Economist Stephanie Kelton on The Deficit Myth

[laughing dog]

As always: debt issuance is a choice, not a necessity.

Yes, it's a choice between immediate inflation and delayed one.

Not at all. I agree with HP - stick to physics.

 

[barbos]

As always: debt issuance is a choice, not a necessity.

Yes, it's a choice between immediate inflation and delayed one. So, no, not really a choice

Is it? So, every debt issuance will necessarily cause inflation? How do you know?

I did not say "every". But in this particular case it will cause something - inflation, default, partial default. There is no way to pay that debt in full.

 

[J842P]

Is it? So, every debt issuance will necessarily cause inflation? How do you know?

I did not say "every". But in this particular case it will cause something - inflation, default, partial default. There is no way to pay that debt in full.

What case, exactly? Why must it cause one of those? Why do you say there is no way to pay that debt? Please, show your reasoning.

 

[barbos]

Is it? So, every debt issuance will necessarily cause inflation? How do you know?

I did not say "every". But in this particular case it will cause something - inflation, default, partial default. There is no way to pay that debt in full.

What case, exactly? Why must it cause one of those? Why do you say there is no way to pay that debt? Please, show your reasoning.

The debt is too large. The only real way to pay debt is to raise taxes which would hurt the economic "growth" which is the reason why you have debt in the first place - nobody wanted to hurt the "economy".

 

[Loren Pechtel]

As always: debt issuance is a choice, not a necessity.

Yes, it's a choice between immediate inflation and delayed one.

Not at all. I agree with HP - stick to physics.

Harry Potter sticks to magic!

 

[DBT]

Summary of Main causes of inflation

Demand-pull inflation – aggregate demand growing faster than aggregate supply (growth too rapid)
Cost-push inflation – For example, higher oil prices feeding through into higher costs.
Devaluation – increasing cost of imported goods, and also the boost to domestic demand.
Rising wages – higher wages increase firms costs and increase consumers’ disposable income to spend more.
Expectations of inflation – causes workers to demand wage increases and firms to push up prices.

 

[barbos]

Summary of Main causes of inflation

Demand-pull inflation – aggregate demand growing faster than aggregate supply (growth too rapid)
Cost-push inflation – For example, higher oil prices feeding through into higher costs.
Devaluation – increasing cost of imported goods, and also the boost to domestic demand.
Rising wages – higher wages increase firms costs and increase consumers’ disposable income to spend more.
Expectations of inflation – causes workers to demand wage increases and firms to push up prices.

This is all mildly interesting and academic but we are talking about high inflation (hyperinflation) here. And it is caused by printing too much money.

 

[bilby]

Summary of Main causes of inflation

Demand-pull inflation – aggregate demand growing faster than aggregate supply (growth too rapid)
Cost-push inflation – For example, higher oil prices feeding through into higher costs.
Devaluation – increasing cost of imported goods, and also the boost to domestic demand.
Rising wages – higher wages increase firms costs and increase consumers’ disposable income to spend more.
Expectations of inflation – causes workers to demand wage increases and firms to push up prices.

This is all mildly interesting and academic but we are talking about high inflation (hyperinflation) here. And it is caused by printing too much money.

No, it's not. Every case of hyperinflation has a clear cause unrelated to the printing of money.

Printing money is a forced response to, not a cause of, hyperinflation.

Correlation isn't causation, and you have your horse being pulled by a cart.

 

[barbos]

Summary of Main causes of inflation

Demand-pull inflation – aggregate demand growing faster than aggregate supply (growth too rapid)
Cost-push inflation – For example, higher oil prices feeding through into higher costs.
Devaluation – increasing cost of imported goods, and also the boost to domestic demand.
Rising wages – higher wages increase firms costs and increase consumers’ disposable income to spend more.
Expectations of inflation – causes workers to demand wage increases and firms to push up prices.

This is all mildly interesting and academic but we are talking about high inflation (hyperinflation) here. And it is caused by printing too much money.

No, it's not. Every case of hyperinflation has a clear cause unrelated to the printing of money.

Printing money is a forced response to, not a cause of, hyperinflation.

Yes, printing money would be forced (by too much accumulated debt) response.
And it is a fucking cause of hyperinflation.
Alternative would be paying up, ask Greece about that.

Correlation isn't causation, and you have your horse being pulled by a cart.

And Hitler was a bad dude.

 

[laughing dog]

There is no way to pay that debt in full.

