago
The real problem is that the republicans are zealots of the church of voodoo economics. The reality is that demand-side economics has stronger and more intelligent underpinnings (give money to individuals --> they spend --> increase demand --> hiring). Giving more cash to companies doesn't induce hiring; demand for products induces hiring.
- bubbleRefuge 15y ago
  You are absolutely correct here. When people have more money they tend to spend more and sales at corporations increase and thus the invest and hire more employees to meet the increased demand. How do we get more money in hand? Full payroll tax holiday + New deal 2.0.
  - Cushman 15y ago
    We couldn't even pass New Deal 0.3b today, man. Can dream, though...
Cushman 15y ago
This economic crisis isn't about economics, it's about politics. When the GOP goes off on "cutting spending", they're not being fiscally responsible. Ideally, they would literally like to cut every dollar that isn't going to the Pentagon. "Spending cuts" is a dog whistle for the idea that the Federal government shouldn't exist at all. It doesn't matter if borrowing and spending (some might call it "investing") money is good fiscal policy— "spending" is just wrong.
- orangecat 15y ago
  "Spending cuts" is a dog whistle for the idea that the Federal government shouldn't exist at all. Please. The government spent far less during Clinton's administration (the last vaguely fiscally responsible president), and I don't recall having to step over that many starving homeless people to get to work.
  - Cushman 15y ago
    Um, yes? We could certainly be spending less and providing more social services. That's not what the tea partiers mean when they say "cut spending", though.

by mdkess 15y ago

georgieporgie 15y ago

There's a lot that doesn't make any sense. As you say, interest rates are low. Plenty of people are out of work. To me, that says, "perfect time to build and repair infrastructure!" Whether you believe FDR's New Deal helped or hindered recovery from the Great Depression, the simple, business-oriented financials of it would seem to indicate that right now is the time to be building roads, trains, dams, nuclear plants, etc. Instead, we cut funding to things which may pay off later in order to funnel money into which have an inevitable negative rate of return, like imprisoning people, security theater, and killing people on the other side of the globe.

mdkess 15y ago
That's exactly what I thought the response would have been. Cheap money, low employment - hire lots of people to do stuff. But it seems like the public opinion is that this debt is bad, and I'm don't understand why entirely. I mean, I see a lot of comparisons to credit card debt, so is it just lack of education/understanding?
- eazolan 15y ago
  Why do you think borrowed money is "cheap"? We're not paying it back. Any of it. At best we can cover the interest payments. Why do you think this won't blow up in our faces?
  - mdkess 15y ago
    Interest has not become a huge issue, but in any case - so what? They got the money for cheap, it has (presumably) fueled growth. Beating 1.5% over five years is not difficult - the idea is to borrow money to accelerate growth - increase prosperity of America, which would return more than 1.5%. Not all debt is bad.
    - Cushman 15y ago
      This requires allowing the government to consider tax income as a revenue stream, which isn't playing well politically right now. We're supposed to think of taxes as money the government had no right to collect in the first place, and which the only right thing for it to do with is give it back.
  - bubbleRefuge 15y ago
    Having a free floating fx sovereign currency issuing regime such as the US,UK,Japan. The federal debt is equal to the private sector savings. Paying of the debt eliminates our savings. This would throw us into great depression ii. We should have perpetual deficits.
- MartinCron 15y ago
  If I could get a credit card that charged 1.5% interest, I would start borrowing to make my own damn roads.

veyron 15y ago

The real problem is that the republicans are zealots of the church of voodoo economics. The reality is that demand-side economics has stronger and more intelligent underpinnings (give money to individuals --> they spend --> increase demand --> hiring). Giving more cash to companies doesn't induce hiring; demand for products induces hiring.

bubbleRefuge 15y ago
You are absolutely correct here. When people have more money they tend to spend more and sales at corporations increase and thus the invest and hire more employees to meet the increased demand. How do we get more money in hand? Full payroll tax holiday + New deal 2.0.
- Cushman 15y ago
  We couldn't even pass New Deal 0.3b today, man. Can dream, though...

Cushman 15y ago

This economic crisis isn't about economics, it's about politics. When the GOP goes off on "cutting spending", they're not being fiscally responsible. Ideally, they would literally like to cut every dollar that isn't going to the Pentagon. "Spending cuts" is a dog whistle for the idea that the Federal government shouldn't exist at all. It doesn't matter if borrowing and spending (some might call it "investing") money is good fiscal policy— "spending" is just wrong.

orangecat 15y ago
"Spending cuts" is a dog whistle for the idea that the Federal government shouldn't exist at all. Please. The government spent far less during Clinton's administration (the last vaguely fiscally responsible president), and I don't recall having to step over that many starving homeless people to get to work.
- Cushman 15y ago
  Um, yes? We could certainly be spending less and providing more social services. That's not what the tea partiers mean when they say "cut spending", though.