Monday, July 27, 2015

IMF Paints Dim Picture for Europe's Debt Addicts, Suggests More Debt May Be Needed

July 27, 2015
IMF paints dim picture for Europe, suggests more money printing may be needed

BRUSSELS/FRANKFURT, July 27 (Reuters) - The International Monetary Fund warned on Monday that the euro zone's prospects were modest and that more money printing than planned may be needed.

Oops. Did I say debt? I meant money printing! How embarrassing! Sorry about that.

Why would the world's governments ever borrow money when they can simply print it as needed? It would make no sense! What was I thinking?

But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. - Ben Bernanke (2002)

See? Only a fool would borrow money when it can be printed at essentially no cost! Now, if I could just figure out why our country has $18 trillion in federal public debt. Did we make a large purchase using a cash back credit card? That's not just smart, it's wicked smart!


mab said...

Now, if I could just figure out why our country has $18 trillion in federal public debt.

Not that it matters much, but federal public "debt" is less than $18 trillion. The $18 trillion includes non-public debts, aka inter-governmental "debts"/bookkeeping entries.

As long as the "experts" keep the public worried about our impending national bankruptcy, the looting can continue.

I can't wait to hear all the presidential candidates dutifully fearmonger about the national debt.

MSM - what a sham. American Pravda! Freedom of speech? Sure, as long as you don't challenge certain beliefs.

Stagflationary Mark said...


For what it is worth:

National debt of the United States

Economists also debate the definition of public debt. Krugman argued in May 2010 that the debt held by the public is the right measure to use, while Reinhart has testified to the President's Fiscal Reform Commission that gross debt is the appropriate measure. The Center on Budget and Policy Priorities (CBPP) cited research by several economists supporting the use of the lower debt held by the public figure as a more accurate measure of the debt burden, disagreeing with these Commission members.

There is debate regarding the economic nature of the intragovernmental debt, which was approximately $4.6 trillion in February 2011. For example, the CBPP argues: that "large increases in [debt held by the public] can also push up interest rates and increase the amount of future interest payments the federal government must make to lenders outside of the United States, which reduces Americans' income. By contrast, intragovernmental debt (the other component of the gross debt) has no such effects because it is simply money the federal government owes (and pays interest on) to itself." However, if the U.S. government continues to run "on budget" deficits as projected by the CBO and OMB for the foreseeable future, it will have to issue marketable Treasury bills and bonds (i.e., debt held by the public) to pay for the projected shortfall in the Social Security program. This will result in "debt held by the public" replacing "intragovernmental debt".

Is it any wonder the "experts" keep the public worried when we can't even all agree on the definition of federal public debt?

Stagflationary Mark said...

As someone worried about our country's long-term economic future, I prefer to think of it as $18 trillion. Big number.,Scary stuff.

So what am I doing to protect myself? Well, nearly my entire nest egg sits in long-term inflation protected U.S. treasuries. That's what.

Call me a stock market "vigilante", lol. Sigh.

mab said...

I don't see Gov't debt as a "burden" at all. Shun the non-believer! I see it as just the opposite, an asset held by the public. And that's why I see an important distinction between public and inter-governmental "debt".

As for Krugman and the rest of the "main-stream" eCONomist, the best you'll get from them is a half truth.

An expanding economy needs an increased money supply. The notion that fraudulent and usurious private bank lending can "foot the bill" is absurd.

Stagflationary Mark said...


The debt certainly isn't a burden to me. I'd much rather own a long-term piece of it than bury dollars in the backyard!

And for those who think rates must rise over the long-term, I would simply ask why. The answer better not be because we're printing so much money. It takes money to buy bonds.