Would the GOP types push the USA into default ?

[JollyRoger]

Comparing the U.S. to Greece? Has this thread devolved into horror fiction?

 

[danjuno]

Hell yea! Rich people should tell poor people how to vote. And they should be grateful too!

Have you ever heard of this thing called the middle class? States that let the "free market" *expletive* on the middle class are poor, states that protect the middle class aren't.

 

[Kaitzilla]

Have you ever heard of this thing called the middle class? States that let the "free market" *expletive* on the middle class are poor, states that protect the middle class aren't.

I have heard of such a group of people.
They will be gone shortly as the world reverts to feudalism.


Heck, even just recently we keep printing money to help the rich who own 90% of the stock market.

And subsidize the poor with 95% obamacare subsidies for their health insurance.


Middle class? A term meaning the only ones not being subsidized.
They can just pay that 9% income for their family until the inevitable crush is over and we achieve a 2 class society.

 

[DemonicAppleGuY]

Yeah, Greece is far worse off than the US.

The US is on the road to recovery to currently. As long as the government doesn't get in the way, we'll be good soon.

What's happening in Greece doesn't go away in any meaningful amount of time...

Greece is a country without much of a future...

 

[DemonicAppleGuY]

I have heard of such a group of people.
They will be gone shortly as the world reverts to feudalism.


Heck, even just recently we keep printing money to help the rich who own 90% of the stock market.

Does it harm the Middle Class..? Because I'm not suffering here. Middle Class families generally have stocks and the like too you know right? There are generally through mutual funds but still, stocks man, stocks.

And subsidize the poor with 95% obamacare subsidies for their health insurance.

Middle class?
They can just pay that $1200 per month for their family themselves until the inevitable crush is over and we achieve a 2 class society.

You know that Obamacare is "for" everyone right? Subsidies aren't necessarily required to reduce the cost of healthcare.

 

[Cutlass]

Are Austerians so Slippery Because They Are Excessively Greeced?


Ignore the trolls. Stick to those Austerians whose public personas understand and acknowledge the numbers.

Conversations still have a very Alice-in-Wonderland quality:

Tortoise: The deficit and debt are out of control! We must cut spending now and in the future! Cameron-Osborne-Clegg were right to slash spending in Britain in 2010 and so raise unemployment! The Republicans are right to be slashing spending in the US now!

Akhilleus: But right now the debt-to-GDP ratio is falling, not rising. Right now more spending to reduce unemployment is a much higher priority than steepening the downward trajectory of the debt-to-GDP ratio. And with the shadow cast on the long run by a depressed economy, at current interest rates and at the interest rates priced into financial markets for the next thirty years spending cuts worsen the debt-to-GDP ratio as long as the economy remains depressed.

Tortoise: But the long-run deficit-and-debt outlook is dire! We need to assemble a coalition now to lock-in future spending cuts in the 2020s and 2030s! And we cannot get such a coalition unless we appease spending hawks by including spending cuts now!

Akhilleus: But the long-term budget forecasts you are looking at do not include the effects of two huge policy changes that start in the 2020s: the IPAB fast-track Medicare savings and the Cadillac insurance tax revenues. Why not count thos in the baseline?

Tortoise: Because future congresses will repeal them! We need to pass more policy changes today that I like that will take effect in the 2020s to reduce the deficit and debt!

Akhilleus: Why won't those policy changes you like that would take effect in the 2020s likewise be repealed by future congress before they can have significant effects?

Tortoise: [Silence]

Akhilleus: So your position is the policy changes that I like that have already commanded legislative majorities and that have already been enacted into law that reduce the deficit in the 2020s are so weak will be repealed by future congresses, and hence don't count? And your position is that policy changes that you like that have not yet been able to command legislative majorities and have not yet been enacted into law would, if enacted, be so strong that they would then not be repealed by future congresses, and hence would count? Is that what you're saying?

Tortoise: [More silence]

Akhilleus: Is there any doubt that once one takes the position that future congresses are going to do what future congresses are going to do that leaves us with no sensible option but the focus on the present? And there is no doubt at all that if we focus on the present what the economy needs right now is more spending?

Tortoise: Multiple equilibria! That's it! Multiple equilibria! "Greece"! A high-debt economy could instantly jump to a Greece-like equilibrium, and that would cause a depression. So we must reduce the debt! We must deepen the current depression by cutting spending now in order to reduce the chances that the economy jumps to a Greece-like equilibrium which would bring on a depression!


