Do you think you know more about economics than the Deputy Secretary of the Treasury?

"We don't have to have high unemployment anymore. We don't have to have uncontrolled financial crises. We don't have to have all the bad things that go along with a recession. We have the ability,... we have the tools necessary to resolve all those things. ...And the reasons people have for standing in the way of doing those things are just not valid."

Frank N. Newman, United States Deputy Secretary of the Treasury

Some highlights:

4:30 The Federal budget does not have to be balanced. Government finance is nothing like household finance.
5:50 We cannot run out of money, because the government can create money.
6:50 The "national debt" is a very misleading term.
9:00 There is no "great burden of debt" that will fall to our children or grandchildren. The idea that this debt has to be repaid simply "defies history."
10:45 The national debt is only about 7% of the total financial assets of the U.S., so it's not that major anyway.
14:00 Reserves do not get lent out.
15:00 QE created $2.5 trillion in new deposits (which cannot be lent out, btw).
17:00 As demonstrated by the $2.5 trillion created by QE, "too much money" does not automatically cause inflation.
17:50 "Too much national debt" is not a problem, either.
18:45 The idea of "bond vigilantes" is ridiculous.




What are the downsides of deficits?

What are the downsides of the national debt?

Why aren't we experiencing the inflation predicted by mainstream economists for so many years?

Why aren't we experiencing the high interest rates predicted by mainstream economists for so many years?

Can anybody here substantiate any of the old economic standbys that Mr. Newman claims are false?

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

The Federal budget does not have to be balanced. Government finance is nothing like household finance

Click to expand...

Only if you don't care about your credit rating and operating in a fiscally responsible manner.

We cannot run out of money, because the government can create money

Click to expand...

sure it can doesn't mean it should. having the ability to do something doesn't mean you should do it. There is a reason that the federal government
doesn't just print everyone 1m dollars and eliminate poverty. I mean they can do it so why wouldn't they?

The "national debt" is a very misleading term

Click to expand...

Not really it is a very clear term it is money that is owed by the federal government to another party.

There is no "great burden of debt" that will fall to our children or grandchildren. The idea that this debt has to be repaid simply "defies history."

Click to expand...

tell that to your grand children and children who have to pay more in taxes to support it.

The national debt is only about 7% of the total financial assets of the U.S., so it's not that major anyway.

Click to expand...

as of 2015 the debt to GDP ratio is 104.17%. which means we owe more money than our entire GDP.

Reserves do not get lent out.

Click to expand...

no one says they do.

As demonstrated by the $2.5 trillion created by QE, "too much money" does not automatically cause inflation

Click to expand...

This is a misleading statement. here is why. the 2.5 trillion of QE never entered into the public space. it was held in reserves by the banks.
so as far as the money supply was concerned it was non-existent. had they actually released that money into the system then you would have
seen a huge spike on the inflation rate.

"Too much national debt" is not a problem, either.

Click to expand...

yea tell VZ that they will disagree. but hey everyone is walking around with 50k marked bills in their pocket so I guess they are
semi rich until they buy that gallon of milk for 2000-5000 of it.

again there is a reason our credit rating took a hit. I wonder why? ol yea too much spending.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

ludin said:

Only if you don't care about your credit rating and operating in a fiscally responsible manner.


sure it can doesn't mean it should. having the ability to do something doesn't mean you should do it. There is a reason that the federal government
doesn't just print everyone 1m dollars and eliminate poverty. I mean they can do it so why wouldn't they?



Not really it is a very clear term it is money that is owed by the federal government to another party.



tell that to your grand children and children who have to pay more in taxes to support it.


as of 2015 the debt to GDP ratio is 104.17%. which means we owe more money than our entire GDP.



no one says they do.



This is a misleading statement. here is why. the 2.5 trillion of QE never entered into the public space. it was held in reserves by the banks.
so as far as the money supply was concerned it was non-existent. had they actually released that money into the system then you would have
seen a huge spike on the inflation rate.



yea tell VZ that they will disagree. but hey everyone is walking around with 50k marked bills in their pocket so I guess they are
semi rich until they buy that gallon of milk for 2000-5000 of it.

again there is a reason our credit rating took a hit. I wonder why? ol yea too much spending.

