ShcShc11 0 #1 June 20, 2012 Quotehttp://www.bloomberg.com/markets/rates-bonds/government-bonds/us/ U.S Government Bonds 10 years U.S Treasuries 1.75% = which is essentially a historic low and the U.S Gov can borrow at an extremely cheap rate. 1.75 means investors are putting their money in the Government in spite of getting a negative return (with inflation). 1.75 means we are in a depressed economy. 1.75 means the Gov can borrow super cheaply and debunks this whole ''U.S is drowning in debt and is going to become like Greece'' bs talk. 1.75 means good money is ending up doing nothing. The Federal Government is simply not spending enough. I understand people are concerned about the debt and thinks its responsible to pay it off. But doing this in a demand-depressed economy is incredibly irresponsible when the rate is as cheap as it is now. So whenever a rich/investor/whoever are putting their money in the Gov, it ends up doing nothing. It ends up doing nothing because: 1) we are too afraid with the imaginary voodoo debt concerns. 2) people keep bringing up: ''Government spending is inefficient''. Hellooo, doing NOTHING with the money is worse. 3) people make this into PRIVATE sector vs PUBLIC sector spending. http://cdn.debtdeflation.com/blogs/wp-content/uploads/2012/01/010212_2140_TheDebtwatc1.png ...except the PRIVATE sector is still paying down its debt from the bubble years and unable to stimulate demand. 2008-20?? will probably be seen as the dark ages of economics. In the meantime, Germany in lala fantasy land and still refuses to acknowledge that a much higher inflation is needed (around 4%) to save the euro. Cheers! Shc Quote Share this post Link to post Share on other sites
Zep 0 #2 June 20, 2012 Don't you worry Germany will get it's comeuppance for the stupidity of Merkel and as usual the German and European people will suffer once again for the mistakes of a power mad Chancellor. Gone fishing Quote Share this post Link to post Share on other sites
Fearjoburg 0 #3 June 20, 2012 You got it all wrong- the rate has got more to do with the risk of getting your money back and not necessarily an indication of the state of the economy. That is why you will see economies that are struggling more than the US will have a higher yield because the risk is higher to buy these instruments. You are also not taking into account at what price you can buy these bonds. A $100 bond will not necessarily sell for a $100 depending on the current market rate compared to rate at the date of issue. If you want to check the state of the economy you will fare much better at looking at indicators such as GDP. Quote Share this post Link to post Share on other sites
Marinus 0 #4 June 20, 2012 If it's all the same to you, if the last pillar that keeps the Euro from collapsing (AKA Germany) fails, I'll take my little piece of modified swamp and go in whatever direction PanzerMerkel goes. My understanding of economics isn't all that good, but blaming this whole mess on the Germans seems a bit odd. Quote Share this post Link to post Share on other sites
Zep 0 #5 June 20, 2012 QuoteIf it's all the same to you, if the last pillar that keeps the Euro from collapsing (AKA Germany) fails, I'll take my little piece of modified swamp and go in whatever direction PanzerMerkel goes. My understanding of economics isn't all that good, but blaming this whole mess on the Germans seems a bit odd. No, I'm in no way blaming the problem of the Euro crisis on Merkel, The financial institutions and banks made the mess. The problem with Merkel and it is a typical German trait is that she can see only one solution "austerity" and her reason for the final austerity solution is that her country is having to finance a great proportion of the capital that is being used for the bailouts. When most of the economists are telling her that she is wrong and she refuses to listen, then Germany as the financial power house of Europe will fail along with the rest of Europe. Gone fishing Quote Share this post Link to post Share on other sites
ShcShc11 0 #6 June 21, 2012 Quote You got it all wrong- the rate has got more to do with the risk of getting your money back and not necessarily an indication of the state of the economy. The 10 years bonds help give hints on the state of the economy. It is only one of the indicators, but once you pair it with the other statistics- then it is pretty clear that the U.S has a low rate BECAUSE of the depressed state of economy. GDP, like you mentioned is another indicator that tells other story. Quote My understanding of economics isn't all that good, but blaming this whole mess on the Germans seems a bit odd. Germany is not the only one to be blamed for the Euro crisis, but they are the only one who can solve it. The house was set on fire by the Greeks, and the Germans are the only one with the fire extinguisher but refuses to use it. They have to start accepting basic economics (e.g: inflation at 4%) if they are any serious about solving the problem. Quote Canadian yields are just as low. You are welcome to petition and encourage your government to spend as much as possible. Canada has definitely its own problem including a housing crisis similar to 2007 U.S. House prices especially in the Toronto and Vancouver area are extremely high and the bubble there might pop too. Provinces such as Saskatchewan SHOULD most definitely up their spending. Quote I want ours to 'live within it's means' and start paying off those higher interest notes that are coming due. But that's just me. I don't take out a $10k cash advance just because Discover says I can do it with 0% interest for 12 months. This comparison is flawed and essentially it is what causing the current U.S economic slug. My debt is your income. For an economy, it would be like refusing to pay for school in order to "save money". Cheers! Shc Quote Share this post Link to post Share on other sites
