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View Diary: Why deficits don't matter - the reality of government finance (116 comments)

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  •  I don't think so, and have reasons for not (1+ / 0-)
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    psyched

    thinking so, among those reasons is that we've poured enormous amounts of new money into the system  over the last 4 years, but no inflation.  At least not wage and interest rate inflation.  Of course, being a monetary soveriegn, US interest rates are controlled by US policy, not bond vigilantes.

    Think we stopped investing in infrastructure because industry moved to other places.  China has a great infrastucture, shiny and new, cuz American industry wished it so.

    Instead of providing banks with dollars by buying back the bonds they buy, thus giving them a profit, we could introduce those dollars into the economy by hiring people to build a smart grid.  Dollars are dollars as far as inflation is concerned -- inflation doesn't make a distinction between a poor  person's dollar and a fat cat's dollar.

    •  A thought on current policy (0+ / 0-)

      Because the housing crisis saw a 30% drop in housing values, that might be deflationary, so lots of printing might be good to counter the deflationary effect.

      SO my thought is that QE is not about to cause inflation, not in the near term. In fact QE brings some balance to a situation careening out of balance, some stability to an unstable environment. And QE has some stimulative effect, crappy multiplier though.  :~ )

      FDR 9-23-33, "If we cannot do this one way, we will do it another way. But do it we will.

      by Roger Fox on Sat Nov 10, 2012 at 02:46:50 PM PST

      [ Parent ]

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