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View Diary: NYT: It's Krugman Vs. Reinhart & Rogoff, Who Trivialize Their Incompetence And Attack “Left” (246 comments)

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  •  but we don't agree (7+ / 0-)

    I see no reason why a government shouldn't be able to sell bonds; I don't see why it inherently represents bad economic management, even for a "country that issues its own currency."

    The public debt is important because it tells us that the economy is being badly managed. It's sort of like the number of inches in a person's waistline telling us that he's eating badly.
    Mmmm. Do you think the ideal waistline measurement is zero?

    Election protection: there's an app for that! -- and a toll-free hotline: 866-OUR-VOTE
    Better Know Your Voting System with the Verifier!

    by HudsonValleyMark on Fri Apr 26, 2013 at 05:17:28 AM PDT

    [ Parent ]

    •  I actually think it's a useful policy tool. (6+ / 0-)

      From an indirect economic standpoint, you always want to keep the people you've loaned money to afloat, so that they can pay you back as much as possible.  Unless, of course, you can palm off that debt on some unsuspecting type, as we saw in the recent derivatives fiasco.

    •  There is no reason (7+ / 0-)

      for "local" governments and agencies not to issue bonds . . . the "household" model works for them.  Borrow now against future income (taxes) for an immediate and ongoing "public good".  And if that doesn't work out then default and go bankrupt.

      Not so for the currency issuing national government, however.  In that case there is no reason for the government to issue bonds, since it can simply issue currency and accomplish the same public good without paying "interest" to anyone (of course that "interest" is the bonds real purpose, which is to be a nationally mandated transfer tax benefiting the wealthy).  Of course if currency printing gets out of hand the resulting "inflation" devalues the currency . . . but no more than uncontrolled borrowing does, since "creating" debt is just another way of creating currency (it's the side benefit to the wealthy that is the problem).

      Fake Left, Drive Right . . . not my idea of a Democrat . . .

      by Deward Hastings on Fri Apr 26, 2013 at 06:10:42 AM PDT

      [ Parent ]

    •  Why not just issue the currency you need (9+ / 0-)

      instead of selling bonds to banks which charge you interest to lend you the currency you could have created interest-free in the first place?

      So you end up where 1/4 to 1/3 of your debt is interest payments (iirc). And will grow from here.

      The long-standing rationale is that politicians will play political games with the currency; Bankers are indifferent to politics.

      Well, that's clearly risible.

      Further, politicians can be directly checked by the voters; whereas Private Banks can shit on anyone they want as they have no checks on them. And now, under our modern Two- or even Three-Tiered system of Law, everyone knows that Bankers have no hint of checks. Especially the Bankers.


      Actual Democrats is the surest, quickest. route to More Democrats

      by Jim P on Fri Apr 26, 2013 at 08:27:29 AM PDT

      [ Parent ]

      •  Bingo ! / nm (3+ / 0-)

        The "extreme wing" of the Democratic Party is the wing that is hell-bent on protecting the banks and credit card companies. ~ Kos

        by ozsea1 on Fri Apr 26, 2013 at 12:16:45 PM PDT

        [ Parent ]

      •  For different reasons... (1+ / 0-)
        Recommended by:
        Words In Action

        You issue debt if there is a public policy purpose for the private sector to hold debt instead of currency.

        Notice in that sentence that there is nothing about issuing debt in order to deficit spend.  It is about whether there is a public purpose to an extremely safe interest bearing financial instrument issued by the currency issuing government.  Under that policy it is possible to make an argument that there are situation where the government should issue debt instruments even in the event of a surplus.

        A couple possible ideas (might not be good ones):
        1) Maybe we want retirees to have a safe investment and that is a good way to do it.
        2) A method for control of long term interest rates.

        •  Currency is debt. Every dollar is a (0+ / 0-)

          certified IOU. Certified because socially recognized. For comparison think of marriage certificates.

          We organize governments to deliver services and prevent abuse.

          by hannah on Sat Apr 27, 2013 at 02:29:38 AM PDT

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          •  Context please... (0+ / 0-)

            In particular context, I am using debt interchangeably with bonds.  Perhaps imprecise, but the point is that bonds have a role in public policy that has nothing to do with financing the federal government.

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