Click to expand...

I remember a few years ago when Standard and Poors downgraded our credit. The CEO said it was because of the disfunction in Congress.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

JohnfrmClevelan said:

"We don't have to have high unemployment anymore. We don't have to have uncontrolled financial crises. We don't have to have all the bad things that go along with a recession. We have the ability,... we have the tools necessary to resolve all those things. ...And the reasons people have for standing in the way of doing those things are just not valid."

Frank N. Newman, United States Deputy Secretary of the Treasury

Some highlights:

4:30 The Federal budget does not have to be balanced. Government finance is nothing like household finance.
5:50 We cannot run out of money, because the government can create money.
6:50 The "national debt" is a very misleading term.
9:00 There is no "great burden of debt" that will fall to our children or grandchildren. The idea that this debt has to be repaid simply "defies history."
10:45 The national debt is only about 7% of the total financial assets of the U.S., so it's not that major anyway.
14:00 Reserves do not get lent out.
15:00 QE created $2.5 trillion in new deposits (which cannot be lent out, btw).
17:00 As demonstrated by the $2.5 trillion created by QE, "too much money" does not automatically cause inflation.
17:50 "Too much national debt" is not a problem, either.
18:45 The idea of "bond vigilantes" is ridiculous.



What are the downsides of deficits?

What are the downsides of the national debt?

Why aren't we experiencing the inflation predicted by mainstream economists for so many years?

Why aren't we experiencing the high interest rates predicted by mainstream economists for so many years?

Can anybody here substantiate any of the old economic standbys that Mr. Newman claims are false?

Click to expand...

This challenge looks to me to be a long-winded way of saying "prove MMT wrong" using an indirect appeal to authority.

As long as MMT (or the like) proponents continue setting this unspoken rule that the entire nation needs to buy into their prerequisite foundational assumptions, these discussions are never going to get anywhere. Until schools start teaching macroeconomic theory in elementary education and churches start preaching it as God's way, a hell of a lot of people will never, ever wrap their heads around how fiat currency and fractional reserve central banking and international finance and all that really work. So get over the fact that not everyone's going to "get it" on some deep fundamental level. The farthest they will get is believing in default or hyperinflation as the only inevitable outcomes of federal over-spending.

The other problem with creating this indoctrination-like mental prerequisite of embracing MMT's foundational tenets is that they ignore the fact that federal spending can be done badly, i.e. in ways that do not serve the interests of the nation as a whole. The political limitations on federal spending, even if artificial and self-imposed, might create a check on bad spending, i.e. scarcity requires prioritization and puts pressure on legislators to not spend it badly/corruptly. Having to continuously recite "the federal budget does not have to be balanced, we cannot run out of money, the national debt is not a problem, the national debt is a misleading term," this weakens the case that can be made against bad federal spending priorities.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

I have an intuition that this all relates to that old axiom, "morons look normal." Russia and China keep talking about backing their currencies with gold. That is the real reason they are USA enemies. The USA "fiat dollar" would inevitably crash and the World economic order would re-arrange.
/

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Do you think you know more about economics than the Deputy Secretary of the Treasury?

Absolutely. You run a Ponzi scheme until it crashes. Ask Madoff. You'll please note that we are not talking about money with intrinsic value, but "fiat money." That would be money because we say it is. There are no economics involved, just "full faith and credit," better phrased as "confidence." No intrinsic values, just like Madoff.
/

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Neomalthusian said:

This challenge looks to me to be a long-winded way of saying "prove MMT wrong" using an indirect appeal to authority.

Click to expand...

It's a very direct appeal to authority, because that seems to be what people here are demanding. They won't accept the weight of the evidence and the various sources I have used to explain banking, reserve banking, and federal finance, and they won't accept the word of the professors because they aren't in the majority. So I'm using a guy who worked at the Fed and now works in private banking, who has nothing to gain by pushing one school of thought over another.

