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Thread: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

  1. #101
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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    Quote Originally Posted by drz-400 View Post
    I have a question goldenboy.

    During the crisis the average maturity of US treasuries took a nose dive, and the average maturity has really been decreasing since about 2001. Only recently has it begun climbing again. What, if anything, does this change represent?



    x -axis = year
    y - axis = average maturity of debt held by the public (in weeks)
    From looking at the graph, i am going to assume that the line represents all treasuries.

    On the surface, a declining maturity is a sign of shrinking yields, which can be explained by an increase relative to proportion in short term debt issuance. This has occurred not only on the governmental front, but in private debt markets as well. The rise of money markets along with various SIVs (structured investment vehicles) undoubtedly played a role.

    The change however shows (IMHO) that long term deflation (even extremely low inflation) is unlikely.
    Last edited by Kushinator; 08-31-10 at 05:42 PM.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    Quote Originally Posted by Harry Guerrilla View Post
    You want a quick way to stimulate the economy, cut a bunch of $10k checks to the bottom 50% of income earners.
    It will be circulated through the economy and it will be done fast.
    $690,000,000,000 deeper in debt.

    Edit: If you got lost in the 0's..... that is 690 trillion deeper in debt.
    Last edited by Crunch; 08-31-10 at 06:34 PM.
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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    that's nice, but meanwhile, here on earth, any further stimulus is non starter

    Has Obama Run Out of Economic Options? - Newsweek

    bernanke is stuck between a rock and a double dip

    Ben Bernanke dashes Democrats' hopes - Ben White - POLITICO.com

    conrad, nelson and lieberman are already on record---extend bush tax cuts to all

    Tax cuts for rich, and middle class, gains steam - Aug. 27, 2010

    last week the prez interrupted his golf swing to release the "readout" of his "conference call" with his "economic team," universally panned as "lame"

    Readout of President Obama's Conference Call with His Economic Team | The White House

    and then, yesterday, in that peculiar impromptu presser in the rose garden, over-his-head obama attempted to assure us---my "economic team is hard at work in identifying additional measures that could make a difference in both promoting growth and hiring in the short term"

    ah, additional measures...

    the economic team---hard at work

    they'll be "providing details" in the "days and weeks to come"

    "Can You Guys Still Hear Us?": President Obama Talks Economy Amidst Technical Snafus - Political Punch

    well, isn't it gladdening to know they've made so much progress?

    why did romer and orszag quit?

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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    Quote Originally Posted by Goldenboy219 View Post
    From looking at the graph, i am going to assume that the line represents all treasuries.

    On the surface, a declining maturity is a sign of shrinking yields, which can be explained by an increase relative to proportion in short term debt issuance. This has occurred not only on the governmental front, but in private debt markets as well. The rise of money markets along with various SIVs (structured investment vehicles) undoubtedly played a role.

    The change however shows (IMHO) that long term deflation (even extremely low inflation) is unlikely.
    I just want to make sure I am thinking this through correctly. Shrinking yields mean that the price of the treasuries are increasing, which either means less treasuries are being issued or a higher demand for treasuries. So if the fed gov issued less long term debt and more short term debt this would decrease the yields on long term debt and increase yields on short term debt (other things equal). This would create a "flatter" and lower yield curve since short term treasuries will typically yield less than long term treasuries.

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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    Goldenboy I'm back, but reading over your comments it's truly, and not trying to be rude, you're one of the few people I can have a serious discussion on this topic with, blown away you're ok with this reckless monetary policy. I mean the delicate tight rope walk that has to happen for this strategy to work is mind blowing.

    Do you have faith in the fed to actually pull this off?
    The Obama Deficit

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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    Sounds like 'Ballroom Blitz' or something.... "full scale attack"... yeah, right. Hell he's already making a full scale attack on the economy.

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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    from the obscurantist orifice of the inscrutable one himself:

    “One risk of further balance sheet expansion arises from the fact that, lacking much experience with this option, we do not have very precise knowledge of the quantitative effect of changes in our holdings on financial conditions."
    no duh

    ben white:

    Some Federal Reserve officials had hoped to reduce the bank’s balance and to focus on keeping inflation in check. But many economists now see deflation — an often self-perpetuating cycle of falling prices — as a greater threat. The Fed purchased $1.7 trillion in bonds during the financial crisis.
    Ben Bernanke dashes Democrats' hopes - Ben White - POLITICO.com

    meanwhile, outside the stuffy world of textbooks:

    today: U.S. Auto Sales May Hit 28-Year Low as Discounts Flop - Bloomberg

    new homes sales, all time low, august 25: http://www.newsday.com/classifieds/r...cord-1.2235595

    existing homes, 15 year nadir, august 24: Low prices and rates can't slow fall in home sales - Yahoo! News

    august 27: GDP report: Economic growth for second quarter slows to 1.6% - Aug. 27, 2010

    today: Dow Logs Worst August in 9 Years - WSJ.com

    educated americans need to take their noses outta those post grad primers and look around at reality, we know obama can't
    Last edited by The Prof; 08-31-10 at 10:38 PM.

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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    Quote Originally Posted by Harry Guerrilla View Post
    following it up with a firm governmental debt reduction plan and you have a home run.
    http://thehill.com/homenews/house/10...nt-pass-budget: "dems won't pass budget in 2010"

    perturbingly, the party in power is too pinched and too pusillanimous even to propose a blueprint for 2011

    in other words, get real

    unless this is all mere academic exercise

    in which case, several contributers to this egghead thread earn ripping A+'s (and i mean that)

    unfortunately, tho, mom's a realist, no wonk
    Last edited by The Prof; 09-01-10 at 01:18 AM.

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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    Quote Originally Posted by drz-400 View Post
    I just want to make sure I am thinking this through correctly. Shrinking yields mean that the price of the treasuries are increasing,
    The price of treasuries are increasing, however the issuance of short term debt is increasing more so than face values (which are market determined for the most part).

    which either means less treasuries are being issued or a higher demand for treasuries.
    Not entirely. More treasuries are being issued in the face of greater demand (which illustrates the post 2008 retracement).

    So if the fed gov issued less long term debt and more short term debt this would decrease the yields on long term debt and increase yields on short term debt (other things equal). This would create a "flatter" and lower yield curve since short term treasuries will typically yield less than long term treasuries.
    It all depends on demand. Short term debt is in greater demand since 2000 partly because of a growing negative current account. Foreign trade partners (say China) have a greater demand for "two year" and less durations due to greater flexibility. Reason be, maturities are quicker which reduces the possibility of portfolio devaluation. Liquidating a slew of longer term debt would undoubtedly lower the face value in cases such as China or Japan (the latter is highly unlikely).

    Inflation expectations are also quite low (which is critical in increasing demand for short term debt).
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
    "Wealth of Nations," Book V, Chapter II, Part II, Article I, pg.911

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    Re: Obama Calls for 'Full-Scale Attack' to Revive Struggling Economy

    Quote Originally Posted by danarhea View Post
    Roosevelt essentially spent our way out of the Great Depression. But this time, we have a problem - We don't have any money left to do this.
    He did nothing of the sort. Rebuilding Europe after WWII transferred the wealth from Europe to the United States. FDR did nothing but prolong the recovery. You are right about the empty coffers, though.

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