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This is all worse than a joke. Krugman is a US citizen, purporting to advise the US government. He is not in a position to advise the government to break the l

by 001sky 14y ago

This is all worse than a joke. Krugman is a US citizen, purporting to advise the US government. He is not in a position to advise the government to break the law. No economist is, for the very reason that Economic analysis pre-supposed the rule of law. If you throw out "obeying the law" you throw out the field of Economics, generally speaking. Second, there is the empirical fact the the US debt is subject to being held by insitutions that are constrained by law as to holding only certain classes of securities. Your pension fund cannot hold XXX rated t-secs if they are below investment grade thresholds. So, the who would hold 17trillion of US debt after a default? Talk about too big to fail... And furthermore, there are stronger constraints on policy set in in the constitution that prevent 'interference with contract' which generally speaking includes financial contracts. It is not the case that the government can dis-regard the Constitution and appropriate value through cynical public policy. And just as a general point, now that you've sunken to this desperate level, take a look around at the company you are keeping? Seriously. The rule of law trumps economics. Full stop. (Ask the 2009 nobel prize winners). Lastly, taxes as an "asset class" if you want to condier them that are a "derivative" of corporate and personal earnings (at first approximation). The are, like any derivative, dependant on the value of the underlying assets. They are therefore subject to the same constraints--ie, unless corporate earnings are infiinite, taxes-as-dervatives cannot be infiinte through logic/math. This is all unimpressive rubbish that you put forth here. The reason I didn;t walk through all of this before is it is a waste of time even giving Krugman the attention.

mpweiher 14y ago
Ahh, we're getting somewhere. Slowly. Not much progress on the ad-hominems, but so be it. Now that we've debunked the claim that Krugman's assertion is "literally" false, we can concentrate on whether it ("government debt is not like family debt") is BS. (By the way, thanks for filling me in on taxes being a derivative of earnings; there I was using "debt-to-GDP ratios" all this time without a clue as to what those strange words meant!) First, of course, is the question of what Krugman is advocating. Is it simply defaulting on the debt? No. In fact: "So yes, debt matters. But right now, other things matter more". What are those other matters? Exactly the "underlying asset class" you mention. Governments can spend money on either the numerator (debt) or denominator (GDP) to improve the debt-to-GDP ratio, families rarely have that option (spending money tends to not lead to raises, unless you live in Baku). Greece for example has tried reducing their debt by cutting spending (so far with limited success), with the side-effect of putting the economy into deep recession (+free street entertainment) and actually making the debt-to-gdp ratio much, much worse, now at 170% of GDP: http://www.tradingeconomics.com/greece/government-debt-to-gdp http://www.tradingeconomics.com/greece/government-debt-to-gd... The other possibly immediate problem with debt is interest rates, but so far that just doesn't seem to be a problem, with rates sub 1%. In fact, with rates this low one might consider it negligent to not use those rates for investments with even modest ROI.
- 001sky 14y ago
  Now that we've debunked the claim that Krugman's assertion is "literally" false No, its literally false. You haven't "debunked" anything. Honestly, if you don't understand any of this I cannot help you, further.
  - mpweiher 14y ago
    "it is" -> "it's" ("its" is the possessive) What Krugman said is literally true (he gives examples in the article, I have given others). And the actual point that he makes about the relative nature of the debt and thus the question for governments as to wether to work on the numerator or the denominator is one that you yourself brought up, unprompted. Finally, his biggest point (AFAICT) is that this is debt that is largely internal, therefore it doesn't actually make the country poorer. In fact, you brought up pension funds: these actually have a big problem when there isn't any "safe" government debt to invest in. Heck, they are actually starting to get into trouble now, with the yields of that government debt so incredibly low (recent emissions of Danish and German debt had negative interest rates, so you paid some money to the government for holding onto your money for a while).
    - 001sky 14y ago
      If you're not trained in economics, or experienced in finance, it is best to assume--based on your comments-- you have no idea what you are talking about. Reading the op-ed pages of the NY times, unfortunately, does not give you either the information or perspective to judge the games Krugman is playing. If you do have this kind of training and this is what you got out of it, it seems you didn't get your money's worth or you have a vested interest in polishing someones ego. But there is nothing original, insightful, or discriminatory in anything you have written in this thread. Which is pretty typical of Krugman's supporters.
      - mpweiher 14y ago
        Well, at least you are consistent, sticking to the ad-hominems and staying well clear of any kind of substantive support for your silly little claims.

by 001sky 14y ago

mpweiher 14y ago

Ahh, we're getting somewhere. Slowly. Not much progress on the ad-hominems, but so be it. Now that we've debunked the claim that Krugman's assertion is "literally" false, we can concentrate on whether it ("government debt is not like family debt") is BS. (By the way, thanks for filling me in on taxes being a derivative of earnings; there I was using "debt-to-GDP ratios" all this time without a clue as to what those strange words meant!) First, of course, is the question of what Krugman is advocating. Is it simply defaulting on the debt? No. In fact: "So yes, debt matters. But right now, other things matter more". What are those other matters? Exactly the "underlying asset class" you mention. Governments can spend money on either the numerator (debt) or denominator (GDP) to improve the debt-to-GDP ratio, families rarely have that option (spending money tends to not lead to raises, unless you live in Baku). Greece for example has tried reducing their debt by cutting spending (so far with limited success), with the side-effect of putting the economy into deep recession (+free street entertainment) and actually making the debt-to-gdp ratio much, much worse, now at 170% of GDP: http://www.tradingeconomics.com/greece/government-debt-to-gdp http://www.tradingeconomics.com/greece/government-debt-to-gd... The other possibly immediate problem with debt is interest rates, but so far that just doesn't seem to be a problem, with rates sub 1%. In fact, with rates this low one might consider it negligent to not use those rates for investments with even modest ROI.

001sky 14y ago
Now that we've debunked the claim that Krugman's assertion is "literally" false No, its literally false. You haven't "debunked" anything. Honestly, if you don't understand any of this I cannot help you, further.
- mpweiher 14y ago
  "it is" -> "it's" ("its" is the possessive) What Krugman said is literally true (he gives examples in the article, I have given others). And the actual point that he makes about the relative nature of the debt and thus the question for governments as to wether to work on the numerator or the denominator is one that you yourself brought up, unprompted. Finally, his biggest point (AFAICT) is that this is debt that is largely internal, therefore it doesn't actually make the country poorer. In fact, you brought up pension funds: these actually have a big problem when there isn't any "safe" government debt to invest in. Heck, they are actually starting to get into trouble now, with the yields of that government debt so incredibly low (recent emissions of Danish and German debt had negative interest rates, so you paid some money to the government for holding onto your money for a while).
  - 001sky 14y ago
    If you're not trained in economics, or experienced in finance, it is best to assume--based on your comments-- you have no idea what you are talking about. Reading the op-ed pages of the NY times, unfortunately, does not give you either the information or perspective to judge the games Krugman is playing. If you do have this kind of training and this is what you got out of it, it seems you didn't get your money's worth or you have a vested interest in polishing someones ego. But there is nothing original, insightful, or discriminatory in anything you have written in this thread. Which is pretty typical of Krugman's supporters.
    - mpweiher 14y ago
      Well, at least you are consistent, sticking to the ad-hominems and staying well clear of any kind of substantive support for your silly little claims.