Neomalthusian said:

As long as MMT (or the like) proponents continue setting this unspoken rule that the entire nation needs to buy into their prerequisite foundational assumptions, these discussions are never going to get anywhere. Until schools start teaching macroeconomic theory in elementary education and churches start preaching it as God's way, a hell of a lot of people will never, ever wrap their heads around how fiat currency and fractional reserve central banking and international finance and all that really work. So get over the fact that not everyone's going to "get it" on some deep fundamental level. The farthest they will get is believing in default or hyperinflation as the only inevitable outcomes of federal over-spending.

Click to expand...

I'm not looking for anybody to buy into any assumptions. I'm just asking that people accept a) what can clearly be demonstrated, as far as mechanics are concerned, and b) that the data does not support their own assumptions. It is far more about people accepting that they are wrong than about MMT being right, at least initially. That's why I'm always asking for proof of other people's claims - like, where is the inflation, where are the high interest rates, etc.

If some people will never "get it," that's fine - but we are on a debate board, and the forum is Government Spending and Debt, so at least I'm in the right place. Anyway, quite a few people here on DP have "gotten it" in the time I've been here.

Neomalthusian said:

The other problem with creating this indoctrination-like mental prerequisite of embracing MMT's foundational tenets is that they ignore the fact that federal spending can be done badly, i.e. in ways that do not serve the interests of the nation as a whole. The political limitations on federal spending, even if artificial and self-imposed, might create a check on bad spending, i.e. scarcity requires prioritization and puts pressure on legislators to not spend it badly/corruptly. Having to continuously recite "the federal budget does not have to be balanced, we cannot run out of money, the national debt is not a problem, the national debt is a misleading term," this weakens the case that can be made against bad federal spending priorities.

Click to expand...

MMT doesn't ignore "bad spending." But it's not time to address that when people still believe that the government can go broke. Governments can (and have) spent stupidly even when on a gold standard. Perceived scarcity doesn't seem to be doing the trick.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

ludin said:

Only if you don't care about your credit rating and operating in a fiscally responsible manner.


sure it can doesn't mean it should. having the ability to do something doesn't mean you should do it. There is a reason that the federal government
doesn't just print everyone 1m dollars and eliminate poverty. I mean they can do it so why wouldn't they?



Not really it is a very clear term it is money that is owed by the federal government to another party.



tell that to your grand children and children who have to pay more in taxes to support it.


as of 2015 the debt to GDP ratio is 104.17%. which means we owe more money than our entire GDP.



no one says they do.



This is a misleading statement. here is why. the 2.5 trillion of QE never entered into the public space. it was held in reserves by the banks.
so as far as the money supply was concerned it was non-existent. had they actually released that money into the system then you would have
seen a huge spike on the inflation rate.



yea tell VZ that they will disagree. but hey everyone is walking around with 50k marked bills in their pocket so I guess they are
semi rich until they buy that gallon of milk for 2000-5000 of it.

again there is a reason our credit rating took a hit. I wonder why? ol yea too much spending.

Click to expand...

Same old stupid, discredited arguments. This time, discredited by Frank Newman, who knows a few things about money.

Watch the video. You would have learned a few things, including the fact that QE led to $2.5 trillion in bank deposits, not just reserves. That is $2.5 trillion spendable dollars hitting the broad economy, yet no inflation occurred, let alone a huge spike.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

trblmkr said:

I remember a few years ago when Standard and Poors downgraded our credit. The CEO said it was because of the disfunction in Congress.

Click to expand...

that isn't fully it. they downgraded our credit over the dysfunction of congress to do something about the deficit.
that our deficit was getting out of control.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Neomalthusian said:

This challenge looks to me to be a long-winded way of saying "prove MMT wrong" using an indirect appeal to authority.

As long as MMT (or the like) proponents continue setting this unspoken rule that the entire nation needs to buy into their prerequisite foundational assumptions, these discussions are never going to get anywhere. Until schools start teaching macroeconomic theory in elementary education and churches start preaching it as God's way, a hell of a lot of people will never, ever wrap their heads around how fiat currency and fractional reserve central banking and international finance and all that really work. So get over the fact that not everyone's going to "get it" on some deep fundamental level. The farthest they will get is believing in default or hyperinflation as the only inevitable outcomes of federal over-spending.

