Good news! Biden says to hell with deficits!

Jeebus - it's not "tit-for-tat". Friedman is peddling b.s. and you might do well to understand that.

The paragraph you don't get is simply saying that our debt burden today is about the same as the 90's, so where's the problem? Furthermore, Friedman makes the innumerate mistake of thinking that if interest rates go up, our entire debt burden will be affected - when, obviously, our existing burden will remain unchanged, since the low rates are already locked in. Only new debt would be affected. Very dumb mistake.

He's misleading an awful lot of people, including you, who trust him.

jimmurphy said:

Not following the “Mr. Arithmetic” paragraph, but fine, let’s agree to disagree. I have no interest interest in tit-for-tat citations.

Once I got past the tired blog snark of “Hmmm” and “Mr. Arithmetic,” I think what Dean Baker was doing there was putting debt service in Modern Monetary Theory terms: percentage of GDP rather than percentage of the federal budget (where the money that Friedman was talking about comes from).

not sure how expressing debt as a percentage of GDP is an MMT thing.

drummerboy said:

not sure how expressing debt as a percentage of GDP is an MMT thing.

Meaning looking at it in those terms without current worry, in contrast to worrying about it in budget terms. A la Kelton, in a 2019 CNBC interview:

If you think about what happened after World War II, when the U.S. national debt went in excess of 100 percent, close to 125 percent of GDP. If we were talking about it the way we talk about it today as burdening future generations as posing a grave national security risk, we would have to scratch our heads and say, wait a minute. Do we think that our grandparents burdened the next generation with all of those bonds that were sold during World War II to win the war, build the strongest middle class, produce the longest period of peacetime prosperity, the golden age of capitalism, all of that followed in the wake of fighting World War II, increasing deficits, massively increasing the size of the national debt. And of course the next generation inherits those bonds. They don’t become burdens to the next generation. They become their assets.

So it’s impossible really to put a number, nobody can. How much debt is too much debt? If you look at Japan today you see a country where the debt-to-GDP ratio is something like 240 percent. Well above, orders of magnitude above, where the U.S. is today or even where the U.S. is forecast to be in the future. And so, the question is how is Japan able to sustain a debt of that size? Wouldn’t it have an inflation problem? Wouldn’t it lead to rising interest rates? Wouldn’t this be destructive in some way? And the answer to all of those questions, as Japan has demonstrated now for years is simply: No. Japan’s debt is close to 240 percent of GDP — almost a quadrillion, that’s a very big number, yen. Long-term interest rates are very close to zero, there’s no inflation problem. And so despite the size of the debt there are no negative consequences as a result and I think Japan teaches us a really important lesson.

Debt as a percentage of GDP has been a long time, and widespread, measure. Has nothing to do with MMT.

It can be both a longtime, widespread measure and relevant to MMT. For some reason, anyway, Kelton found it worth focusing on when discussing the topic.

DB, how is inflation managed under MMT?

not for nothing, but if I see anyone citing David Brooks, Ross Douthat, Bret Stephens, or Tom Friedman, I'm not likely to even read it.  And before anyone chides me for a "closed" mind, I'll just say I've read each of them WAY too many times, and generally all they do is give me agita because their idiocy is so overwhelming.  It's not a closed mind, it's remembering what the cliché definition of insanity is, and thus trying to break the cycle.

ml1 said:

not for nothing, but if I see anyone citing David Brooks, Ross Douthat, Bret Stephens, or Tom Friedman, I'm not likely to even read it.  

This.  If I wanted some garbage I would look in a dumpster.

I like Douthat. Maybe it's just leftover from when he, Coates, Sullivan, and Yglesias were all blogging at The Atlantic. The thing with Douthat is realizing he's speaking from a premise of theologically conservative Catholicism -- if you can get past that then I think he comes across as well reasoned and thoughtful. If that's disqualifying, well, none of what he says after that will have much purchase.

