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1) The government is literally awash in cheap credit. Good businesses, when credit is cheap, borrow and invest. If you think this is a bad idea, please explai

1) The government is literally awash in cheap credit. Good businesses, when credit is cheap, borrow and invest. If you think this is a bad idea, please explain if it is because you do not believe the government should act as a business does (and for what reasons), or because you think that you should not borrow when your interest rates are low. 2) If you dislike Cuban's target for investment (fixing unemployment, the purported goal of the Tea Party and GOP), then please, by all means, pick a different avenue by which the government could make a return on investment.

Anechoic 15y ago
>pick a different avenue by which the government could make a return on investment. A WPA-type program to improve transportation, energy and communications infrastructure. Lot's of jobs across many sectors, from professional to artistic to skilled & unskilled labor, most of which can be in the private sector (contractors/contracting firms).
- anamax 15y ago
  > A WPA-type program to improve transportation, energy and communications infrastructure. We tried that and can't do it today. Instead, we piss away large amounts of money and don't build infrastructure. Policy recommendations should account for reality, not "if we do this right".
  - tomjen3 15y ago
    There is also the problem of diminishing returns. Paving the roads and later upgrading them to highways improved the transportation capabilities a lot. I am at a loss as to what you would upgrade to now (unless you want to make it greener, but environmentalism doesn't improve the economy).
    - Anechoic 15y ago
      > I am at a loss as to what you would upgrade to now There are upgrades to be had: HSR (where it makes sense), more modern air traffic control, intelligent transport systems, multimodal facilities, high-speed internet, power generation (green or otherwise), smart grid, flood contro, seismic refits, etc. But we don't even need to discuss upgrading the infrastructure, most of what we have now is subpar because of decades of deferred or non-existent maintenance. We will need to spend billions just to get our existing systems up to par,
    - o1iver 15y ago
      What about improving the American school system?
      - CWuestefeld 15y ago
        We're getting far afield, but the problem with American education isn't a lack of funding. Look at the slope of a graph of education funding over time, and you'll see that it would be difficult to pump cash in any more quickly than we already have -- and to no avail.
  - Anechoic 15y ago
    >We tried that When? ARRA was sold as that, but it became more about tax cuts and propping up state governments that a public works program. > and can't do it today. We're going to have to do it some point: http://www.infrastructurereportcard.org/ http://www.infrastructurereportcard.org/ May as well do it now while people are out of work and interest rates are low.
    - anamax 15y ago
      > >We tried that > When? ARRA was sold as that, but it became more about tax cuts and propping up state governments that a public works program. And your new program won't be that because ....? We can also look at currrent infrastructure spending. It's basically all jobs program, starting with the Davis-Bacon requirement. > We're going to have to do it some point: http://www.infrastructurereportcard.org/ http://www.infrastructurereportcard.org/ > May as well do it now while people are out of work and interest rates are low. Um, the facts that we need to do it and now would be a good time to do it do not imply that we'd actually do it. We're doing a lot of infrastructure spending now. How about fixing it before embarking on an expansion? That way, we won't have wasted a lot of money that could be used when we're actually going to fix infrastructure. Yes, interest rates are low now, but lenders want their principle back as well, so wasting money now can affect our ability to borrow and spend when we're serious.
jerf 15y ago
The government should not act as a business does, because per Cuban's words, "The problem for the Democrats is that the government hasn’t shown that they can earn a positive or even a break even return on their spending." If a business can not break even, then the proper thing for them to do is to liquidate while they are still worth something and disburse the proceeds of the liquidation to their shareholders. Yes, I think perhaps maybe the government should not be doing what a business would do in this situation. Again, I remind you I'm not actually trying to engage in a debate over proper economics in general (and trying very hard to carefully refrain from injecting too much of my opinion, it took me a few edits on the first message), I'm trying to work out what exactly this post is trying to say. It isn't clear to me at all how Cuban gets from the the government of today, which is incapable of allocating capital, to the government of tomorrow, which when presented with a menu of even more decisions than it has to make today, is then capable of allocating capital intelligently in an even tougher decision-making environment. Why would the government not simply fail in the ways it is failing already in the allocation of capital? What's the connecting step?
- knowtheory 15y ago
  Alright, so we'll grant the government is terrible at capital allocation (because yes, that's the premiss of Cuban's post). So, what would you do when faced with an investor who's a complete fucking idiot, but can borrow money cheaply? What is a fail-proof investment plan for this trustifarian? Why can't we find a plan, or demand that our government do something with this opportunity? There is a hack to be had in here. Who can we trust with this opportunity that the government can farm it out to? What would the terms have to be in order to ensure that the government can make a return? btw, upvotes for you, thanks for the conversation :)
  - jerf 15y ago
    "So, what would you do when faced with an investor who's a complete fucking idiot, but can borrow money cheaply?" ... tell him not to borrow money? Is that really such a strange idea? In fact... how can you seriously entertain any other answer? (In this case, limited to the investor case, not the investor as a standin for the government. This may or may not apply to the government, but what is this metaphor supposed to be proving, anyhow...?) One of the human irrationalities is a belief that for any set of constraints there must be a solution, but that's not true. An "idiot" investor has no winning solution (virtually by definition in this case), and therefore the answer is not to play. There is no force in the universe that says there must still be a way to invest and prosper anyhow.
anamax 15y ago
> The government is literally awash in cheap credit TODAY. However, do you really think that interest rates will remain low until that money is paid off?
- knowtheory 15y ago
  The Fed is betting that that will be the case with their announcement today that they will be keeping interest rates low. So, er, yes, sounds like that might be a reasonable assumption?
- 2arrs2ells 15y ago
  Bonds/Notes/Bills issued by the Treasury have fixed rates - so yes, the interest rates will stay that low until the money is paid off. The point that others have brought up is that if the US Government borrows an incredibly large amount of money and pushes up the Debt/GDP ratio, future, additional borrowing will become more expensive. But if today's borrowing is used efficiently, it should drive up GDP and reduce some of the need for future borrowing.
  - anamax 15y ago
    > Bonds/Notes/Bills issued by the Treasury have fixed rates - so yes, the interest rates will stay that low until the money is paid off. TIPS aren't fixed rate, but I don't know what fraction of new US debt is TIPS. More to the point, you're assuming that we won't have to roll-over that debt, which only happens if we're not running a deficit. Since we are for the forseeable future....
    - 2arrs2ells 15y ago
      I believe the "real" interest rate on TIPS is fixed - while the nominal rate fluctuates with CPI. Your second point is, of course, right on. But if we have to borrow $x, better to borrow it now at ~0% than later at (likely) >0% interest.
      - anamax 15y ago
D_Alex 15y ago
> The government is literally awash in cheap credit. --> infrastructure projects! If it is a given that money can be borrowed for basically zero interest rate, why not invest it at long term low yield infrastructure projects such as: roads/bridges, high speed trains, electrical distribution networks, or my personal favourite: scientific research.
- nooneelse 15y ago
  Preschools for children from low-income households also have a good return on the investment, according to that Planet Money episode... see them for their sources.
jaekwon 15y ago
1) used to be true. 2) proper taxation and trimming the fat.
rwmj 15y ago
Education?

