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View Diary: Beyond Palpable (267 comments)

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  •  Read Krugman. (10+ / 0-)

    I know you've read about too much spending b/c I've read it too.

    Paul Krugman, OTOH, is worried about a deflationary spiral: and IMHO, that's a bigger risk than a bit of inflation right now.

    Over the last 30 years, the Democrats have moved to the right, and the Republicans have moved into a mental hospital. -- Bill Maher

    by Youffraita on Sat Jun 12, 2010 at 05:44:51 PM PDT

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    •  Peak risk (5+ / 0-)

      Deflation and delevaraging are very closely connected in a debt based monetary system.  Deleveraging is necessary to end the bubble.  We are drowning in debt -- more is not better, not now, not ever.

      Leverage is also risk -- they grow together. We are entering peak risk, all systems overextended.  Public safety is all about lowering risk.  So is national defense.  Deleveraging is our top national security priority -- the public gets it.

      Leverage implies value that does not exist -- as Stoneleigh at Automatic Earth states it, overlapping claims to the same assets.  Some excess claims need to be erased.  As a progressive I say that the claims of the bondholders go first.  More debt ignores that priority.

      Time for a jubilee -- bondholder haircuts, French Revolution style.

      The Shock Doctrine by Naomi Klein -- best book ever, I nominate for a Nobel Prize!

      by xaxado on Sat Jun 12, 2010 at 06:11:18 PM PDT

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    •  But our deficit is already over 10% (1+ / 0-)
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      I understand that since nobody on the planet has a job at the moment, and since the recovery has been far too jobless, that suggests deflation.  But how much greater, exactly, are we to allow the deficit to become?

      I want to stress that even if there's a risk from it, I support what I understand to be Obama's plan to clean up the oil spill with a Works Progress Administration-type of public works project.  I support this even if it will make the deficit grow (though I'm sure it wouldn't be as big as our entitlements or our runaway "defence" spending).  

      But how big, exactly, are we going to let our deficit become?  China, who allows us to run such deficits by buying our treasuries, is already a bit spooked by the size of our deficit, and has made moves to diversify.  Though no other currency is prepared to take over the Dollar's role as the world's reserve currency, there's no reason that China can't--and won't--diversify to a BASKET of currencies, and perhaps that trading partners will begin to denominate trade in whatever their own currencies are, instead of the Dollar.  What then?  We won't be able to sustain 10% deficits anymore without inflation, if China and others pull out of our treasury securities in sufficient numbers.

      Please, no hysterical responses, lying about what I just wrote, if there are any shills out there.  But although, as mentioned, I support the Works Progress Administration sorts of initiatives, I can't see us being able to pretend that there's no danger of China and others diversifying from Treasuries, especially since they've recently begun to do so here and there.

      "Arguments are to be avoided. They are always vulgar, and are often convincing." -- Oscar Wilde

      by Villagejonesy on Sat Jun 12, 2010 at 06:46:31 PM PDT

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      •  Reality check (3+ / 0-)
        1. china needs us more than we need them.
        1.  You aren't going to overcome debt and deficits in an economy like this. You can't cut your way out of this. The twin towers of paying down deficits and debts are spending AND taxes. The later can not be a factor until you have a strong economy even if you raised the tax rates right now.

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