Ezra Klein has a column out today for Bloomberg in which he discusses the "truth" about the national debt and the budget deficit. Klein is a left-wing policy wonk who writes in the Washington Post and subs for Rachel Maddow on MSNBC. Just yesterday, he was on TV having a lengthy discussion of budget economics with Paul Krugman. Klein often discusses economic. Here is the essence of his latest column:
Today’s deficits are, if anything, too small. Yes, I said it. Too. Small. We’ve seen real, clear damage from spending cutbacks -- if public employment had remained steady since 2008, unemployment would be down to about 7.1 percent -- and the world is begging us to borrow more money. In fact, they’re paying us to borrow more money; real interest rates on Treasury debt have, amazingly, turned negative. We should accept the world’s generous, limited-time offer.
What Klein says sounds good, until you know the actual facts. Klein points out that interest rates on Treasury debt is currently less than the rate of inflation, in other words real interest rates are negative. He fails to explain why that is, however. At the moment, the Federal Reserve is spending about $85 billion each month to buy Treasury debt with the stated purpose of keeping interest rates as low as possible. It is not "the world" that is keeping the prices of Treasury bonds high and the interest rates low; no, it is the Federal Reserve which is accomplishing this outcome by just printing more and more money. What this means in simple English, is that the United States is not really borrowing money from the world; it is simply printing the money that it needs and spending it. At some point soon, this will all catch up to us. When the Fed stops printing money, as it must, interest rates will soar, inflation will zoom, and the economy will falter even worse than it already is. Klein wants to increase this problem, to make things in the future much, much worse.
I am not sure if Ezra Klein actually understands the problem with his position. He may just be ignorant and following his ideological positions. Such ignorance would be pretty bad. Even worse, however, is the possibility that Klein knows the truth and just does not care. Either way, he should be ignored.
Today’s deficits are, if anything, too small. Yes, I said it. Too. Small. We’ve seen real, clear damage from spending cutbacks -- if public employment had remained steady since 2008, unemployment would be down to about 7.1 percent -- and the world is begging us to borrow more money. In fact, they’re paying us to borrow more money; real interest rates on Treasury debt have, amazingly, turned negative. We should accept the world’s generous, limited-time offer.
What Klein says sounds good, until you know the actual facts. Klein points out that interest rates on Treasury debt is currently less than the rate of inflation, in other words real interest rates are negative. He fails to explain why that is, however. At the moment, the Federal Reserve is spending about $85 billion each month to buy Treasury debt with the stated purpose of keeping interest rates as low as possible. It is not "the world" that is keeping the prices of Treasury bonds high and the interest rates low; no, it is the Federal Reserve which is accomplishing this outcome by just printing more and more money. What this means in simple English, is that the United States is not really borrowing money from the world; it is simply printing the money that it needs and spending it. At some point soon, this will all catch up to us. When the Fed stops printing money, as it must, interest rates will soar, inflation will zoom, and the economy will falter even worse than it already is. Klein wants to increase this problem, to make things in the future much, much worse.
I am not sure if Ezra Klein actually understands the problem with his position. He may just be ignorant and following his ideological positions. Such ignorance would be pretty bad. Even worse, however, is the possibility that Klein knows the truth and just does not care. Either way, he should be ignored.
3 comments:
$3.5 Billion in back taxes owed by Federal Employees only.
Google--
Federal Employees Owed $3.5 Billion In Back Taxes In 2011: IRS
Collect that from Fed employees, it represents almost 8% of the sequestration cuts for 2013
Collect it or PUT THEM IN JAIL!!!
NO B.S.
This is appalling, House & Senate tax delinguecies!!!
House employees had a higher delinquency rate than workers for the Senate, but not by much. House workers had a delinquency rate of 3.7 percent, while Senate workers had a delinquency rate of 3.3 percent. Federal court employees had a delinquency rate of 2.7 percent.
http://www.woai.com/content/news/newslinks/story/IRS-3-5B-in-back-taxes-owed-by-federal-workers/lVs5R_cw5kStBaReRIABfA.cspx
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