And by this point I have lost the thread of the Austerian argument completely. I fear a situation in which an economy has lots of hard-currency debt, in which case a loss of confidence can lead to a fall in the value of the exchange rate that amplifies the domestic value of debt and sets off a vicious spiral into deep depression. I fear a situation in which an economy with a hard-currency peg that sees the sudden collapse of a capital inflow finds that external balance requires a slow grinding deflation and deep depression. I can even fear a situation in which an economy without a hard-currency peg fears the expectational effects of an import-price surge and so acts as if it has a hard-currency peg, fighting inflation by defending the currency, and defending the currency by attacking the economy and sending it into a deep depression.

But I simply do not see how an economy with a well-functioning tax system, stable and well-anchored long-term inflation expectations, no hard-currency debt, very low current and expected future interest rates, and a degree of exorbitant privilege as a reserve currency provider--an economy like the UK or the US--could possibly instantly jump to another equilibrium that looks anything at all like "Greece"…

If markets stop buying government debt, then they are buying something else. By Walras's Law, excess supply of government debt is excess demand for currently-produced goods and services and labor. That is not continued deflation and depression, that is a boom--it may well be a destructive inflationary boom, and it may be a costly boom, but it is the opposite problem of an deflationary depression.

Yet the Austerians say--that with an output gap of between 5% and 10% of GDP, the most urgent task of the government is to hit the economy on the head with the hammer of austerity to raise unemployment. Why? To guard against the threat of the invisible bond-market vigilantes. Even though there is no sign of them--for they are not just invisible, they are noiseless and odorless as well. We must not try to infer expectations, probabilities, scenarios, and risks from market prices, but instead have faith as great as St. Paul's in the truth of Austerity, which is indeed "the evidence of things not seen". Even though cutting spending is--with interest rates and persistence coefficients at their current levels--going to worsen and not improve the debt-to-GDP ratio.

The only thing I can think of is Lewis Carroll's dialogues between Akhilleus and the Tortoise:

Achilles had overtaken the Tortoise, and had seated himself comfortably on its back.

"So you've got to the end of our race-course?" said the Tortoise. "Even though it does consist of an infinite series of distances? I thought some wiseacre or other had proved that the thing couldn't be done?"

"It can be done," said Achilles. "It has been done! Solvitur ambulando. You see the distances were constantly diminishing; and so --"

"But if they had been constantly increasing?" the Tortoise interrupted "How then?"

"Then I shouldn't be here," Achilles modestly replied; "and you would have got several times round the world, by this time!"

"You flatter me -- flatten, I mean" said the Tortoise; "for you are a heavy weight, and no mistake! Well now, would you like to hear of a race-course, that most people fancy they can get to the end of in two or three steps, while it really consists of an infinite number of distances, each one longer than the previous one?"

"Very much indeed!" said the Grecian warrior, as he drew from his helmet (few Grecian warriors possessed pockets in those days) an enormous note-book and a pencil. "Proceed! And speak slowly, please! Shorthand isn't invented yet!"

"That beautiful First Proposition of Euclid!" the Tortoise murmured dreamily. "You admire Euclid?"

"Passionately! So far, at least, as one can admire a treatise that won't he published for some centuries to come!"

"Well, now, let's take a little bit of the argument in that First Proposition -- just two steps, and the conclusion drawn from them. Kindly enter them in your notebook. And in order to refer to them conveniently, let's call them A, B, and Z: --

(A) Things that are equal to the same are equal to each other.
(B) The two sides of this Triangle are things that are equal to the same.
(Z) The two sides of this Triangle are equal to each other.

Readers of Euclid will grant, I suppose, that Z follows logically from A and B, so that any one who accepts A and B as true, must accept Z as true?"

"Undoubtedly! The youngest child in a High School -- as soon as High Schools are invented, which will not be till some two thousand years later -- will grant that."

"And if some reader had not yet accepted A and B as true, he might still accept the sequence as a valid one, I suppose?"

"No doubt such a reader might exist. He might say 'I accept as true the Hypothetical Proposition that, if A and B be true, Z must be true; but, I don't accept A and B as true.' Such a reader would do wisely in abandoning Euclid, and taking to football."

"And might there not also he some reader who would say 'I accept A and B as true, but I don't accept the Hypothetical '?"

"Certainly there might. He, also, had better take to football."

"And neither of these readers," the Tortoise continued, "is as yet under any logical necessity to accept Z as true?"

"Quite so," Achilles assented. "Well, now, I want you to consider me as a reader of the second kind, and to force me, logically, to accept Z as true."

"A tortoise playing football would be -- " Achilles was beginning

"-- an anomaly, of course," the Tortoise hastily interrupted. "Don't wander from the point. Let's have Z first, and football afterwards!"

"I'm to force you to accept Z, am I?" Achilles said musingly. "And your present position is that you accept A and B, but you don't accept the Hypothetical --"

"Let's call it C," said the Tortoise. "-- but you don't accept

(C) If A and B are true, Z must be true. "

"That is my present position," said the Tortoise.

