Bill Mitchell, “S&P Decision is Irrelevant,” Billy Blog, August 8, 2011.This sort of thing happened to Japan repeatedly, but has not affected its ability to borrow at low rates. Nor has Japan defaulted on its debt.
Curiously, I just saw this video below where Greenspan understands the basics of MMT and why there is no risk of US default (from 0.51), where he says:
“The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default.”
Right. We don't have to panic because the U.S. government might not pay its debt. We can instead panic because it might have to pay the debt by printing money.
ReplyDeleteIf there is ever any default, that will be a plain political decision, and not because there is "no" money.
ReplyDeleteThe Fed has bought back debt in every year by its direct powers of money creation since the 1930. Has this ever led to hyperinflation?
Of course not. In particular, the US dollar is the global reserve currency, so when foreigners obtain it, they are not even necessarily using to buy things in the US, as they can buy any number of commodities on world markets with it in international trade.
"since the 1930s"
ReplyDeletePrivate debt is between producers, whereas public debt is between parasitic government and producers. Hence the larger the public debt, the larger the parasitic consumption of government that renders society poorer, whereas private debt does not constitute any parasitic consumption at all. That's the crucial difference.
ReplyDelete"whereas private debt does not constitute any parasitic consumption at all. "
ReplyDeleteThere are any number of private loans for pure consumption purposes. Get your facts straight.
Of course, except private debt is paid off by private borrower with their production, actual hard work. Government, on the other hand, produces nothing. That is why we call government consumption parasitic consumption. And that is why public debt renders society poorer, whereas private debt does not.
ReplyDelete"Of course, except private debt is paid off by private borrower with their production, actual hard work."
ReplyDeleteThis is nothing but shifting the argument. A logical fallacy.
"Government, on the other hand, produces nothing."
Rubbish: it provides public goods and services: law and order, defense, justice, public infrastructure (free at the point of use), heath care - the basics of a modern industrial economy.
Big Government produces nothing relative to Small Government. Sure when you nationalize health care or whatever area which private sector does more efficiently, government obviously produces something, but it has negative effect on overall productivity relative to Small Government. Good example is when nationalize the whole economy, like in socialist countries. Then Big Government produces everything, at the same time rendering the society as poor as only possible, relative to Small Government.
ReplyDeleteIt's a psychological media effect. You basically watch television and see that government produces something and feel socialist/keynesian happiness but you don't see what private sector would have produced if government were not stealing funds from private sector (regular or inflation taxes) that made the government production possible in the first place.
"government obviously produces something,"
ReplyDeleteLaughable backpedalling. So now your statement above is just revealed as the rubbish it is.
"Sure when you nationalize health care or whatever area which private sector does more efficiently, "
The private sector doesn't do it more efficiently - privatised systems add an extra layer of insurance bureaucracy wasting money and resources deciding who gets insurance/coverage and who even gets treatment and who doesn't.
The privatised systems costs more as a percentage of GDP and don't deliver better outcomes than the best public systems.
LK, laughable is when Keynesians try to take credit for the benefits of Small Government like "law and order, defense, justice, public infrastructure". Keynesian deficit spending has nothing or very little with any of those. Usually it is purely parasitic consumption relative to Small Government. Hence, keynesian deficit spending produces nothing, and Big Government produces nothing, relative to Small Government. And keynesian spending is what we talk about here, so it is dishonest to interpret my words otherwise.
ReplyDeleteIf private health care was really less efficient than public one, you would not need to force (tax) people to join it. Public health care with voluntary contributions would simply outcompete private one on the free market. That would be honest. You actually can do it, unlike with, say, law and order, where State is indeed irreplaceable. Instead you first use thuggish force and then spread insolent propaganda posing as a benefactor.
@Joanna Liberation:
ReplyDeleteThe US spends substantially more on healthcare per capita than all other developed countries but achieves lower health outcomes. Even worse a significant proportion of the US population doesn't have access to healthcare.
There's a rather good article on the subject here:
http://lanekenworthy.net/2011/07/10/americas-inefficient-health-care-system-another-look/
Another point is that there is no hard and fast distinction between public and private in this context. Broadly private systems like those in Germany and France achieve decent outcomes, despite being private, and broadly public systems like those in the UK achieve decent outcomes, despite being nationalised:
http://www.washingtonpost.com/wp-dyn/content/article/2009/08/21/AR2009082101778.html
"If private health care was really less efficient than public one, you would not need to force (tax) people to join it."
ReplyDeleteThe force necessary to redistribute a comparatively small amount of resources to ensure universal access to health care is completely justified by utilitarian ethics, especially to stop the free rider problem.