Anechoic 15y ago

>pick a different avenue by which the government could make a return on investment. A WPA-type program to improve transportation, energy and communications infrastructure. Lot's of jobs across many sectors, from professional to artistic to skilled & unskilled labor, most of which can be in the private sector (contractors/contracting firms).

anamax 15y ago
> A WPA-type program to improve transportation, energy and communications infrastructure. We tried that and can't do it today. Instead, we piss away large amounts of money and don't build infrastructure. Policy recommendations should account for reality, not "if we do this right".
- tomjen3 15y ago
  There is also the problem of diminishing returns. Paving the roads and later upgrading them to highways improved the transportation capabilities a lot. I am at a loss as to what you would upgrade to now (unless you want to make it greener, but environmentalism doesn't improve the economy).
  - Anechoic 15y ago
    > I am at a loss as to what you would upgrade to now There are upgrades to be had: HSR (where it makes sense), more modern air traffic control, intelligent transport systems, multimodal facilities, high-speed internet, power generation (green or otherwise), smart grid, flood contro, seismic refits, etc. But we don't even need to discuss upgrading the infrastructure, most of what we have now is subpar because of decades of deferred or non-existent maintenance. We will need to spend billions just to get our existing systems up to par,
  - o1iver 15y ago
    What about improving the American school system?
    - CWuestefeld 15y ago
      We're getting far afield, but the problem with American education isn't a lack of funding. Look at the slope of a graph of education funding over time, and you'll see that it would be difficult to pump cash in any more quickly than we already have -- and to no avail.
- Anechoic 15y ago
  >We tried that When? ARRA was sold as that, but it became more about tax cuts and propping up state governments that a public works program. > and can't do it today. We're going to have to do it some point: http://www.infrastructurereportcard.org/ http://www.infrastructurereportcard.org/ May as well do it now while people are out of work and interest rates are low.
  - anamax 15y ago
    > >We tried that > When? ARRA was sold as that, but it became more about tax cuts and propping up state governments that a public works program. And your new program won't be that because ....? We can also look at currrent infrastructure spending. It's basically all jobs program, starting with the Davis-Bacon requirement. > We're going to have to do it some point: http://www.infrastructurereportcard.org/ http://www.infrastructurereportcard.org/ > May as well do it now while people are out of work and interest rates are low. Um, the facts that we need to do it and now would be a good time to do it do not imply that we'd actually do it. We're doing a lot of infrastructure spending now. How about fixing it before embarking on an expansion? That way, we won't have wasted a lot of money that could be used when we're actually going to fix infrastructure. Yes, interest rates are low now, but lenders want their principle back as well, so wasting money now can affect our ability to borrow and spend when we're serious.