"Then I must ask you to accept C."

"I'll do so," said the Tortoise, "as soon as you've entered it in that note-book of yours. What else have you got in it?"

"Only a few memoranda," said Achilles, nervously fluttering the leaves: "a few memoranda of -- of the battles in which I have distinguished myself!"

"Plenty of blank leaves, I see!" the Tortoise cheerily remarked. "We shall need them all!" (Achilles shuddered.) "Now write as I dictate: --

(A) Things that arc equal to the same are equal to each other.
(B) The two sides of this Triangle are things that are equal to the same.
(C) If A and B are true, Z must be true.
(Z) The two sides of this Triangle are equal to each other."

"You should call it D, not Z," said Achilles. "It comes next to the other three. If you accept A and B and C, you must accept Z."

"And why must I?"

"Because it follows logically from them. If A and B and C are true, Z must be true. You don't dispute that, I imagine?"

"If A and B and C are true, Z must he true," the Tortoise thoughtfully repeated. "That's another Hypothetical, isn't it? And, if I failed to see its truth, I might accept A and B and C', and still not accept Z. mightn't I?"

"You might," the candid hero admitted; "though such obtuseness would certainly be phenomenal. Still, the event is possible. So I must ask you to grant one more Hypothetical."

"Very good. I'm quite willing to grant it, as soon as you've written it down. We will call it

(D) If A and B and C are true, Z must be true.

"Have you entered that in your notebook?"

"I have!" Achilles joyfully exclaimed, as he ran the pencil into its sheath. "And at last we've got to the end of this ideal race-course! Now that you accept A and B and C and D, of course you accept Z."

"Do I?" said the Tortoise innocently. "Let's make that quite clear. I accept A and B and C and D. Suppose I still refused to accept Z?"

"Then Logic would force you to do it!" Achilles triumphantly replied. "Logic would tell you 'You can't help yourself. Now that you've accepted A and B and C and D, you must accept Z!' So you've no choice, you see."

"Whatever Logic is good enough to tell me is worth writing down," said the Tortoise. "So enter it in your book, please. We will call it

(E) If A and B and C and D are true, Z must be true. Until I've granted that, of course I needn't grant Z. So it's quite a necessary step, you see?"

"I see," said Achilles; and there was a touch of sadness in his tone. H ere narrator, having pressing business at the Bank, was obliged to leave the happy pair, and did not again pass the spot until some months afterwards. When he did so, Achilles was still seated on the back of the much-enduring Tortoise, and was writing in his note-book, which appeared to be nearly full.

The Tortoise was saying, "Have you got that last step written down? Unless I've lost count, that makes a thousand and one. There are several millions more to come. And would you mind, as a personal favour, considering what a lot of instruction this colloquy of ours will provide for the Logicians of the Nineteenth Century -- would you mind adopting a pun that my cousin the Mock-Turtle will then make, and allowing yourself to be re-named Taught-Us?"

"As you please!" replied the weary warrior, in the hollow tones of despair, as he buried his face in his hands. "Provided that you, for your part, will adopt a pun the Mock-Turtle never made, and allow yourself to be re-named A Kill-Ease!"

J. Bradford DeLong on October 07, 2013 at 06:00 PM

http://delong.typepad.com/sdj/2013/...ery-because-they-are-excessively-greeced.html

 

[Kaitzilla]

Breaking out the big guns to bash budget hawks is fun obviously.
Everyone loves turtles

Assume that everything the anti-conservative believes is true.

We can just buy ourselves an economic recovery with enough deficit spending.



Is it necessary to maintain confidence in the system to act concerned about $1 trillion deficits when we can print our own money?

I'd hope we'd at least get that much credit.

 

[Cutlass]

Breaking out the big guns to bash budget hawks is fun obviously.
Everyone loves turtles

Assume that everything the anti-conservative believes is true.

We can just buy ourselves an economic recovery with enough deficit spending.



Is it necessary to maintain confidence in the system to act concerned about $1 trillion deficits when we can print our own money?

I'd hope we'd at least get that much credit.

What you just are not getting is that the method of reducing deficits is to reduce unemployment. And the method of increasing deficits is to increase unemployment. So with any policy, the question to ask is, does this, right here, right now, increase or decrease, unemployment?

If it increases unemployment now, then it increases the deficit in the long run. If it decreases unemployment now, then it decreases the deficit in the long run.

That is the fundamental reality of government budgeting.

 

[DemonicAppleGuY]

Is it necessary to maintain confidence in the system to act concerned about $1 trillion deficits when we can print our own money?

I'd hope we'd at least get that much credit.

What in God's name are you even trying to say?

 

[Kaitzilla]

What in God's name are you even trying to say?