The other problem with creating this indoctrination-like mental prerequisite of embracing MMT's foundational tenets is that they ignore the fact that federal spending can be done badly, i.e. in ways that do not serve the interests of the nation as a whole. The political limitations on federal spending, even if artificial and self-imposed, might create a check on bad spending, i.e. scarcity requires prioritization and puts pressure on legislators to not spend it badly/corruptly. Having to continuously recite "the federal budget does not have to be balanced, we cannot run out of money, the national debt is not a problem, the national debt is a misleading term," this weakens the case that can be made against bad federal spending priorities.

Click to expand...

I know they think that if they repeat the same lie over enough that it will become true.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

JohnfrmClevelan said:

Same old stupid, discredited arguments. This time, discredited by Frank Newman, who knows a few things about money.

Watch the video. You would have learned a few things, including the fact that QE led to $2.5 trillion in bank deposits, not just reserves. That is $2.5 trillion spendable dollars hitting the broad economy, yet no inflation occurred, let alone a huge spike.

Click to expand...

I say so is not an argument. Yet this is the only argument that you have. if you want to act like an authority in the matter please post your PHD in economics.
otherwise you are committing an appeal to authority fallacy.

the 2.5 trillion swap never entered the market as cash.

The answer is that banks and financial institutions hoarded the money in order to shore up their own balance sheets and regain profitability. Banks still had bad loans and toxic assets on their balance sheets as a result of the housing bubble burst and its aftershocks. The extra cash on hand made their financial picture look a whole lot better.

Why Didn't Quantitative Easing Lead to Hyperinflation? | Investopedia

you seriously need to learn about things before you start saying other people are wrong.
they used all the QE money to sure up their balance sheets.

you seriously don't know what you are talking about and this proves it yet again.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

It is this economic fantasy that has caused the value of the dollar to lose 90% of its value over the past 50 years.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

"Do you think you know more about economics than the Deputy Secretary of the Treasury?"

Since you can find "economists" on both sides of every issue then what they know about economics is fairly meaningless.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

ludin said:

Only if you don't care about your credit rating and operating in a fiscally responsible manner.


sure it can doesn't mean it should. having the ability to do something doesn't mean you should do it. There is a reason that the federal government
doesn't just print everyone 1m dollars and eliminate poverty. I mean they can do it so why wouldn't they?



Not really it is a very clear term it is money that is owed by the federal government to another party.



tell that to your grand children and children who have to pay more in taxes to support it.


as of 2015 the debt to GDP ratio is 104.17%. which means we owe more money than our entire GDP.



no one says they do.



This is a misleading statement. here is why. the 2.5 trillion of QE never entered into the public space. it was held in reserves by the banks.
so as far as the money supply was concerned it was non-existent. had they actually released that money into the system then you would have
seen a huge spike on the inflation rate.



yea tell VZ that they will disagree. but hey everyone is walking around with 50k marked bills in their pocket so I guess they are
semi rich until they buy that gallon of milk for 2000-5000 of it.

again there is a reason our credit rating took a hit. I wonder why? ol yea too much spending.

Click to expand...

It is very admirable that you are so polite. What is really disturbing is the thought, that that man had an important job at Treasury. But it goes a long way towards explaining Clinton's bubble.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

trblmkr said:

I remember a few years ago when Standard and Poors downgraded our credit. The CEO said it was because of the disfunction in Congress.

Click to expand...

You are correct. The dysfunction in Congress they referenced, however, was their inability to lower the debt.

https://www.washingtonpost.com/busi.../gIQAqKeIxI_story.html?utm_term=.12f87f35a911

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

JohnfrmClevelan said:

"We don't have to have high unemployment anymore. We don't have to have uncontrolled financial crises. We don't have to have all the bad things that go along with a recession. We have the ability,... we have the tools necessary to resolve all those things. ...And the reasons people have for standing in the way of doing those things are just not valid."