As for taxes being "evil, coercive theft", the majority of Americans - and the public of virtually any country you care to name - don't see it that way:
“The IRS Oversight Board conducted an independent poll in 2005 that found 96 percent of the respondents agreed ‘it is every American’s civic duty to pay their fair share of taxes.’
The Pew Research Center in a similar study in 2006 found 79 percent of the respondents said that cheating Uncle Sam was ‘morally objectionable.’
S. Maxwell, 2000. The Price is Wrong: Understanding What Makes a Price Seem Fair and the True Cost of Unfair Pricing, John Wiley & Sons, Hoboken, N.J. p. 146.
"Public health care with voluntary contributions would simply outcompete private one on the free market."
It already does: people can vote to abolish their national health care systems easily. They don't.
There is no free rider problem in health care: no contribution, no service. It's not like a person can sneak up into a hospital and surreptitiously get hospital care. Funny, maybe you start writing stand-up shticks? Leftists are usually good at that (really).
ReplyDeleteI too believe it is my duty to pay my fair share of taxes and that cheating Uncle Sam is morally objectionable. I simply happen to also believe that majority should have legitimate reasons to force government aggression down minority throats.
Of course every goverment aggression is always supported by majority of people. You keep stating the obvious like it is supposed to legitimize anything. Actually, even totalitarian governments can hold on to power only by majority support, so you might also correctly argue that people can always overthrow their governments if they don't like their national health care systems. Again, I simply happen to believe that majority should have legitimate reasons to force government aggression down minority throats.
"There is no free rider problem in health care: no contribution, no service."
ReplyDeleteA pathetic, immoral view. You deny a child or mentally ill person treatment because they made no contribution?
In the case of able bodied people who work, and who benefit from public health systems, they should pay a fair share, even those minority who dont want to.
"I simply happen to also believe that majority should have legitimate reasons to force government aggression down minority throats."
They already do: it's called consequentialist/utilitarian ethics.
TJ, I've talked with many socialists who claim Cuba has top notch health care, on par with western countries and better. It's like belief in God. If you believe some country's health care is better, then it probably is. For you. But why don't you let me choose? If each and every person can choose what toilet paper they buy, then it is absurd to propose everyone should be forced to pay and use one single health provider. I'm simply against any monopoly that is not really necessary. Is that unreasonable?
ReplyDeleteMe? Like if I owned a hospital or was a doctor? Yes, I would likely deny, unless I was rich or could find charity funding. And I bet you would all the more deny. Note if you wanted to help the poor, you would simply help the poor, rather than force others to help the poor.
ReplyDeleteRight, utilitarian, not majority per se. Government aggression does not become legitimate just because it is supported by majority. Is that really so wild an idea to accept?
"Note if you wanted to help the poor, you would simply help the poor, rather than force others to help the poor."
ReplyDeleteWe've already been through this rubbish.
If you want to help the poor the most effective way to do it is by provision of basic public goods (like health care) by taxation.
The moral justification for that comes from a consequentialist/utilitarian argument.
It could also by justified by Kantian ethics, Rawl's human rights objectivism, G. E. Moore's agathistic consequentialism, W.D. Ross's ethics, etc.
About the only ethics that you can use against it would be natural rights, which in past conversations you've said you don't support.
Also, your last question of your emotional warfare has nothing to do with compulsory public health care. I can easily imagine a tax to subsidize private health care of the poorest. Can you? Of course, as any government aggression, it will actually hurt the poorest. Still, it is a solution to the imaginary free rider problem of yours.
ReplyDelete"Of course, as any government aggression, it will actually hurt the poorest."
ReplyDeleteWhat garbage. Taxation ensures law and order. So even this "government aggression", say, against criminals actually actually just hurts the poor?
You're an object lesson in where this sort libertarian buffoonish nonsense leads.
Aggression is initiation of physical force against persons or property. There is no government aggression against criminals. At least there should not be. There is merely government protection against criminal aggression.
ReplyDelete"Taxation ensures law and order". Cool. I mean, there is a pattern isn't it. When you defend deficit spending, you take credit for law and order. When you defend compulsory public health care, you take credit for curing poor babies. Etc, etc, even though one can imagine much simpler ways to achieve the same. I guess you must really be out of ideas. But I still can't understand your drive to subsidize the rich and create government monopolies. It's like, okay, you tax people by inflation, rendering them unemployed, and give Coca Cola's owners $1 billion because they then may or may not create new jobs. Or, you nationalize Coca Cola, tax people, and in exchange give them "free" pack of Coca Cola every week. After all, rich people can still buy Pepsi with whatever's left after the tax... but the poor get stuck with Coca Cola. You keep giving more and more options to the rich, less and less to the poor. Finally, you call yourself the poor's biggest benefactor and Austrians are allegedly the bad guys. Tell me, if the poor are too ignorant to know better, is there any hope left for them?
