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Because we can borrow money at an interest rate lower than inflation. Most other countries with a AAA credit rating can also, even if they're not on USD. But t

Because we can borrow money at an interest rate lower than inflation. Most other countries with a AAA credit rating can also, even if they're not on USD. But this is a result of the pandemic and shouldn't be taken as a direct indicator of economy health. We haven't had something of this magnitude in almost 100 years, and so far we've fared MUCH better than the 30s.

someguydave 5y ago
No, the US gov has been on this spending trajectory since well before the pandemic.
sharklazer 5y ago
> because we can borrow at an interest rate lower than inflation. I don’t think you understand what it means for the inflation rate to be above the return rate of promissory notes, but the only incentive to buy such notes is to prop the system with the belief this is temporary—otherwise, by definition, you are just throwing money away (sans considerations of ownership).
ShroudedNight 5y ago
> and so far we've fared MUCH better than the 30s. There was an entire decade between the Spanish influenza pandemic and the beginning of the depression - it's not obvious to me why we should already presume to have mastered economic effects that trailed the historical "equivalent" by a decade
asow92 5y ago
> we've fared MUCH better than the 30s. Didn't it take years to feel the effects of the 1929 crash (just as it _may_ with our current crisis), and didn't FDR's Keynesian economic polices actually make things worse, albeit while providing hope of recovery to those affected? What might have actually got us out of that decade long slump towards the end? I am also hopeful that it won't be as bad this time around, and who's to say since we're all still in the middle of this.
refurb 5y ago
This is a super odd comment. The way the fed control interest rates is through it’s buying of federal debt (through “new” dollars). We can borrow cheaper than inflation because the feds just print new dollars. And during the 30’s the strategy was not “spend our way out” but rather “cut back spending”. Different strategy so not sure why you’re saying we’re doing better - that would imply the same strategy is working better?
betwixthewires 5y ago
> But this is a result of the pandemic and shouldn't be taken as a direct indicator of economy health. I don't follow the logic here. Suppose a pandemic wipes out 50% of the world population. The economy would collapse. You wouldn't say what you said if that happened. The health of an economy is affected by real world occurrences, it is in fact nothing more than a measure of the aggregate cumulative things happening in the world. A shock is a shock no matter what causes it, crises are crises precisely because something unexpected caused them.

someguydave 5y ago

No, the US gov has been on this spending trajectory since well before the pandemic.

sharklazer 5y ago

> because we can borrow at an interest rate lower than inflation. I don’t think you understand what it means for the inflation rate to be above the return rate of promissory notes, but the only incentive to buy such notes is to prop the system with the belief this is temporary—otherwise, by definition, you are just throwing money away (sans considerations of ownership).

ShroudedNight 5y ago

> and so far we've fared MUCH better than the 30s. There was an entire decade between the Spanish influenza pandemic and the beginning of the depression - it's not obvious to me why we should already presume to have mastered economic effects that trailed the historical "equivalent" by a decade

asow92 5y ago

> we've fared MUCH better than the 30s. Didn't it take years to feel the effects of the 1929 crash (just as it _may_ with our current crisis), and didn't FDR's Keynesian economic polices actually make things worse, albeit while providing hope of recovery to those affected? What might have actually got us out of that decade long slump towards the end? I am also hopeful that it won't be as bad this time around, and who's to say since we're all still in the middle of this.

refurb 5y ago

This is a super odd comment. The way the fed control interest rates is through it’s buying of federal debt (through “new” dollars). We can borrow cheaper than inflation because the feds just print new dollars. And during the 30’s the strategy was not “spend our way out” but rather “cut back spending”. Different strategy so not sure why you’re saying we’re doing better - that would imply the same strategy is working better?

betwixthewires 5y ago

> But this is a result of the pandemic and shouldn't be taken as a direct indicator of economy health. I don't follow the logic here. Suppose a pandemic wipes out 50% of the world population. The economy would collapse. You wouldn't say what you said if that happened. The health of an economy is affected by real world occurrences, it is in fact nothing more than a measure of the aggregate cumulative things happening in the world. A shock is a shock no matter what causes it, crises are crises precisely because something unexpected caused them.