patrick.net

Government bonds are what 25% of the bond market?

The could pay them off as well...

Back to my question, you stated that infation is bad. Have you changed your view?

marcus says

What you end up with is [an indebted majority wanting] inflation [because they like to "buy now" but don't like to "pay later"]. But this is sort of like everyone being [short] a stock. Now all you have is [buyers].

There, fixed that for you.

curious2 says

Then you say people who disagree with you can't read, when in fact they've quoted you.

I said gsr couldn't read because he misquoted me after I was very clear in my earlier post (which I reposted again). Just to be clear, I'll repost it for a 3rd time.

tatupu70 says

There is a very strong correlation between deflation and high unemployment.

Hopefully that clears it up for you.

curious2 says

tatupu70 says

curious2 says

Deflation does not generally cause unemployment, except in the FIRE sector

Of course it does.

Then you say people who disagree with you can't read, when in fact they've quoted you.

This is disingenuous, even for you. It's from a different thread, and later in that same thread I corrected myself to say this:

tatupu70 says

Of course it does. It has nothing to do with the FIRE sector, it's just Econ 101. Unless you are experiencing very high productivity gains throughout the entire economy(and it's highly competitive), deflation results from lack of demand. The same lack of demand that causes deflation also causes unemployment. And it's a positive feedback--deflation leads to unemployment, leads to more deflation, leads to more unemployment, etc.

curious2 says

that AAPL has become the most valuable corporation in the history of the world, amid perennial deflation in its sector. There, fixed that for you.

You understand the difference between productivity driven deflation in an individual sector and deflation in an entire economy that is driven by lack of demand, right?

Those are not the same thing. Do you understand that?

tatupu70 says

Do you understand that?

I understand that you are trolling, calling people illiterate and liars, and I'm not going to waste more time indulging you. I have already refuted your false claims, so I'll simply link.

curious2 says

I understand that you are trolling, calling people illiterate and liars

lol--who's the troll? Let's see:

1. calling people names. (tatpoop) check
2. falsely accusing me of callilng people liars and illiterate? check
3. Running away when presented with logical arguments refuting your points? check

That's pretty standard trolling. How about you look in a mirror

Pretend to take the high road all you want-your previous posts say it all.

tatupu70 says

MORE of the productive assets at fire sale prices making them even more powerful.

Exactly so what use are the Democrats?

tatupu70 says

Assuming you mean to say rooting--you shouldn't be hoping for deflation because the little guys lose BIG under deflation.

They aren't winning now, you're just scared it will fuck with the gravy train you got going on at everyone's expense.

Regardless where a person may stand deflation is here for a time to come. You stand in the front of it (money flow) and you will be standing in front of a freight train. Like the saying goes put hope in 1 hand and s$%^ in the other and see what hand is filled 1st.

CaptainShuddup says

They aren't winning now, you're just scared it will fuck with the gravy train you got going on at everyone's expense.

So your solution to help the middle class is to make things worse for them?

Different doesn't always equal better.

CaptainShuddup says

They aren't winning now, you're just scared it will fuck with the gravy train you got going on at everyone's expense.

And btw--what gravy train do I have going? I'm a working stiff like everyone else.

This deflation environment is and will be very different. The cash is not going to stay cash and will be invested (traded) in our countries markets and GDP.

The dollar and our equities market have just begun their honeymoon. The majority will not reap much benefit regardless although things on the surface will look rosie due to misinterpretation and confusion but it will remain the same s%^% different day.

The markets are a traders market like they have been particularly since QE1 and CDS before that, however it's about to get much worse.

marcus says

Japan is an example of it working in an environment of low inflation and ever decreasing interest rates. And it won't work forever.

It's not working for Japan - Abenomics have widened the wealth gap significantly whereas a deflationary correction such as in 2008 was reducing the wealth gap significantly until the Fed stick-saved the leveraged investments of the wealthy.

bob2356 says

The tbill rate was 2% in 1980. This highest it ever hit was 7.5% briefly in 1982 (deficit still below a trillion), it was back down to 4% by the end of the 1982.

What are you talking about ? You're way off. 90 day TBIlls were over 10% for most of 1980, hit a high in the mid teens in 1981, and never dropped below 4% in all of the 80s.

The yield curve actually got inverted for a while there, when Volker was doing his thing.

bob2356 says

Uh, the debt in 1980 was 800 billion not 2 trillion. The tbill rate was 2% in 1980. This highest it ever hit was 7.5% briefly in 1982 (deficit still below a trillion), it was back down to 4% by the end of the 1982. https://www.bostonfed.org/economic/wp/wp1991/wp91_6.pdf

Try again.

"Real" t bill yields. Says it right in the first sentence.

Try this one.

https://research.stlouisfed.org/fred2/data/TB3MS.txt

$850 billion @ 12% = $102B in interest.
$18 Trillion @ .02% = $3.6B in interest.

control point says

bob2356 says

Uh, the debt in 1980 was 800 billion not 2 trillion. The tbill rate was 2% in 1980. This highest it ever hit was 7.5% briefly in 1982 (deficit still below a trillion), it was back down to 4% by the end of the 1982. https://www.bostonfed.org/economic/wp/wp1991/wp91_6.pdf

Try again.

"Real" t bill yields. Says it right in the first sentence.

Try this one.

https://research.stlouisfed.org/fred2/data/TB3MS.txt

$850 billion @ 12% = $102B in interest.

$18 Trillion @ .02% = $3.6B in interest.

Oops, I grabbed the ex ante chart by mistake. 10 year was 11.03% in 1980.

So how to you get .02% interest on the debt? That's the tbill rate. Less than 25% of the debt is in tbills. The rest is longer term bonds and notes from 1 to 3.5%. Mostly 10 years at 2.2%. http://www.federalreserve.gov/releases/h15/data.htm. So 12 (3/4 of 16) trillion times 2% is 240B, which is just about what was paid in 2013. Even at these historically low rates interest on the debt is the third largest item in the general budget after military and medicaid.

This is all well and good if the interest rate genie can be held in the bottle forever. Good luck with that. You guys keep thinking those happy thoughts.

bob2356 says

So how to you get .02% interest on the debt? That's the tbill rate. Less than 25% of the debt is in tbills. The rest is longer term bonds and notes from 1 to 3.5%.

I was comparing apples to apples. (t bills to t bills)

Truth be told, actualy budget impact of debt service is about 6x what it was in 1980. ($52.5b vs. $310B)

In nominal dollars.

Of course, if we fast forward a bit to 1989, we had $169B in net interest payments.

In nominal dollars. Or about $327B in 2014 dollars.

At the end of Ray-gun's run.

http://www.whitehouse.gov/sites/default/files/omb/budget/fy2013/assets/hist.pdf

bob2356 says

This is all well and good if the interest rate genie can be held in the bottle forever. Good luck with that. You guys keep thinking those happy thoughts.

Here is the thing....interest rates do not rise in a vacuum. Rising interest rates on treasuries implies rising inflation, which implies strong economic growth. As long as we dont further butcher tax revenues - added revenues will more than make up for the increase in debt service from rising rates.

control point says

bob2356 says

This is all well and good if the interest rate genie can be held in the bottle forever. Good luck with that. You guys keep thinking those happy thoughts.

Here is the thing....interest rates do not rise in a vacuum. Rising interest rates on treasuries implies rising inflation, which implies strong economic growth. As long as we dont further butcher tax revenues - added revenues will more than make up for the increase in debt service from rising rates.

LOL. So you keep on having the happy dream just as Bob suggested. The idea that rising inflation means strong economic growth is quite false. It's similar to the Phillips Curve nonsense.