Can you explain that graph'?
^^^^^^^^^^^^^^^^^
This.
From what I can see, it's a graph of who holds how much of our debt? In which case, I fail to see the problem. You'd rather have China and Russia holding giant swathes of US debt rather than the Fed Reserve?
And while Chinese holdings have a slight dip in the last year, Japan has been on a buying spree. Seems Tokyo gots some mad love for the US debt. Since they're really good at taking American things and making them smaller and more efficient, maybe we can get them to do the same for our debt.
Oh, there's a lot of reasons why Japan is buying T-Bonds, but that's a whole different story. The significant point is that the Fed is basically intervening to great extents to ensure that interest rates stay low. To go back to a previous point:
As for US Treasuries, when the market loose confidence in them, interest rate will raise and that'll be the signal budget need to be balanced. As long as price don't raise, the signal is clear: borrow. As long as it's used for investment rather than entitlements, it'll be easy to cut later on.
Since the Fed can indefinitely purchase T-Bonds to keep interest rates down, that signal may NEVER appear, and borrowing can and will continue indefinitely until there comes a point where any cut would be economically disastrous. For example, cutting Medicare in the 60s or 70s in some way would have been fairly minor and not terribly damaging since so few people were dependent on it at the time. Now, Medicare is entrenched because lots of people are dependent on it, and that number will only increase without significant changes.
Can you explain that graph'?
Also, what's the Fed is doing is essentially printing money. Strangely, inflation is constant and low. If/when inflation goes up, we can stop rpinting money, in the meantime it's a good way to boost the economy.
It's not strange, it's what mainstream economics has been told us would happen in these circumstances for 70 years now.
Also GJ is full of crap. If his story was true then interest rates would spike every time the Fed slowed it's purchases, which doesn't happen.
Hey Great Justice, I'll make you a bet. I'll be that three years from now the Interest Rate on one year US t-notes still will not have passed 10%. That is a very low bar to set for the hyperinflation you predict. I'll offer you a bet of up to $100, given to a third party to keep track of in the mean time.
Interest rates would spike every time the Fed slowed it's purchases if not for the support of other central banks, conducted through massive credit swaps and through buying each other's bonds to keep up pretenses (see: the Fed and BoJ buying piles of Eurobonds). Your view would only hold true were the Fed the only central bank in the world buying treasuries.
Hyperinflation isn't necessarily going to occur, not in the least because the US could instead end up mired in a debt crisis like Europe or face stagnation like Japan instead (where stimulus spending and infrastructure improvement successfully created a gigantic deficit and no recovery). If I had $100 to throw around right now I'd make THAT bet without a second thought, though some other wager would suffice.
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Topic: American Election Megathread - It's Over (Read 772189 times)