Project-Syndicate serves a reader who is equally dissatisfied with both one-sided advocacy, and by antagonistic dismissal of opponents. Does Prof. Boskin of Hoover believe Nobelist Prof. Krugman is "beyond irresponsible?"
If so I can only invite him to go publish on Commentary, or National Review Online, where his level of prose will be matched by his commitment to obfuscation, rather than enlightenment of the public.
His claim that entitlement spending is unbalancing the federal budget is what one would expect from those who mostly listen to radio, and reject David Brooks as a moderate. There is substantive literature which documents what other commenters have already pointed out - balancing FICA and Medicare is our easiest tax issue.
This comment has the EU situation precisely reversed. Prof. Rogoff is very clear that whatever else we'd like to say about EU capital, we must admit that huge amounts have been simply lost. Pretending that it wasn't is a kind of fraud.
More importantly, the way most of that capital was lost was by plain fraud by politicians (eg in Italy and Greece) or by speculators exploiting vulnerable homebuyers (as most of the OECD).
Rogoff's point is not really Keynesian, but rather a simple matter of honest, non-creative accounting. Nobody can re-create the money which was lost. Once we stop that self-deception, we proceed with the harder work of political integration and effective regulation.
Well, private corporations (incl cities, etc) are issuing bonds too. Lending increases money supply whether the debt is a security or just a promissory note
The difference between plain old "printing money" vs. Federal borrowing is that the debt creates offsetting entries in balance sheets - the lender gives the borrower some cash, but in return the lender obtain a valuable asset - the promissory note and its cash flow. Same for the borrower who got cash, but also has to book a liability and make payments. So it is clear to each party (and their auditors!) that no wealth was created and nobody is pretending there was.
Printing money, on the other hand, is an attempt to create wealth without acknowledging that a corresponding debt has been incurred. It is no different from a counterfeiting operation, if you look at it in bookkeeping terms. The Wikipedia article on "Quantitative Easing" is helpful here.
The finances of a modern state are more and more like any other corporation, and that pattern is probably all for the better. Of course, it is a monopoly, which can only be allowed in a free market system when it is well and carefully regulated.
There are many examples of successful, well-regulated monopolies of many sizes. The problem is, how to get our Govt. to become one.
It's just astonishing at this date to read an article on the Rogoff-Reinhart paper which does not mention that it had blatant admitted errors, not just in calculations, but as Brad DeLong points out, in the essence of its non-parametric method. It was never the data which showed a "threshold" effect where debt became dangerous. It was only the authors who created an arbitrary-sized category over 90% debt-to-GDP.
Anyone who stumbles across Prof. Hausman's dubious apologia here, should quickly turn to Prof. DeLong's piece on this same site. There is a stimulating discussion already in the comments there too.
Replying to Clint -It's not the ability to issue currency which gives the central bank influence over interest rates. All lending adds to the money supply, whether the borrower is private or public.
Rather, it is arbitrage relationships between the overnight rates, discount, etc and the rest of the debt market which makes gives the central bank its 'leverage.'
The Debt-Growth Controversy
Project-Syndicate serves a reader who is equally dissatisfied with both one-sided advocacy, and by antagonistic dismissal of opponents. Does Prof. Boskin of Hoover believe Nobelist Prof. Krugman is "beyond irresponsible?"
If so I can only invite him to go publish on Commentary, or National Review Online, where his level of prose will be matched by his commitment to obfuscation, rather than enlightenment of the public.
His claim that entitlement spending is unbalancing the federal budget is what one would expect from those who mostly listen to radio, and reject David Brooks as a moderate. There is substantive literature which documents what other commenters have already pointed out - balancing FICA and Medicare is our easiest tax issue.
Europe’s Lost Keynesians
This comment has the EU situation precisely reversed. Prof. Rogoff is very clear that whatever else we'd like to say about EU capital, we must admit that huge amounts have been simply lost. Pretending that it wasn't is a kind of fraud.
More importantly, the way most of that capital was lost was by plain fraud by politicians (eg in Italy and Greece) or by speculators exploiting vulnerable homebuyers (as most of the OECD).
Rogoff's point is not really Keynesian, but rather a simple matter of honest, non-creative accounting. Nobody can re-create the money which was lost. Once we stop that self-deception, we proceed with the harder work of political integration and effective regulation.
When Is Government Debt Risky?
Well, private corporations (incl cities, etc) are issuing bonds too. Lending increases money supply whether the debt is a security or just a promissory note
The difference between plain old "printing money" vs. Federal borrowing is that the debt creates offsetting entries in balance sheets - the lender gives the borrower some cash, but in return the lender obtain a valuable asset - the promissory note and its cash flow. Same for the borrower who got cash, but also has to book a liability and make payments. So it is clear to each party (and their auditors!) that no wealth was created and nobody is pretending there was.
Printing money, on the other hand, is an attempt to create wealth without acknowledging that a corresponding debt has been incurred. It is no different from a counterfeiting operation, if you look at it in bookkeeping terms. The Wikipedia article on "Quantitative Easing" is helpful here.
The finances of a modern state are more and more like any other corporation, and that pattern is probably all for the better. Of course, it is a monopoly, which can only be allowed in a free market system when it is well and carefully regulated.
There are many examples of successful, well-regulated monopolies of many sizes. The problem is, how to get our Govt. to become one.
Who’s Afraid of the Big Bad Debt?
It's just astonishing at this date to read an article on the Rogoff-Reinhart paper which does not mention that it had blatant admitted errors, not just in calculations, but as Brad DeLong points out, in the essence of its non-parametric method. It was never the data which showed a "threshold" effect where debt became dangerous. It was only the authors who created an arbitrary-sized category over 90% debt-to-GDP.
Anyone who stumbles across Prof. Hausman's dubious apologia here, should quickly turn to Prof. DeLong's piece on this same site. There is a stimulating discussion already in the comments there too.
When Is Government Debt Risky?
Replying to Clint -It's not the ability to issue currency which gives the central bank influence over interest rates. All lending adds to the money supply, whether the borrower is private or public.
Rather, it is arbitrage relationships between the overnight rates, discount, etc and the rest of the debt market which makes gives the central bank its 'leverage.'