A crazy idea to counter another crazy idea

[Goo For You]

the final paragraph is a mouthful.

"We are living in weird economic times, where many of the usual rules don’t apply and there are big free lunches to be had. But not everything is a free lunch, even now. Sorry."

I took that as him trying to constrain the leftist impulses of some of his readers.

When he talks about economics and not party politics, he's (to many) surprisingly balanced.

[I invented that]

I took that as him trying to constrain the leftist impulses of some of his readers.

When he talks about economics and not party politics, he's (to many) surprisingly balanced.

i took it as him saying "there's no such thing as a free lunch".

[Goo For You]

You and others may be interested in this fine piece on the guy:

http://www.newyorker.com/reporting/2...ct_macfarquhar

I'll spoil the best part: he blames his wife for making him write partisan rants!

[Goo For You]

i took it as him saying "there's no such thing as a free lunch".

Yes, and based on what he wrote above that paragraph, that seemingly "free lunch" is minting trillion dollar coins to get rid of debt problems...

[I invented that]

Yes, and based on what he wrote above that paragraph, that seemingly "free lunch" is minting trillion dollar coins to get rid of debt problems...

thanks captain obvious.

[Goo For You]

thanks captain obvious.

Ok sorry I thought you disagreed with my comment about leftist impulses.

[I invented that]

the platinum coin proposal is the economic equivalent of a perpetual motion machine.

[Goo For You]

In the minds of some leftists, yes. And that's the type of thinking Krugman opposes.

[I invented that]

In the minds of some leftists, yes. And that's the type of thinking Krugman opposes.

krugman says the following about the debt.

Now, the fact that federal debt isn’t at all like a mortgage on America’s future doesn’t mean that the debt is harmless. Taxes must be levied to pay the interest, and you don’t have to be a right-wing ideologue to concede that taxes impose some cost on the economy, if nothing else by causing a diversion of resources away from productive activities into tax avoidance and evasion. But these costs are a lot less dramatic than the analogy with an overindebted family might suggest.
And that’s why nations with stable, responsible governments — that is, governments that are willing to impose modestly higher taxes when the situation warrants it — have historically been able to live with much higher levels of debt than today’s conventional wisdom would lead you to believe.
http://www.nytimes.com/2012/01/02/op...debt.html?_r=0

according to the guru, it's not the debt that matters it's the ability to cover the interest payments through tax increases that matters i guess incurring less debt would just be foolish. why not just increase the debt to cover the interest payments and stop taxing the citizens?

[Goo For You]

according to the guru, it's not the debt that matters it's the ability to cover the interest payments through tax increases that matters

I have a soft spot for people who think they look good when they facepalm Nobel laureates on Internet message boards.

i guess incurring less debt would just be foolish.

Why devise and implement an elaborate fiat money + central bank system and not use the perks that come with it?

(In other areas of politics, do you consider it smart to go for the second best alternative just because a certain constituency actively refuses to embrace modern science? Especially considering that the said constituency built the best alternative, and now seems to have forgotten about it.)

why not just increase the debt to cover the interest payments and stop taxing the citizens?

Good question. In theory, that is, under some circumstances, I guess it might be possible to abolish some forms of taxation and replace them with a system of debt monetization. Maybe we'll see something like that implemented in the future, when all the practical problems (incentives, transparency, etc.) get sorted out.

(That said, the biggest low-hanging fruits are obviously in simplifying the current tax code. Not sure how much (if any) more efficient the aforementioned system would be compared to an optimal tax regime. Besides, there's always huge risks involved in regime changes.)

[I invented that]

I have a soft spot for people who think they look good when they facepalm Nobel laureates on Internet message boards.

those were krugman's words, you have no response so you attempt to ridicule.

Why devise and implement an elaborate fiat money + central bank system and not use the perks that come with it?

(In other areas of politics, do you consider it smart to go for the second best alternative just because a certain constituency actively refuses to embrace modern science? Especially considering that the said constituency built the best alternative, and now seems to have forgotten about it.)

so you believe debt is good and more debt is gooder.

Good question. In theory, that is, under some circumstances, I guess it might be possible to abolish some forms of taxation and replace them with a system of debt monetization. Maybe we'll see something like that implemented in the future, when all the practical problems (incentives, transparency, etc.) get sorted out.

(That said, the biggest low-hanging fruits are obviously in simplifying the current tax code. Not sure how much (if any) more efficient the aforementioned system would be compared to an optimal tax regime. Besides, there's always huge risks involved in regime changes.)

if debt doesn't matter, the practice of punishing productive citizens through taxation should be abolished.

[Goo For You]

The answers to your continued confusion lie in the paragraphs you replied to. Maybe take a moment to calm down and read through them again?

[I invented that]

ya got nothin, huh?

[Goo For You]

Help me out here by reiterating, preferably in more than one sentence, which part of Krugman's argument still confuses you and how. If you'd care to formulate a thoughtful question, I'd be happy to answer it.

[I invented that]

krugman contends, debt is no problem as long as the tax revenues can cover the interest payments. when we outspend the revenue krugman suggests a tax increase, what actually happens is we sell more debt. if we financed the interest with more debt we would could eliminate taxes and still have an unlimited amount of money. remember krugmans point about debt, as long as interest payments are covered it's not a problem.

[Goo For You]

You left me to wonder what your actual question is. Are you asking what keeps us from replacing all tax revenue with a system of debt monetization?

Like I said in my earlier post, there are several problems with implementing such a system:

1) Would such a system create bad incentives?
2) How would we make it transparent to ensure accountability?
2) Would it be any more better in terms of economic efficiency than an optimal tax regime?
3) Could something go terribly wrong when switching to such a system?

As you can see, these reasons have nothing to do with principles or ideology; economists of Krugman's level deal mainly with questions of efficiency and pragmatism. And in case you're wondering, it's not likely that there will be favorable answers to these questions any time soon; hence, you won't be seeing Krugman advocate such a policy. (Remember, he's firmly against MMT theorists, who are in favor of something similar.)

[I invented that]

You left me to wonder what your actual question is. Are you asking what keeps us from replacing all tax revenue with a system of debt monetization?

Like I said in my earlier post, there are several problems with implementing such a system:

1) Would such a system create bad incentives?
2) How would we make it transparent to ensure accountability?
2) Would it be any more better in terms of economic efficiency than an optimal tax regime?
3) Could something go terribly wrong when switching to such a system?

As you can see, these reasons have nothing to do with principles or ideology; economists of Krugman's level deal mainly with questions of efficiency and pragmatism. (And in case you're wondering, it's not likely that there will be favorable answers to these questions any time soon; hence, you won't be seeing Krugman advocate such a policy.)

i was simply pointing out the absurdity of krugman's statement through the use of exaggeration. thanks for playin. in closing, i would just like to say, i bet this douche puts me on ignore

[Goo For You]

The confusion is strong in this one.

Thanks to all who repped me saying I'm wasting my time talking to a well-known troll, but that's ok. I love talking about this stuff, and there are always other people listening.

[HeinousMark]

...you have no response so you attempt to ridicule...

ya got nothin, huh?

Damn that's some delicious irony........I've gained 20 pounds just reading this thread.

[Goo For You]