tag:blogger.com,1999:blog-2499715909956774229.post7300034258710204291..comments2024-03-22T22:37:02.639-07:00Comments on Stephen Williamson: New Monetarist Economics: Mr. K #2Stephen Williamsonhttp://www.blogger.com/profile/01434465858419028592noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-2499715909956774229.post-37035914700585390652010-08-22T21:26:58.306-07:002010-08-22T21:26:58.306-07:00"The bond vigilantes I have never quite under..."The bond vigilantes I have never quite understood. Somehow we're not supposed to care about the views of people who are lending to us (or potentially lending to us)."<br />Krugman has often emphasized the "invisible" part of "invisible bond market vigilantes". He's saying that the bond-market doesn't actually worry about our ability to repay, which is why our bonds sell so much better than those of Greece or Spain.TGGPhttps://www.blogger.com/profile/11017651009634767649noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-16121904814641104072010-08-21T18:06:36.905-07:002010-08-21T18:06:36.905-07:00Professor,
When the US Government issues T-Bills o...Professor,<br />When the US Government issues T-Bills or Bonds, it has nothing to do with "financing" the deficit. These are reserves drains operations. If you do not drain, then excess reserves at the Fed will result. If these excess reserves are not rewarded at the Fed Fund rate, they would cause a plunge in short term interest rates. So issuing T-Bills or Bonds are really reserves draining operations, not "financing" operations. Greece issues bonds to finance its deficit, but a country with its own floating non convertible currency issue bonds or T-Bills to drain reserves so that the target for short term rates is achieved (Krugman does not understand this, but I was hoping that you would...)<br /><br />Yields on long dated US Treasury strictly reflect expectations regarding the future levels of short term interest rate as decided by the Fed. It has nothing to do with fears over the solvency of the US Government. The US will never run out of US dollars so it can not possibly become insolvent (Japan will never run out of Japanese Yen either, Canada will never run out of Canadian dollars, the UK will never run out of UK pounds... but Ireland and Greece can run out of EUROs big time just like Argentina ran out of US dollars in the late 1990s). The US Government spend by changing numbers in bank accounts using computers. It will never run out of numbers or computers to mark up your bank account with US dollars.<br /><br />The ultimate limit for the size of the US Government deficit are the real resources of the economy (human, energy, etc). If you test this limit, inflation will result. At 10% unemployment, we are nowhere close to this limit for the foreseeable future. This is in fact fully reflected right now by yields on US Treasuries (the 10-year is at 2.6%!). <br /><br />Qc (I know... I was not supposed to write again, but I couldn't remain silent on this one)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-54649957834313351322010-08-20T22:53:39.623-07:002010-08-20T22:53:39.623-07:00And know many examples where fiscal stimulus did m...And know many examples where fiscal stimulus did miracles. But of course modern macroeconomy is all about anecdotes and never about objective analysis. Public sector is bad, private sector is good. Judging by the temperature outside it is jut the oppositeИгры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-72416744755271436502010-08-20T15:18:26.959-07:002010-08-20T15:18:26.959-07:00more stimulus...brings my country (Italy) in a bad...more stimulus...brings my country (Italy) in a bad situation....20-30y ago we stimulated (well..I wasn't born so it's not my fault eheh) the postive fiscal policy..and..well..you can see what his the result of our choise.<br /><br />PK wants to fight against the big running water....with a small running water in the opposite side to it....well..I think the result will be..a bigger running water that will come against us...<br /><br />http://ecobusinesspace.blogspot.com/2010/08/positive-fiscal-stimulus-no-thanks.htmlMattia Poletti (Rebel Ekonomist)https://www.blogger.com/profile/11429980647368423889noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-57139172193437684452010-08-20T13:40:33.516-07:002010-08-20T13:40:33.516-07:00Don't be so depressed. Everything could turn o...Don't be so depressed. Everything could turn out fine. In any event, it's not boring.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-91105421068040784002010-08-20T13:26:37.584-07:002010-08-20T13:26:37.584-07:00I find the whole situation depressing...
http://s...I find the whole situation depressing...<br /><br />http://squashpractice.wordpress.com/2010/08/19/depressing-debt-dogma-distills-deflation-dilemma/Garyhttps://www.blogger.com/profile/08580497879135994296noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-67108055180241990022010-08-20T13:06:45.451-07:002010-08-20T13:06:45.451-07:00"Our central bank just engaged in a huge, ris..."Our central bank just engaged in a huge, risky intervention, which they are reluctant to unwind."<br /><br />What a lot of non-sense. <br /><br />What is the reason for central bank to exist? What is this intervention? Where is its risk? And what was its benefit?<br /><br />Finally, what is the difference between accumulated new 1 trln of debt and 1 trln of Fed liabilities? Well, there is NONE as far as USA is concerned.<br /><br />And again if you are worried about long-term growth then how does 10% unemployment fit into this long-term growth prospect? Woundn't this growth be higher if these people were employed and producing value to economy? But, you will say, inflation will result. What is the cost of inflation in terms of lost GDP output per year compared to 10% lost output due to unemployment?<br /><br />What a lot non-sense.Игры рынкаhttps://www.blogger.com/profile/12001273098690387194noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-9974870679304974312010-08-20T12:58:41.546-07:002010-08-20T12:58:41.546-07:00Hi Richard,
1. Sure. I didn't want the Bush t...Hi Richard,<br /><br />1. Sure. I didn't want the Bush tax cuts to start with. Let them expire.<br /><br />2. On education and training: depends what it is. It's certainly unfortunate that state governments are tightening up on their higher education budgets.Stephen Williamsonhttps://www.blogger.com/profile/01434465858419028592noreply@blogger.comtag:blogger.com,1999:blog-2499715909956774229.post-12325536454473413582010-08-20T12:51:00.317-07:002010-08-20T12:51:00.317-07:00"There is risk that we may not return to the ..."There is risk that we may not return to the long-run growth path that we were on prior to 2000 (see this), and thus our capacity for repaying our debts may be compromised. Why shouldn't we be a little cautious?"<br /><br />Then you should be against making permanent the Bush tax cuts and, given your last post, for a great increase in government spending on education and training. Is that correct?<br /><br />And if you're worried about long run growth that's reason for much more government spending on high return investments like education, alternative energy, other infrastructure, basic science, etc., things that economics has long established will be underprovided or poorly provided by the private sector due to externalities, asymmetric information, economies of scale, zero marginal cost of idea/information use, etc., etc.Richard H. Serlinhttps://www.blogger.com/profile/09824966626830758801noreply@blogger.com