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View Diary: Krugman is Wrong: The Real Reason to Raise Taxes on the Rich (133 comments)

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  •  Did you completley miss the point? Yes. (3+ / 0-)
    Recommended by:
    Orinoco, NoMoreLies, rgjdmls

    The point is that it is good to borrow when you can actually make money doing so.

    Yes, it's true, debt has an interest payment.  But anyone with even a slight knowledge of economics can tell you that the real cost of a loan is its interest rate minus the rate of inflation.  In the same way, the real value of an investment its its yield, minus inflation.

    Right now, the real yield of a 10 year treasury bond is negative 0.04%.  In other words, the value of what the government has to pay back later is LESS than the value of what they'll get right now, because inflation is higher than the interest rate.  They can actually turn a profit just by borrowing money!  So in real terms, the federal deficit costs the government absolutely nothing, and is actually a net profit for them right now.

    Moreover, "a federal deficit is absolutely necessary to maintain a capitalist economy, because without it there's no room for average citizens to earn a profit and save money."

    Sheesh. A little reading goes a long way to establishing even the most rudimentary reading comprehension...

    •  The problem w/"the point" is is is inaccurate (1+ / 0-)
      Recommended by:
      heineken1717

      Even if the current borrowed money sort of pays for itself because of inflation concern, that does not mean the country should just sit on the debt.  Not when "the point" is to reduce America's wealth imbalance. The national debt is one of the major routes by which wealth concentration has become a problem over the past 40 years.

      Think about it. EVERY YEAR taxpayers pay a half-trillion dollars to lenders ... and that reduces our bedt load by not one penny.  Which means the landers get a half-trillion year in and year out.

      Now, who owns the vast bulk of $14 trillion in debt?  Do the hyper rich have 14 large*large*large*large lying around t leand, or do the poor have an extra $14T?  Correct.

      So, regardless of the low interest rates as compared to inflation, it is still vital to shut down this mass wealth transfer system!

      •  Actually close to $4 Trillion (0+ / 0-)

        is "owned" by Social Security and Medicare Hospital funds. US. And a lot of it is T bonds in pension and mutual funds or directly owned by middle income people who are risk adverse. Lot of them are retired people.

        I'm asking you to believe. Not in my ability to bring about real change in Washington ... *I'm asking you to believe in yours.* Barack Obama

        by samddobermann on Sun Nov 27, 2011 at 06:59:09 AM PST

        [ Parent ]

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