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by seanmcdirmid 3503 days ago
If people need to save, someone has to borrow. So where should all that money saved in USD go? The high risk stock market? The reason the US dollar is so powerful in the world is that there is always a safe place to park a large amount of them (the US gov) when you need to use them later. Take that away, and the dollar becomes much less appealing internationally. Treasury rates (what you call interest) are actually negative ATM when inflation is considered (we make money by borrowing it).

We should be spending more wisely, but debt economics is not as simple as it seems.
1 comments
gozur88 3503 days ago
The bond market dwarfs the stock market, and it's just as reliable as any inter-generational promise made by the government.

Treasury rates are only effectively negative because the government is printing money to buy treasuries. That's not going to end well.

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seanmcdirmid 3503 days ago
The government is buying treasuries to push down rates, not because they are doing QE at the moment. Now pushing down rates means there is more money to borrow (the gov buys from owners of bonds, they get cash in return), but it doesn't necessarily mean the government is printing money (you can tell by he inflation rate, which is still quite reasonable).

The corporate bond market cannot soak up trillions of dollars in safe investments. In fact, low interest rates can simply result from high demand for treasury bonds because they are a "sure thing."

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gozur88 3503 days ago
>The government is buying treasuries to push down rates, not because they are doing QE at the moment. Now pushing down rates means there is more money to borrow (the gov buys from owners of bonds, they get cash in return), but it doesn't necessarily mean the government is printing money (you can tell by he inflation rate, which is still quite reasonable).

We've had quite a bit of asset inflation. Sure, the consumer products you buy that were made in China aren't going up, but Zillow says my house is worth more than double what I paid five years ago. You can't tell someone looking for housing there's no inflation.

Did you ever stop and wonder why infrastructure costs so damn much in the US? Why a rail segment going from nowhere to nowhere in California costs seventy billion dollars, or a new bridge ten billion?

>The corporate bond market cannot soak up trillions of dollars in safe investments. In fact, low interest rates can simply result from high demand for treasury bonds because they are a "sure thing."

Low interest rates are the result of artificial demand for bonds. If the government would stop monkeying with the bond markets they could "soak up" enough to cover domestic savings. Foreign governments would have to find somewhere else to park their money, but that's not the end of the world.

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seanmcdirmid 3503 days ago
Environmental regulation, high labor costs; I.e., we aren't a shithole like china.

Housing bubbles come and go, they don't impact real inflation.

Unfortunately, libertarians would throw away all of our influence in global finance for an isolationalist paradise, but it won't work. If Russia and China aren't economically dependent on us, do you think that would actually mean less military tension?

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nostalgiac 3503 days ago
>ut Zillow says my house is worth more than double what I paid five years ago. You can't tell someone looking for housing there's no inflation.

You mean..it's gained value a few short years after a major crash? How surprising.

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gozur88 3503 days ago
No, I mean you could only explain the price at which I can sell it with Georgist ideas on monetary inflation.
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