Stephens I read when he does his dual column with Collins. His stand alone columns don't do much for me. 

Brooks and Friedman, in their own way, have always come across as too pollyanna-ish for me, ducking the relevant hard questions. The world is flat - - really? Brooks is maybe not quite as blinkered as when he wrote Bobos in Paradise, but I still find Douthat to be a sharper cultural observer than Brooks.

jimmurphy said:

DB, how is inflation managed under MMT?

That's a complicated question, as the causes of inflation aren't really agreed on.

But generally speaking, MMT states that increasing taxes and decreasing government spending are ways to control inflation.

drummerboy said:

That's a complicated question, as the causes of inflation aren't really agreed on.

But generally speaking, MMT states that increasing taxes and decreasing government spending are ways to control inflation.

 What’s are the disagreements on the causes of inflation based in? I mean, what are the various positions regarding the causes, from an MMT perspective?

Well, it's been sort of canon that simply printing too much money causes inflation, but we have real life cases like Japan and even the U.S. over the last 10 years that prove that's not the case. MMT says that inflation can also be caused by overspending if it's combined with the economy running at capacity.

For completeness, inflation is also caused by demand exceeding supply. I guess everyone agrees on that.

If you want radical deficit spending based on money printing you are not allowed to complain about the growing income inequality. Who do you think gets this "money"?

drummerboy said:

Well, it's been sort of canon that simply printing too much money causes inflation, but we have real life cases like Japan and even the U.S. over the last 10 years that prove that's not the case. MMT says that inflation can also be caused by overspending if it's combined with the economy running at capacity.

For completeness, inflation is also caused by demand exceeding supply. I guess everyone agrees on that.

 How exactly does it prove that? What has happened to the price of equities?  What about bonds? What about real estate?

In a global pandemic where we have locked down societies killing businesses and drastically curbing travel, what do you think would normally happen to prices? What has actually happened to prices?

terp said:

drummerboy said:

Well, it's been sort of canon that simply printing too much money causes inflation, but we have real life cases like Japan and even the U.S. over the last 10 years that prove that's not the case. MMT says that inflation can also be caused by overspending if it's combined with the economy running at capacity.

For completeness, inflation is also caused by demand exceeding supply. I guess everyone agrees on that.

 How exactly does it prove that? What has happened to the price of equities?  What about bonds? What about real estate?

In a global pandemic where we have locked down societies killing businesses and drastically curbing travel, what do you think would normally happen to prices? What has actually happened to prices?

Yeah, but what about the general rate of inflation? Barely moved. So what's your point?

Then again, I remember some years ago that your definition of inflation had little to do with reality.

terp said:

If you want radical deficit spending based on money printing you are not allowed to complain about the growing income inequality. Who do you think gets this "money"?

The money goes to whom we give it to. Obviously. QE money from the Fed is not the same as money being spent on specific programs by the government.  Biden's COVID plan would help to offset the QE money, which went to the wealthy.

terp said:

If you want radical deficit spending based on money printing you are not allowed to complain about the growing income inequality. Who do you think gets this "money"?

 Thank you Terp.

jimmurphy said:

terp said:

If you want radical deficit spending based on money printing you are not allowed to complain about the growing income inequality. Who do you think gets this "money"?

 Thank you Terp.

 Don't encourage him, please!

drummerboy said:

Yeah, but what about the general rate of inflation? Barely moved. So what's your point?

Then again, I remember some years ago that your definition of inflation had little to do with reality.

It has barely moved because all of the money is going to the rich, who can only spend so much. They chase yield with the rest, which explains the run up in asset prices despite a pandemic economy.

drummerboy said:

terp said:

If you want radical deficit spending based on money printing you are not allowed to complain about the growing income inequality. Who do you think gets this "money"?

The money goes to whom we give it to. Obviously. QE money from the Fed is not the same as money being spent on specific programs by the government.  Biden's COVID plan would help to offset the QE money, which went to the wealthy.

