The US Downgrade Decision is Irrelevant

Bill Mitchell explains why:

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.”

Steve Keen Debates Chris Caton on the Financial Market Crisis

A very nice debate here:

“ABC PM Debate with Chris Caton,” ABC Radio, August 7th, 2011.

Steve Keen makes a quite good point about private debt to GDP ratios. His opponent complains that debt to GDP ratios make no sense, because you are comparing a stock to a flow, yet public debt to GDP ratios are used all the time by opponents of government, to gauge the burden of debt. Either it is valid to use this measure or all such ratios (whether private or public) are invalid.