"It's like, okay, you tax people by inflation, rendering them unemployed, "
ReplyDeleteI repeat: the main effect of expansionary fiscal policy during times of high unemployment and idle resources is to increase output and employment.
Curiously, even some Austrians understand this:
"Perhaps an historical example will elucidate what we mean. Policies based on Keynesian macro-economic recipes might have succeeded (had they then been tried) in 1932 and did succeed in 1940 because it so happened that at the bottom of the Great Depression as well as during the Second World War all sectors of the economy were equally affected. In 1932 any kind of additional spending on whatever kind of goods would have had a favourable effect on incomes because there was unemployment everywhere, as well as idle capital equipment and surplus stocks of raw materials."
Lachmann, L. M. 1973. Macro-economic Thinking and the Market Economy: An Essay on the Neglect of the Micro-Foundations and its Consequences, Institute of Economic Affairs. p. 50.
"Tell me, if the poor are too ignorant to know better, is there any hope left for them? "
Straw man nonsense. Nowhere above do I claim that the "poor are too ignorant".
The problem with right-wing libertarians is that they don't make any sense from a legal, anthropological or ethical point of view!
ReplyDeleteProperty is just as coercive as taxes if you put some thought into it; or, but the way, as justice or law. Also a wage earner is also slave and lacks real freedom as it depends on others properties to provide itself.
So it's just a matter of finding the optimal (the one where the most progress can be made) 'coercive framework' because any human society can't be really free.
Professor Selgin
ReplyDeleteYou should know better. Every bit of debt was "bought" with already created money. Its like putting money from a checking account into a savings account. The govt doesnt just give someone a $100,000 bond that pays 3% interest, they must have the $100,000 first. Then when the bond is "paid off" the money stops earning interest as if money was transferred from a savings account back into a checking account. No money is "printed" to pay off a bond. Nothing scary about it.
You can sleep tight at night no Weimar Germany or Zimbabwe.
Leverage, your argument is perfectly generic, could be used to legitimize any state coercion whatever. Of course in truth it does not legitimize anything. Sure it is coercion, say, to make it illegal for people to kill each other. If you define aggression in that trivial way, then you are simply back with other animals. Also, wage earner is a nearly 100% slave only in a socialist country because there exists only one single employer. Normally it is never binary though; the more state aggression (nontrivially defined), the more slavery. A libertarian state is basically an effort to decrease slavery to a minimum.
ReplyDeleteLK, no, because money is not unique in its function as a store of value. Every valuable good out there has a function of a store of value, so even money designed to be nonreproducible like bitcoins have pretty high elasticity of substitution with producible commodities. And government monopoly fiat money? Ridiculous. Fiat money is freely producible by people who have every motivation to produce, so it's function as a store of value is significatnly worse than even most producibles. Repeating your mantras cannot change that.
ReplyDeleteJL, your preference for one coercion over other is purely subjective, the same could be said about that supposed 'decreased slavery to a minimum'.
ReplyDeleteA generic argument does not make it false. You're a just an oppressor like anyone else, only that you THINK that one form of oppression ( is 'less bad' than an other (removing any sort of welfare or state intervention into the economy).
This is just pure faith and if you went to try it you can try to create your own state, meanwhile will have to live on a nation and accept the social fabric as it is. Don't fall on false moral arguments when by your own "logic" your preferred state of affairs is too coercive.
Leverage, get out of your Ivory Tower and ask any regular person if protecting their lives and property is merely "subjective preference for one coercion over other". I don't think even most of the criminals share your view. Well, again, leftist thinking is basically the law of the strongest. Note the only person who uses moral arguments in this exchange is LK ("cheating Uncle Sam was ‘morally objectionable'", "A pathetic, immoral view" etc).
ReplyDeleteIt's you who is incoherent not LK by your own standandards.
ReplyDeleteI'm not against protecting your own property and live, what I'm saying is to what extend do you carry this argument (some sort of welfare state or economic interventionism) is a subjective preference. What you think is protection others think is protection too.
The problem is you are confusing that under a capitalistic system all transactions are free and there is no coercion caused by property and money. This is simply false, so your whole thinking framework falls apart and with the demand of intervention or transfers people is protecting itself like just you want to pay taxes to have a police and judicial system to protect yourself.
Leave straw man a part.