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Politics : Formerly About Advanced Micro Devices -- Ignore unavailable to you. Want to Upgrade?

To: TimF who wrote (218164)	2/8/2005 8:17:18 PM
From: Road Walker	Read Replies (1) \| Respond to of 1572099

re: The deficit does matter, so does other obligations for future spending. The deficit doesn't matter more than other obligations for future spending. It sure does. Future spending is subject to many, many variables, current deficits are real, black and white. re: Interest rates respond negatively to debt mostly for two reasons. 1 - Concern about the ability of government to pay back the debt or the inflation that the government might allow to pay it back in inflated dollars. 2 - "Crowding out", if the government borrows money, less money is available for the private sector to borrow. That's three. re: In the case of social security #1 applies with or without the private accounts. Wrong. First you ignore interest. Second you assume everything else will go well. If the world economy, or the domestic economy were to break bad, the ability to pay back those debts would be greatly diminished. And the country is pushing against unknown deficits and current account deficits. The later may be even more critical. re: The payouts to social security grow in a way that has a similar net effect to having interest costs on the money owed. If the future payouts where static then you would have a point but they are not static even when measured in inflation adjusted dollars. So the payouts are going to be "interest rate adjusted". Come on man, you are making stuff up now. You own bonds, interest rates go up, your bonds are worth less. Quit stretching to justify this huge expense, for some ideological or political prejudice. Be pragmatic. We can't do it, we can't afford it. Bush already spent the money we might have been able to use for a program like this. John

To: TimF who wrote (218164)	2/8/2005 8:46:36 PM
From: combjelly	Read Replies (1) \| Respond to of 1572099

"The deficit doesn't matter more than other obligations for future spending." Except that the deficit is here and now and future obligations are, well, in the future. A lot can happen between now and then. So what happens when a deficit is run? There are two choices, either the government sells bonds or it prints money. Now even politicians are aware, however dimly, that just printing money is a bad thing. So they prefer selling bonds. Now bonds are great, because buyers can assume that they will get paid, one way or other, the yields tend to be pretty low. But if there is a glut of them, or other countries for whatever reason don't want to buy them, then they have to raise rates until they sell. At some point, the bonds are more attractive that regular business bonds, and so cost of capital for improvements goes up. This, at some point, means businesses can't afford to stay competitive, so the economy starts to tank. When the economy starts to tank, then the government bonds are even less attractive. At some point, the government can't reasonably afford to sell the bonds, so they start to just print money. That, of course, triggers inflation. Which, BTW, is probably already a problem by that time. So you have a slumping economy, stagnant market, rising unemployment, rising inflation, and no way out that isn't extremely painful. And this can go one for years. If there aren't any politicians with any guts, there is no real reason why it can't go on for decades. This isn't just a theoretical exercise, but a model of what happened during the late '60s through the early '80s. It wasn't a patch on what happened during the '30s, but I suppose having one leg amputated isn't nearly as bad as having both...