jerf 15y ago

The government should not act as a business does, because per Cuban's words, "The problem for the Democrats is that the government hasn’t shown that they can earn a positive or even a break even return on their spending." If a business can not break even, then the proper thing for them to do is to liquidate while they are still worth something and disburse the proceeds of the liquidation to their shareholders. Yes, I think perhaps maybe the government should not be doing what a business would do in this situation. Again, I remind you I'm not actually trying to engage in a debate over proper economics in general (and trying very hard to carefully refrain from injecting too much of my opinion, it took me a few edits on the first message), I'm trying to work out what exactly this post is trying to say. It isn't clear to me at all how Cuban gets from the the government of today, which is incapable of allocating capital, to the government of tomorrow, which when presented with a menu of even more decisions than it has to make today, is then capable of allocating capital intelligently in an even tougher decision-making environment. Why would the government not simply fail in the ways it is failing already in the allocation of capital? What's the connecting step?

knowtheory 15y ago
Alright, so we'll grant the government is terrible at capital allocation (because yes, that's the premiss of Cuban's post). So, what would you do when faced with an investor who's a complete fucking idiot, but can borrow money cheaply? What is a fail-proof investment plan for this trustifarian? Why can't we find a plan, or demand that our government do something with this opportunity? There is a hack to be had in here. Who can we trust with this opportunity that the government can farm it out to? What would the terms have to be in order to ensure that the government can make a return? btw, upvotes for you, thanks for the conversation :)
- jerf 15y ago
  "So, what would you do when faced with an investor who's a complete fucking idiot, but can borrow money cheaply?" ... tell him not to borrow money? Is that really such a strange idea? In fact... how can you seriously entertain any other answer? (In this case, limited to the investor case, not the investor as a standin for the government. This may or may not apply to the government, but what is this metaphor supposed to be proving, anyhow...?) One of the human irrationalities is a belief that for any set of constraints there must be a solution, but that's not true. An "idiot" investor has no winning solution (virtually by definition in this case), and therefore the answer is not to play. There is no force in the universe that says there must still be a way to invest and prosper anyhow.

anamax 15y ago

> The government is literally awash in cheap credit TODAY. However, do you really think that interest rates will remain low until that money is paid off?

knowtheory 15y ago
The Fed is betting that that will be the case with their announcement today that they will be keeping interest rates low. So, er, yes, sounds like that might be a reasonable assumption?
2arrs2ells 15y ago
Bonds/Notes/Bills issued by the Treasury have fixed rates - so yes, the interest rates will stay that low until the money is paid off. The point that others have brought up is that if the US Government borrows an incredibly large amount of money and pushes up the Debt/GDP ratio, future, additional borrowing will become more expensive. But if today's borrowing is used efficiently, it should drive up GDP and reduce some of the need for future borrowing.
- anamax 15y ago
  > Bonds/Notes/Bills issued by the Treasury have fixed rates - so yes, the interest rates will stay that low until the money is paid off. TIPS aren't fixed rate, but I don't know what fraction of new US debt is TIPS. More to the point, you're assuming that we won't have to roll-over that debt, which only happens if we're not running a deficit. Since we are for the forseeable future....
  - 2arrs2ells 15y ago
    I believe the "real" interest rate on TIPS is fixed - while the nominal rate fluctuates with CPI. Your second point is, of course, right on. But if we have to borrow $x, better to borrow it now at ~0% than later at (likely) >0% interest.
    - anamax 15y ago

D_Alex 15y ago

> The government is literally awash in cheap credit. --> infrastructure projects! If it is a given that money can be borrowed for basically zero interest rate, why not invest it at long term low yield infrastructure projects such as: roads/bridges, high speed trains, electrical distribution networks, or my personal favourite: scientific research.

nooneelse 15y ago
Preschools for children from low-income households also have a good return on the investment, according to that Planet Money episode... see them for their sources.

jaekwon 15y ago

1) used to be true. 2) proper taxation and trimming the fat.

rwmj 15y ago

Education?