This is your opinion or can you prove it?

 

[Horatio Parker]

No, it's not. Every case of hyperinflation has a clear cause unrelated to the printing of money.

Printing money is a forced response to, not a cause of, hyperinflation.

Yes, printing money would be forced (by too much accumulated debt) response.
And it is a fucking cause of hyperinflation.
Alternative would be paying up, ask Greece about that.

Correlation isn't causation, and you have your horse being pulled by a cart.

And Hitler was a bad dude.

Greece doesn't control its own currency. Borrowing in a foreign currency is an entirely different matter; another indication you have no idea what you're talking about.

 

[barbos]

Yes, printing money would be forced (by too much accumulated debt) response.
And it is a fucking cause of hyperinflation.
Alternative would be paying up, ask Greece about that.

And Hitler was a bad dude.

Greece doesn't control its own currency.

Exactly, they had no choice but to pay or not to pay.

Borrowing in a foreign currency is an entirely different matter; another indication you have no idea what you're talking about.

Exactly why I mentioned it, and exactly why I know what I am talking about and you don't.
You just conceded that US have a legal option of screwing its lenders, in other words crashing bond market along with hyper-inflation.
So printing money is not a really viable option. Legal, but neither economically nor politically viable.

 

[Horatio Parker]

Exactly, they had no choice but to pay or not to pay.

Borrowing in a foreign currency is an entirely different matter; another indication you have no idea what you're talking about.

Exactly why I mentioned it, and exactly why I know what I am talking about and you don't.
You just conceded that US have a legal option of screwing its lenders, in other words crashing bond market along with hyper-inflation.

I conceded nothing. Holding govt debt is just a swap - an interest bearing asset instead of a non-interest bearing one.

The debt may never be paid back, but it will be serviced.

I saw today a comment that govt debt issuance provides the illusion of constraint.

 

[barbos]

Exactly, they had no choice but to pay or not to pay.

Borrowing in a foreign currency is an entirely different matter; another indication you have no idea what you're talking about.

Exactly why I mentioned it, and exactly why I know what I am talking about and you don't.
You just conceded that US have a legal option of screwing its lenders, in other words crashing bond market along with hyper-inflation.

I conceded nothing. Holding govt debt is just a swap - an interest bearing asset instead of a non-interest bearing one.

The debt may never be paid back, but it will be serviced.

That's why debt holders hope they die before it crashes.

 

[Wiploc]

The debt may never be paid back, but it will be serviced.

That's why debt holders hope they die before it crashes.

Did the people who lived thru World War 2 hope to die because of that debt?

 

[barbos]

The debt may never be paid back, but it will be serviced.

That's why debt holders hope they die before it crashes.

Did the people who lived thru World War 2 hope to die because of that debt?

I resent your comparison of debt to kill Hitler with debt to buy an iPhone.
That debt was a reason why it was invented - for actual emergencies.
Current debt was mostly wasted and stolen.

 

[Horatio Parker]

I conceded nothing. Holding govt debt is just a swap - an interest bearing asset instead of a non-interest bearing one.

The debt may never be paid back, but it will be serviced.

That's why debt holders hope they die before it crashes.

So why, in your world, would an investor buy US Treasuries?

 

[Wiploc]

Did the people who lived thru World War 2 hope to die because of that debt?

I resent your comparison of debt to kill Hitler with debt to buy an iPhone.
That debt was a reason why it was invented - for actual emergencies.
Current debt was mostly wasted and stolen.

I didn't bring up iPhones, and you didn't answer the question.

Are you retrenching? Is your new position that people hope to die when there is debt that you don't approve of?

 

[laughing dog]

That debt was a reason why it was invented - for actual emergencies.

As usual, you are misinformed. Debt was invented because people wanted to borrow because of liquidity constraints which is not necessarily because of an actual emergency.

Current debt was mostly wasted and stolen.

Perhaps in Russia and Greece, but certainly not everywhere.

Please stick to physics.

 

[bilby]

I conceded nothing. Holding govt debt is just a swap - an interest bearing asset instead of a non-interest bearing one.

The debt may never be paid back, but it will be serviced.

That's why debt holders hope they die before it crashes.

Why would it crash? Is the USA planning to retire, die, or become totally and permanently disabled? Because those are the reasons why personal debt always needs to be paid off in full at some point. Nation states are not only immortal; Their ability to earn increases massively over time.