Only 21 percent of the direct check money from the spring stimulus was spent in the economy. The balance of 79 percent went to debt reduction and investments. This is not stimulus. 

Surveys indicate that even less will be spent on subsequent rounds.

I find it really hard to understand that as a moderate Democrat I am arguing that not enough money is going to the poor and/or unemployed and too much is going to those who were not impacted and I’m getting push-back from those “more liberal” than me.

terp said:

If you want radical deficit spending based on money printing you are not allowed to complain about the growing income inequality. Who do you think gets this "money"?

 I think that would be jimmurphy's point on an earlier thread asking if the proposed $1400 direct payments should be more tightly targeted.

And to the broader point, I'd imagine those advocating for greater deficit spending (which to some degree includes me) would point to tax policy as part of the proper response. 

You know, the money being spent in the last year, including Biden's current proposals, are not meant to stimulate the economy in the manner this has normally meant when fighting a recession. You can't stimulate your way out of a recession caused by pandemic lock downs, and that is not the intent of the spending.

It's wrong to criticize the spending for not doing what it was not meant to do in the first place.

jimmurphy said:

Only 21 percent of the direct check money from the spring stimulus was spent in the economy. The balance of 79 percent went to debt reduction and investments. This is not stimulus. 

Surveys indicate that even less will be spent on subsequent rounds.

I find it really hard to understand that as a moderate Democrat I am arguing that not enough money is going to the poor and/or unemployed and too much is going to those who were not impacted and I’m getting push-back from those “more liberal” than me.

 I don't think any of us are advocating for that.  My understanding is that Biden wants to spend trillions on direct aid to the unemployed, small businesses, infrastructure, and renewable energy.  If it's managed properly it should mostly be spent in the economy.  It's not meant specifically to be a stimulus, it's meant as pandemic relief and investment in the future.

PVW said:

I like Douthat. Maybe it's just leftover from when he, Coates, Sullivan, and Yglesias were all blogging at The Atlantic. The thing with Douthat is realizing he's speaking from a premise of theologically conservative Catholicism -- if you can get past that then I think he comes across as well reasoned and thoughtful. If that's disqualifying, well, none of what he says after that will have much purchase.

Stephens I read when he does his dual column with Collins. His stand alone columns don't do much for me. 

Brooks and Friedman, in their own way, have always come across as too pollyanna-ish for me, ducking the relevant hard questions. The world is flat - - really? Brooks is maybe not quite as blinkered as when he wrote Bobos in Paradise, but I still find Douthat to be a sharper cultural observer than Brooks.

 isn't arguing from a place of conservative faith not an approach based in reason?

ml1 said:

PVW said:

I like Douthat. Maybe it's just leftover from when he, Coates, Sullivan, and Yglesias were all blogging at The Atlantic. The thing with Douthat is realizing he's speaking from a premise of theologically conservative Catholicism -- if you can get past that then I think he comes across as well reasoned and thoughtful. If that's disqualifying, well, none of what he says after that will have much purchase.

Stephens I read when he does his dual column with Collins. His stand alone columns don't do much for me. 

Brooks and Friedman, in their own way, have always come across as too pollyanna-ish for me, ducking the relevant hard questions. The world is flat - - really? Brooks is maybe not quite as blinkered as when he wrote Bobos in Paradise, but I still find Douthat to be a sharper cultural observer than Brooks.

 isn't arguing from a place of conservative faith not an approach based in reason?

 Everyone argues from somewhere. What I appreciate about Douthat is that he's writing within a context that generally doesn't share his premises, and, to my eyes at least, he's aware of and acknowledges that tension, and I find value in seeing him working through that. I'll also note that in general I don't have a super high opinion of regular columnists, as the format doesn't encourage consistently good writing. As I noted earlier, I read him from back when he was a blogger, which is a different context than when you're contractually obligated to push out a certain number of words on a regular schedule.

