Galbraith: The danger posed by the deficit ‘is zero’

Washington Post ^ | May 12, 2010 | Ezra Klein

[C19fan]

EK: You think the danger posed by the long-term deficit is overstated by most economists and economic commentators.

JG: No, I think the danger is zero. It's not overstated. It's completely misstated.

[C19fan]

The apple does not fall from the tree; James Galbraith's father was a leftist too.

[GeronL]

*facepalm*

It’s the debt the deficit is just what we add in one particular year, besides interest

[Howie66]

“James Galbraith is an economist and the Lloyd M. Bentsen Jr. chair in government and business relations at the University of Texas at Austin.”

This is all you need to know, to be convinced that Mr.Galbraith is a blithering idiot.

[Uncle Ike]

Commodities (the ‘basics’) are inflating, while wages (the wherewithal to pay for the ‘basics’) are stagnant-to-deflating...

Something’s gotta give.....

[null and void]

The danger is zero. Hmmmm, as long as Zero is in the WH we are all in danger. Maybe he’s speaking in code....

[KarlInOhio]

Let me guess, he isn't taking the libertarian/conservative argument that the real problem is total government spending no matter whether the funding is taxing or borrowing.

If the markets thought that the interest rate would be forced up by funding difficulties 10 year from now, it would show up in the 20-year rate. That rate has actually been coming down in the wake of the European crisis.

Maybe just because we are the best of a bad lot, like having stage 3 cancer in a ward of people with stage 4 or brain dead but on life support. A real question is how quickly can things go bad when people (read the Chinese) decide to stop supporting our spendthrift ways. The Greek government was going along wonderfully spending more then they took in, until people realized "this is stupid, I don't want to be stuck with Greek bonds" and interest rates skyrocketed. That can't happen if you have no debt or deficit, and is almost guaranteed to happen in our current situation. All it takes is the first few rocks of the landslide to happen (like an insufficient number of willing bond buyers forcing some banks to buy them to keep their seats as primary bond dealers... whoops, already happened a few times) and then things can go to hell in a hurry. Malibu cliffside houses have a wonderful seaview, until the hill gives away.

[Scotsman will be Free]

Anyone who listens to any so called economist by the moniker of Galbraith, much less seeks out their opinion is stupid beyond description.

[VRWCmember]

Anytime you hear somebody named Galbraith talking about economics you can be sure of two things:

1. He is WRONG.
2. He is POMPOUSLY wrong.

[Mister Da]

Leftists have no common sense.

[Pollster1]

I'm sure that if a high-income individual (one one-millionth the income of the United States) with an income of $2,381,000 a year decided to spend $3,550,000 a year, Galbraith would reach the same conclusion. What could possibly go wrong when you're spending almost double what you're bringing in with nothing to show for the excess expenditure?

[milwguy]

Mugabe felt the same way in Zimbabwe....He just kept putting more zero’s on the bills and thought everything would be ok.

The Zimbabwean economy is finally turning around because Mugabe has abandoned their currency and now the USD is the main medium of exchange.

As long as the world has faith in the USD, what Galbraith says is true. When the world loses faith in the USD, which will happen sooner rather than later, the fallacy of Galbraith’s views will be exposed.

No paper currency in history has survived, and the Weimar German Republic should serve as a warning to the idiots in Washington DC.

Government is the only institution that can take a valuable commodity like paper, and make it worthless by applying ink. -Ludwig von Mises

[jnsun]

James Galbraith is an economist and the Lloyd M. Bentsen Jr. chair in government and business relations at the University of Texas at Austin.

Academic "economists" are invariably wrong.

They totally failed to predict nor did they effectively correct the most recent "recession." They are armchair quarterbacks with no skills, and blithering puppets for the politics in power at the moment.

The Soviet Union had banks of professional "economists", and we see how prosperous it was.

The current European Union has dozens of "economists" stashed away in Brussels; and we see how effective they are.

The Brookings Institution has dozens of "economists", and we see what arrogant bigots they are.

An "economist" is like a lawyer or politician, harboring a consuming egocentric desire to be important in human commerce, but having no talent whatsoever that contributes to its material prosperity.

Such egomania obfuscates the rational analysis of technical, historical, and social phenomena.

Johnny Suntrade

[null and void]

The lights are a flashing
the bells are a ringing
the whistle is blowing in vain
if you stand on the tracks
ignoring the facts
you can’t blame the wreck on the train

[sickoflibs]

RE :” I was at a meeting in Cambridge last month where the managing director of the IMF said he was against deficits but in favor of saving, but they're exactly the same thing! A government deficit means more money in private pockets.
.....This is appalling in Europe right now. The Greeks are being asked to cut 10 percent from spending in a few years. And the assumption is that this won't affect GDP. But of course it will! It will cut at least 10 percent! And so they won't have the tax collections to fund the new lower level of spending. Spain was forced to make the same announcement yesterday. So the Eurozone is going down the tubes ”

I read the article, typical socialist nonsense you also get from Paul Krugman. He wants to run up huge national debts with Keynesian welfare handouts then raise taxes to fund them (the death tax yet)claiming that would promote savings(???). He pretty much claims we can borrow forever. His payroll tax holiday is welfare in a sense because those are entitlement taxes, and those are the only federal taxes many pay.

Look at his analysis of Greece above: Of course Greece is in a no win situation now that they followed advice like his. Greece debt and government/deficit dependence is so high any efforts to fix it will put them in a depression and lower tax revenues. Hardly an argument for his case of following them.

[stephenjohnbanker]

The Road to Hell !

[sickoflibs]

RE :"The Road to Hell !"

We started down that road sometime in 2001 and we have drove pretty far down it since then, Obama in high gear. The difference between us an Greece is we create our own currency which we pay our debts in, and our currency is still the world standard(not all countries can get away with this). So we will never need a direct bailout, except new T-bill buyers.

You think Obama loaded up on gold in 2009? I bet Pelosi did.

[stephenjohnbanker]

“You think Obama loaded up on gold in 2009? I bet Pelosi did. “

Of course.

[mlocher]

So there are two possibilities here. One is the theory is wrong. The other is that the market isn't rational. And if the market isn't rational, there's no point in designing policy to accommodate the markets because you can't accommodate an irrational entity.

Galbraith never heard the saying, "The market can stay irrational longer than I can stay liquid." Markets move long term on fact, but markets have a keen eye on short term events. Right now there is so much liquidity in the economy, and the the economy is so shaky, that the market is willing to put its cash in AAA US treasuries. We saw this rush to safety last week, as Galbraith stated.

However, The interest rate spread between 30 day and 30 year US treasuries are close to historic highs. This is a sign that the market is concerned about debt. Should the stock market move higher, then this spread will go up. The debt bubble in the US will be exposed by the markets, but it will be the last nation where it is exposed.

This piece by Wapo is clearly a hit piece trying to mitigate people's concerns about the debt. I wonder how many economists they had to interview to get the answers they wanted -- and a guy with a recognizable name like Galbraith, no less.

[VOA]

“
Maybe just because we are the best of a bad lot, like having stage 3
cancer in a ward of people with stage 4 or brain dead but on life support.
“

We might have improved chances of “remission”.
If we actually had a real President.
That would have told Greece/Eurozone:
“We are BROKE. But we can give you the number of a banker/lender
in Beijing”.

How insane are we: borrowing money from China...to make a loan to Greece.
We are insane to the point of firming up our impending financial death.