Frank N. Newman, United States Deputy Secretary of the Treasury

Some highlights:

4:30 The Federal budget does not have to be balanced. Government finance is nothing like household finance.
5:50 We cannot run out of money, because the government can create money.
6:50 The "national debt" is a very misleading term.
9:00 There is no "great burden of debt" that will fall to our children or grandchildren. The idea that this debt has to be repaid simply "defies history."
10:45 The national debt is only about 7% of the total financial assets of the U.S., so it's not that major anyway.
14:00 Reserves do not get lent out.
15:00 QE created $2.5 trillion in new deposits (which cannot be lent out, btw).
17:00 As demonstrated by the $2.5 trillion created by QE, "too much money" does not automatically cause inflation.
17:50 "Too much national debt" is not a problem, either.
18:45 The idea of "bond vigilantes" is ridiculous.




What are the downsides of deficits?

What are the downsides of the national debt?

Why aren't we experiencing the inflation predicted by mainstream economists for so many years?

Why aren't we experiencing the high interest rates predicted by mainstream economists for so many years?

Can anybody here substantiate any of the old economic standbys that Mr. Newman claims are false?

Click to expand...

You do know that Newman was Deputy Secretary of the Treasury under Bill Clinton in the 1990's?

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

JohnfrmClevelan said:

4:30 The Federal budget does not have to be balanced. Government finance is nothing like household finance.
5:50 We cannot run out of money, because the government can create money.
6:50 The "national debt" is a very misleading term.
9:00 There is no "great burden of debt" that will fall to our children or grandchildren. The idea that this debt has to be repaid simply "defies history."
10:45 The national debt is only about 7% of the total financial assets of the U.S., so it's not that major anyway.
14:00 Reserves do not get lent out.
15:00 QE created $2.5 trillion in new deposits (which cannot be lent out, btw).
17:00 As demonstrated by the $2.5 trillion created by QE, "too much money" does not automatically cause inflation.
17:50 "Too much national debt" is not a problem, either.
18:45 The idea of "bond vigilantes" is ridiculous.

Click to expand...

I didn't watch the video, but yes, he is largely correct.

We should note that while the government can print up whatever it needs, that isn't a painless process. It can cause lots of inflation, and erode confidence. It may be less painful than default, but it's not advisable.

Maybe bond vigilantes weren't a big issue when he was in office, but AFAIK they have a bigger effect today. There's no question that the bond market punished countries like Greece, Spain and Italy for their fiscal irresponsibility.

What are the downsides of the national debt?

Click to expand...

If it gets too big, then there is the risk of default, or engaging in shenanigans to deal with the obligations.

At current levels? That conservatives endlessly bitch about it. And then make it worse, usually by slashing taxes.

Why aren't we experiencing the inflation predicted by mainstream economists for so many years?

Click to expand...

Because most of those so-called "economists" aren't actually economists, and don't know what they are talking about.

The handful who are legit economsts who make the claim ignored the fact that we were in a liquidity trap.

Why aren't we experiencing the high interest rates predicted by mainstream economists for so many years?

Click to expand...

Because the Fed hasn't increased rates.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

fmw said:

It is this economic fantasy that has caused the value of the dollar to lose 90% of its value over the past 50 years.

Click to expand...

https://en.wikipedia.org/wiki/Money_illusion

The reality is that as the nominal value of the dollar has fallen, wages have risen. For example:

Average household income in 1950: $3,300
Average cost of a car in 1950: $1,515
Average cost of a home in 1950: $7,345

Average household income in 2014: $51,107
Average cost of a car in 2014: $31,525
Average cost of a home in 2014: $188,900

And keep in mind that during that time, products and homes alike have vastly improved. Cars are generally made better, offer more features, and are significantly safer; homes are larger and have many more features; communication, medicine, entertainment are better and drowning us in options; food is cheaper, safer, and abundant.... The list goes on.

Another advantage is... yes, the availability of credit. For better and for worse, this has made it possible for Americans to afford a level of affluence that was nearly unthinkable in 1950. I may be wrong, but I don't think most Americans in 1950 took it for granted that a lower middle class home would have 2 SUVs, a bunch of TVs, a private mobile phone, Internet with wifi, etc etc

And of course, we don't have mild inflation because the federal government is borrowing.

I.e. try again, kthx.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

joG said:

It is very admirable that you are so polite. What is really disturbing is the thought, that that man had an important job at Treasury. But it goes a long way towards explaining Clinton's bubble.

Click to expand...