christelsabine 1 #7 June 21, 2012 Quote Don't you worry Germany will get it's comeuppance for the stupidity of Merkel and as usual the German and European people will suffer once again for the mistakes of a power mad Chancellor. What? A power made or a power mad ... You should go back where you came from. You have no clue. dudeist skydiver # 3105 Quote Share this post Link to post Share on other sites
christelsabine 1 #8 June 21, 2012 Quote If it's all the same to you, if the last pillar that keeps the Euro from collapsing (AKA Germany) fails, I'll take my little piece of modified swamp and go in whatever direction PanzerMerkel goes. My understanding of economics isn't all that good, but blaming this whole mess on the Germans seems a bit odd. PanzerMerkel, Marinus? Well, I know - everybody's responsible of his own body shape but, that's a bit too much, don't you think? She's busy working for Europe, with a little less of stress, perhaps she could see a gym a bit more - or a personal trainer. There should be a lot more persons working for Europe, not only barkers who fled to Spain or other European countries ..... dudeist skydiver # 3105 Quote Share this post Link to post Share on other sites
Coreece 190 #9 June 21, 2012 QuoteQuote Don't you worry Germany will get it's comeuppance for the stupidity of Merkel and as usual the German and European people will suffer once again for the mistakes of a power mad Chancellor. What? A power made or a power mad ... You should go back where you came from. You have no clue. Once again Christel enters stage left offering her enlightening words of wisdom...very convincing.Your secrets are the true reflection of who you really are... Quote Share this post Link to post Share on other sites
billvon 3,120 #10 June 21, 2012 Your one warning. Cut it out. Quote Share this post Link to post Share on other sites
kallend 2,151 #11 June 22, 2012 Quote To kinda recant myself, I wouldn't have so much of a problem with deficit spending in bad times provided the government trims back and runs a surplus in good times (paying down and storing up a 'war chest') preparing for the next downswing of the cycle. That's essentially the whole 'Keynsian economics' that people think is going to get us out of this mess. But, that's not what we do here. We run a large deficit in good times and a huge deficit in bad times. So, we only follow one half of Keyne's theory (the spend side). . +1... The only sure way to survive a canopy collision is not to have one. Quote Share this post Link to post Share on other sites
ShcShc11 0 #12 June 23, 2012 Quote As far as the borrowing/spending the 'consumer side' of the equation is pretty much maxed out. We just can't borrow anymore. By consumer side, do you mean the private sector? The private sector definitely cannot / are not spending more and are paying their excess debt from the pre-2008 bubble years. Where does this idea that we can't borrow anymore? People come up with the 14 T$ debt and say ''of course we can't borrow anymore. None of the indicators seem to imply that. If someone borrowed 90,000$, does that mean he borrowed too much? The answer is of course ''it depends''. From a purely debt and fiscal perspective, you're putting yourself more in debt by trying to tackle the debt by slashing in a depressed economy. See 1930 Bruning deflation economics, Japan 1990s austerity period and the U.K Cameron Government. The Cameron Government is back-tracking their austerity stance because they realized they can't hit anywhere near their debt cutting goals and completely devastating their future (through investment cuts) and their KIDS future (education cuts) And about needing to cut back during the good times, I absolutely agree on that. We should. But in a depressed economy the U.S is in at the moment, they really don't have a choice. Trying to cut debt won't even accomplish its goals. Quote Saying they just need to spend for the sake of spending is a pretty lousy idea. That's what's been going on for the last few years and it hasn't made a dent. I've made other threads about how much the Gov actually spent (which was extremely little) when you consider the Fed/State/Local levels. A 2.5-3.0 Trillion $ economic gap created by the 2008 housing bubble/financial crisis can't be amended with a mini-stimulus (most of which was Federal-State transfers). In 2000, we harshly criticized Japan for doing this and what we are doing is much much worse. So are we spending for the sake of spending? No. We don't really have a choice because the PRIVATE sector is bringing down their debt. If we are doing the same, then we would be heading towards deflation. The peripheries countries in Europe is more or less borderline to catastrophic deflation. Its maso-monetarism. We want to cut spending because it ''feels good to suffer'', but it has honestly little evidence from past empirical datas/events. You'l disagree I know. It sounds wrong when I say ''cutting debt will make the debt worse''. In some of my meetings, people called me an ''Economic sorcerer/witchcraft'' wanting to destroy the economy. But at the very least you get new perspectives on it... Cutting spending seems responsible; it even sounds courageous, but its actually downright stupidity and reckless from an economic perspective of a zero-bound economy. Cheers! Shc Quote Share this post Link to post Share on other sites