Road to recovery.

That will be one of those generational sayings if it stays relevant for 4 more years.



I'm saying that if our fiat currency system rests entirely on confidence, then people need to think the debt matters and our government is funded by tax dollars, not money the Federal Reserve hands out for treasuries.
Nations we owe money too need to think we take our debt seriously.


And for those who keep advocating deficit spending or QE to reduce unemployment, what happens when each new $1 in debt creates less than $1 in new GDP?

http://www.zerohedge.com/news/guest...debt-buildup-triggers-another-financial-shock

Mathematically, that brings to mind another crisis in years ahead. Or spending $1 million to create 1 new job.

The world isn't producing any more additional oil each day, hasn't really for years now, and yet our exponential growth on paper must continue onwards.

 

[DemonicAppleGuY]

I'm saying that if our fiat currency system rests entirely on confidence, then people need to think the debt matters and our government is funded by tax dollars, not money the Federal Reserve hands out for treasuries.
Nations we owe money too need to think we take our debt seriously.

ksowutruonaboutm8?

The government is not funded by printing money.

And for those who keep advocating deficit spending or QE to reduce unemployment, what happens when each new $1 in debt creates less than $1 in new GDP?

That's unlikely.

And if it did happen, obviously we've hit the point of very diminished returns. Which means the economy has high employment and stuff. So we can cut spending a little and stuff.

Mathematically, that brings to mind another crisis in years ahead.

The world isn't producing any more oil each day, hasn't really for years now, and yet our exponential growth on paper must continue onwards.

Yes, there will be a world after oil, what are you on about?

 

[Hygro]

I have heard of such a group of people.
They will be gone shortly as the world reverts to feudalism.


Heck, even just recently we keep printing money to help the rich who own 90% of the stock market.

And subsidize the poor with 95% obamacare subsidies for their health insurance.


Middle class? A term meaning the only ones not being subsidized.
They can just pay that 9% income for their family until the inevitable crush is over and we achieve a 2 class society.

It's like reading The Last Psychiatrist and Business Insider in one post

But hey, healthcare + the wealth effect is better than nothing, right?

 

[Kyriakos]

I guess it's some sort of final defence mechanism for some US people here to actually think they are just fine, and not to be compared with countries like Greece. Nevermind that Greece actually can (in theory) refuse to pay off the debt and still continue to exist as a united country, whereas the US is not likely to survive what is probably going to happen anyway (sadly). It goes without saying that the situation is already bad in both countries, only worse here currently, but potentially a lot worse in the US soon.

The main point is, though, that these things are not jokes. Some of you keep being self-glorified comedians. Fine, but the reality of your state makes that alarming by now. Keep on thinking that the problems in the US will just go away, though. I mean that is the new mantra, afterall.

 

[Hygro]

I guess it's some sort of final defence mechanism for some US people here to actually think they are just fine, and not to be compared with countries like Greece. Nevermind that Greece actually can (in theory) refuse to pay off the debt and still continue to exist as a united country, whereas the US is not likely to survive what is probably going to happen anyway (sadly). It goes without saying that the situation is already bad in both countries, only worse here currently, but potentially a lot worse in the US soon.

The main point is, though, that these things are not jokes. Some of you keep being self-glorified comedians. Fine, but the reality of your state makes that alarming by now. Keep on thinking that the problems in the US will just go away, though. I mean that is the new mantra, afterall.

Greece is on the Euro. We have our own currency. The US has no national debt problem, but it does have a national political problem. But the political problem has nothing real to do with debt--that's just a spurious excuse.

 

[DemonicAppleGuY]

If Greece defaulted it likely wouldn't exist as a country much anymore. The government would be even less able to do anything. Parties would get more radical. Then you get awesome things like fascism.

 

[Kyriakos]

^ Just keep that in mind, it will make the US default so much better

Like i said, some people take it as a comedy. It won't mean they will collapse less in the end though. Not all of us here are involved in braindead stuff like "my country is better than your country".

 

[Lord Baal]

If Greece defaulted it likely wouldn't exist as a country much anymore. The government would be even less able to do anything. Parties would get more radical. Then you get awesome things like fascism.

They're currently rounding up and shootingarresting their fascists right now.

 

[KMRblue1027]

Ok now Republicans don't even have a defense at this point. They had a freakin deal months ago!

http://www.thedailyshow.com/watch/tue-october-8-2013/the-shutdown-blame-game

 

[bhsup]

Greece would be better off if it was taken over and just made an administrative division of Turkey. America, not so much. That's the difference between the two.

 

[DemonicAppleGuY]

They're currently rounding up and shootingarresting their fascists right now.

What they don't realize is that harming the fascists really only makes them stronger.