oops, sorry guys. wrong list. On Sat, Nov 24, 2012 at 4:13 PM, nathan tankus <[email protected]> wrote: > "Why is a current 2% yield on TBonds an effective argument against > deficit hawkishness? " > > You are correct that it is not. Galbraith has made the point elsewhere > that it isn't. > > "Galbraith's response what that flat out there is no evidence to > support it. What? What about Rogoff/Reinhart's "This time it's > different"? That book and its research reiterates the debt/GDP ratio > rule of thumb that is taken very seriously, and has filtered out to > the mainstream very effectively via Peterson, etc... > > Why didn't Galbraith acknowledge that research? Is it rogue research > or obviously flawed? " > > It is obviously flawed a colleague of Galbraith does a take down here: > > http://www.rooseveltinstitute.org/new-roosevelt/going-rogoff > > The short form is this, although they have a large data set their > presentation of it is comical. the idea that 18th century public > finance for countries under the gold standard is in any way comparable > to public finance in a world without a gold standard is absurd. They > also mix up private debt, public debt and countries with large amounts > of foreign currency denominated debt. that is obviously very different > from the u.s which only had debt in the unit of account of the u.s > dollar. Finally, they also mix up causality. a big recession > (especially one caused by bubble driven financial crisis) causes tax > revenues to fall and payouts on things like unemployment insurance to > rise. this will lead to high debt to GDP ratios. however, it didn't > cause the big recession. It's the equivalent to the old joke about > umbrellas causing rain. > > a last note: mixing up high public debt and high private debt is > absurd because the financial liabilities of the public sector are > assets to the private sector. The large Clinton surpluses were the > major driving force behind the run up in private debt relative to GDP > in the late 1990's. The only reason it didn't cause a big recession > then was because of the housing bubble. > > -- > -Nathan Tankus > -----------------------------------------------------------------------------------------------------------------------------------------------
-- -Nathan Tankus ----------------------------------------------------------------------------------------------------------------------------------------------- _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