It really is just about facts. He is playing really bad politics.
It is disturbing that people think this way hold the job of treasure.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

ludin said:

I say so is not an argument. Yet this is the only argument that you have.

Click to expand...

I have already answered your arguments, many, many times, in other threads. So to that I would reply that simply repeating the same old answered questions does not qualify as a new question.

ludin said:

if you want to act like an authority in the matter please post your PHD in economics.
otherwise you are committing an appeal to authority fallacy.

Click to expand...

I am committing no fallacy. This is direct appeal to authority. I have already presented my arguments - I posted this to show that my position is shared by both Ph.D. economists and other, more highly placed authorities on the subject. You just asked for an authority, so you obviously value their views.

ludin said:

the 2.5 trillion swap never entered the market as cash.

Click to expand...

To the extent that the securities purchased on the open market were not owned by banks, yes, QE dollars entered the market as deposits - spendable money. So there goes your inflation argument.

ludin said:

The answer is that banks and financial institutions hoarded the money in order to shore up their own balance sheets and regain profitability. Banks still had bad loans and toxic assets on their balance sheets as a result of the housing bubble burst and its aftershocks. The extra cash on hand made their financial picture look a whole lot better.

Click to expand...

Banks do not "hoard money" in the fashion you imagine, because banks don't lend out pre-existing money. As soon as banks were re-capitalized, which was a quick process, they got right back to the business of creating loans, which is how they make money.

ludin said:

Why Didn't Quantitative Easing Lead to Hyperinflation? | Investopedia

you seriously need to learn about things before you start saying other people are wrong.
they used all the QE money to sure up their balance sheets.

Click to expand...

And you seriously need to check the credentials of the people you hold up as authorities. Your guy is a CFA. That's like asking a real estate agent to explain the mechanics behind the housing crash.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

fmw said:

"Do you think you know more about economics than the Deputy Secretary of the Treasury?"

Since you can find "economists" on both sides of every issue then what they know about economics is fairly meaningless.

Click to expand...

That's why I posted a Fed official saying the same things. I've posted smaller clips of Greenspan and Bernanke that back my position, but this one presentation covered way more ground, and was very on-point.

The pool of Fed officials (past and present) is a pretty exclusive club. I assume that they all know what they are talking about - everything looks to be in order to me. If you can find another Fed official that contradicts what he is saying, go ahead.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

joG said:

It is very admirable that you are so polite. What is really disturbing is the thought, that that man had an important job at Treasury. But it goes a long way towards explaining Clinton's bubble.

Click to expand...

Then why don't you explain how Newman's understanding of Fed mechanics led to the the dot-com bubble, and not market forces.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

AlbqOwl said:

You do know that Newman was Deputy Secretary of the Treasury under Bill Clinton in the 1990's?

Click to expand...

Yes, I do. What's your point?

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

JohnfrmClevelan said:

Yes, I do. What's your point?

Click to expand...

I think it might have been appropriate to mention that in the OP. That's all. The implication is that he IS the Deputy Secretary of the Treasury while he hasn't held that title for quite some time now.

Re: Do you think you know more about economics than the Deputy Secretary of the Treas

Visbek said:

We should note that while the government can print up whatever it needs, that isn't a painless process. It can cause lots of inflation, and erode confidence. It may be less painful than default, but it's not advisable.

Click to expand...

Right, but this isn't a call to spend wildly. Newman is just pointing out the misunderstandings that prevent us (politically) from using federal spending in a more useful fashion.

Visbek said:

Maybe bond vigilantes weren't a big issue when he was in office, but AFAIK they have a bigger effect today. There's no question that the bond market punished countries like Greece, Spain and Italy for their fiscal irresponsibility.

Click to expand...

Well, those countries are not in control of their own currency.

Visbek said:

If it gets too big, then there is the risk of default, or engaging in shenanigans to deal with the obligations.

Click to expand...

The risk is not operational, it is only political. You could cite the same risk no matter what the level of debt was. In order for us to default, Congress would have to decide to default.

Visbek said:

At current levels? That conservatives endlessly bitch about it. And then make it worse, usually by slashing taxes.

Click to expand...

Yeah, I'm not sure that would change even if conservatives understood that we could easily spend more without problems.