In any case, while I personally find Douthat worth reading, he's never struck me as someone the majority of readers on this board would get much value from, so I've never quoted or linked to him here. I'm not setting out convince anyone who's not into Douthat to read him, just pushing back a bit on the blanket dismissal of him.

PVW said:

ml1 said:

PVW said:

I like Douthat. Maybe it's just leftover from when he, Coates, Sullivan, and Yglesias were all blogging at The Atlantic. The thing with Douthat is realizing he's speaking from a premise of theologically conservative Catholicism -- if you can get past that then I think he comes across as well reasoned and thoughtful. If that's disqualifying, well, none of what he says after that will have much purchase.

Stephens I read when he does his dual column with Collins. His stand alone columns don't do much for me. 

Brooks and Friedman, in their own way, have always come across as too pollyanna-ish for me, ducking the relevant hard questions. The world is flat - - really? Brooks is maybe not quite as blinkered as when he wrote Bobos in Paradise, but I still find Douthat to be a sharper cultural observer than Brooks.

 isn't arguing from a place of conservative faith not an approach based in reason?

 Everyone argues from somewhere. What I appreciate about Douthat is that he's writing within a context that generally doesn't share his premises, and, to my eyes at least, he's aware of and acknowledges that tension, and I find value in seeing him working through that. I'll also note that in general I don't have a super high opinion of regular columnists, as the format doesn't encourage consistently good writing. As I noted earlier, I read him from back when he was a blogger, which is a different context than when you're contractually obligated to push out a certain number of words on a regular schedule.

In any case, while I personally find Douthat worth reading, he's never struck me as someone the majority of readers on this board would get much value from, so I've never quoted or linked to him here. I'm not setting out convince anyone who's not into Douthat to read him, just pushing back a bit on the blanket dismissal of him.

 for the record, I don't read many NYT columnists regularly at all.  Maybe it's that they are required to deliver a particular number of columns a week, but I find that most of them don't seem to bother to do much research.  And as a result, the columns are often unsupported opinion, and at that often poorly argued and reasoned.  I've often written that there are at leas a half dozen people who post on MOL including yourself, who are more deserving of a regular op-ed gig at the NYT than Brooks, Friedman, Stephens, or Dowd.  Their columns are generally just lazy hackery, and you'll almost never see me link to a NYT op-ed and call it anything like "insightful."

ml1 said:

 for the record, I don't read many NYT columnists regularly at all.  Maybe it's that they are required to deliver a particular number of columns a week, but I find that most of them don't seem to bother to do much research.  And as a result, the columns are often unsupported opinion, and at that often poorly argued and reasoned.  I've often written that there are at leas a half dozen people who post on MOL including yourself, who are more deserving of a regular op-ed gig at the NYT than Brooks, Friedman, Stephens, or Dowd.  Their columns are generally just lazy hackery, and you'll almost never see me link to a NYT op-ed and call it anything like "insightful."

 Ha, thanks! I benefit from low expectations of being on a community message board, where typos and grammatical mistakes are easily overlooked and everyone knows no one is getting paid for any of this.

True story -- when I was choosing my handle for MOL, I looked for inspiration to who I thought were significant posters who consistently made posts worth reading -- so I chose a three-character handle ;-)

I do think the publishing schedule for regular columns contributes quite a bit to their lower average quality -- whenever a writer I like ends up getting a prestige columnist position I'm happy for their success but sad for the implications for their writing.

drummerboy said:

You know, the money being spent in the last year, including Biden's current proposals, are not meant to stimulate the economy in the manner this has normally meant when fighting a recession. You can't stimulate your way out of a recession caused by pandemic lock downs, and that is not the intent of the spending.

It's wrong to criticize the spending for not doing what it was not meant to do in the first place.

What exactly was the money "meant to do in the first place?"

jimmurphy said:

What exactly was the money "meant to do in the first place?"

Keep folks fed and sheltered.