General Discussion

cthulu2016

(10,960 posts)

13. If lenders had an inflexible 90% rule of thumb then

Sat Mar 9, 2013, 03:24 PM

Mar 2013

it would play out the same as if there were a real economic reason for 90% being a magic number. I grant that.

So it is possible for 90% to be a magic number in practical effect.

And I do not advise the USA blowing past 90%, either, except perhaps in a way calculated to best increase future tax revenues by GDP expansion.

(I am not an MMTer who thinks debt cannot matter. At some point it has to matter.)

But I do not think lenders are incapable of distinguishing between the USA at 90% and Greece at 90%. (They certainly do not treat Greece and Japan the same way -- Japan has a much larger relative debt than we do.)

I do not think we should plan to have a huge debt all the time. I think we should, however, try the experiment of kick-starting things with short-term but conventionally very "excessive" debt increase. (Rather than limping along like Japan, which just leads to Japan sized debt without frantic effect.)

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Do our leaders know that the deficit is NOT unsustainable? [View all] cthulu2016 Mar 2013 OP

"The only reason the deficit is unsustainable today is because of efforts to fight the deficit. " abelenkpe Mar 2013 #1

Exactly. Unemployment is driving the deficit, not spending. Fewer jobs means slower economy and JaneyVee Mar 2013 #2

The OP suggests there is not a low tax rate problem, in *deficit terms* cthulu2016 Mar 2013 #7

I meant raising top tax rate for the rich to help pay down debt while investing in America & jobs. JaneyVee Mar 2013 #9

I agree with all of that except "pay down debt" cthulu2016 Mar 2013 #15

And investing in America & jobs. JaneyVee Mar 2013 #19

I agree with "investing in America & jobs" cthulu2016 Mar 2013 #22

Debt Overhangs: Past and Present dkf Mar 2013 #3

Too Much Debt Means the Economy Can�t Grow: Reinhart and Rogoff dkf Mar 2013 #4

This appears to be a confusion of correlation and causation cthulu2016 Mar 2013 #5

There are obviously economic theories on why this is so, but some food for thought: dkf Mar 2013 #10

If lenders had an inflexible 90% rule of thumb then cthulu2016 Mar 2013 #13

There seems to be two levels of impact. dkf Mar 2013 #16

You make a good point here. dkf Mar 2013 #23

I would like to see the results adjusted for *total* debt in cthulu2016 Mar 2013 #26

I've seen that type of data from them. dkf Mar 2013 #27

What I have read about their book sounds interesting cthulu2016 Mar 2013 #29

You are right that a big stimulus was needed and if we had done the dkf Mar 2013 #30

If the debt and deficits are so bad, then why won't Republicans advocate for higher taxes? Yavin4 Mar 2013 #6

I wish we could view this very analytically so that we could fix the structural problems. dkf Mar 2013 #11

In 2000, the Deficit and the Debt problems were solved or Yavin4 Mar 2013 #14

I blame Greenspan for the housing bubble. dkf Mar 2013 #18

Yes, but the bill for the internet bubble was going to be paid either way. cthulu2016 Mar 2013 #20

Bush + Greenspan = recipe for disaster. dkf Mar 2013 #21

Greenspan not withstanding, It's very difficult for Americans to take discussions about the... Yavin4 Mar 2013 #25

I hear what you are saying. 99Forever Mar 2013 #8

Growth doesn't necessarily mean using resources. It could be services. dkf Mar 2013 #12

If they were reprentatives rather than "leaders" they would know. Tierra_y_Libertad Mar 2013 #17

Sooner or later the debt has to be addressed, that is a fact. MadHound Mar 2013 #24

Bingo. It's primarily a lack of revenue problem. The F-35 could be considered a waste of spending. talkingmime Mar 2013 #28

I love how Krugman completely ignores debt held by the trust fund taught_me_patience Mar 2013 #31

??? (revisit what was being calculated) cthulu2016 Mar 2013 #32

The normal rate of growth, 3%-5%, will not return. former9thward Mar 2013 #33

That is possible, but if we are planning for that in one sense (deficit) then cthulu2016 Mar 2013 #34

We should but neither party will tell the truth. former9thward Mar 2013 #35