Is the US economy in recession?

[regexcellent]

Actually he has as much as he wants. The amount of money is pretty much a number on someone's computer somewhere.

[Ben Kenobi]

How much money does Bernanke have, you lunatic?

Probably about double the current debt. He's already burned through about 1/3rd of it all in just 4 years. Unless spending is cut - I'd estimate about another 8 years will be it. Going any higher than he's at now is going to net him very little in the way of stimulus, but is going to increase the debt just as much as previous.

[Kidlicious]

Debt will drive depression. The more debt you have - the greater the long term deflationary effects. Doubling your debt to keep things afloat for 4 years is a bad deal. Even as cheap as the debt is right now - the servicing payments are going up, and that's money that could have been used elsewhere that is already spent. Further spending on top of the rest of the spending is going to push his ratios into the negative, once that happens, it's game over. Borrowing is only inflationary to a certain point - after that it goes deflationary.

First, the interest on the debt is a transfer payment. It IS spent or invested elsewhere. Granted not all of it is spent or invested in the US, but your point is still moot.

Second, true, if you have excessive debt you run the risk of financial crisis. But it's ridiculous to just assume that increasing debt will lead to depression and do nothing about the real risks of depression.

[Ben Kenobi]

Actually he has as much as he wants. The amount of money is pretty much a number on someone's computer somewhere.

Well, sure, unless of course you want to avoid becoming Weimar Germany.

[giblets]

Probably about double the current debt. He's already burned through about 1/3rd of it all in just 4 years. Unless spending is cut - I'd estimate about another 8 years will be it. Going any higher than he's at now is going to net him very little in the way of stimulus, but is going to increase the debt just as much as previous.

I think you have no idea how the federal reserve works. It doesn't get its cash from taxpayers. It creates money out of thin air. Quantitative easing has no direct effect on the size of the debt, although it can reduce the national debt by lowering interest rates and improving tax revenues and by giving the interest earned on assets held by the fed back to the government.

[Ben Kenobi]

First, the interest on the debt is a transfer payment. It IS spent or invested elsewhere. Granted not all of it is spent or invested in the US, but your point is still mute.

Here's a nickel. Buy yourself an education.

http://dictionary.reference.com/browse/moot?s=t

http://dictionary.reference.com/browse/mute?s=t

Second, true, if you have excessive debt you run the risk of financial crisis. But it's ridiculous to just assume that increasing debt will lead to depression and do nothing about the real risks of depression.

Borrowing goes inflationary, deflationary and then hyperinflationary, because once borrowing stops generating money, it slows, slows, slows, goes negative, followed very quickly by hyperinflation. It slows for a long time before it finally flips and at that point - hyperinflation can't really be stopped.

[Ben Kenobi]

I think you have no idea how the federal reserve works. It doesn't get its cash from taxpayers. It creates money out of thin air. Quantitative easing has no direct effect on the size of the debt, although it can reduce the national debt by lowering interest rates and improving tax revenues and by giving the interest earned on assets held by the fed back to the government.

So it's a free lunch? Sorry, don't believe it. QE raises debt by borrowing, same as anything else. It's you who doesn't understand (or deliberately chooses to deceive others), how it works.

[giblets]

So it's a free lunch? Sorry, don't believe it. QE raises debt by borrowing, same as anything else. It's you who doesn't understand (or deliberately chooses to deceive others), how it works.

The money isn't borrowed. It's created out of thin air. Have you ever noticed that dollar bills say "federal reserve note"? The fed creates money. Who exactly is the fed borrowing money from? If I wanted to invest in the fed how would I go about it? You are insane.

[Kidlicious]

Here's a nickel. Buy yourself an education.

http://dictionary.reference.com/browse/moot?s=t

http://dictionary.reference.com/browse/mute?s=t

DanSed you

Borrowing goes inflationary, deflationary and then hyperinflationary, because once borrowing stops generating money, it slows, slows, slows, goes negative, followed very quickly by hyperinflation. It slows for a long time before it finally flips and at that point - hyperinflation can't really be stopped.

Good Night! Everyone is buying our debt! They love it! The demand is not decreasing. It's increasing.

[Ben Kenobi]

Good Night! Everyone is buying our debt! They love it! The demand is not decreasing. It's increasing.

I wasn't talking about debt demand. I was talking about what actually drives the economy - demand for goods and services. Domestic demand in the US is actually dropping not rising, mostly due to demographics. This means that deflation is the correct market response to lowered demand. By acting against this deflationary pressure, Bernanke's basically setting fire to money.

[Kidlicious]

I wasn't talking about debt demand. I was talking about what actually drives the economy - demand for goods and services. Domestic demand in the US is actually dropping not rising, mostly due to demographics. This means that deflation is the correct market response to lowered demand. By acting against this deflationary pressure, Bernanke's basically setting fire to money.

Wait. Wait. You want the Fed to plan for decreasing GDP and deflation?

[Ben Kenobi]

The money isn't borrowed. It's created out of thin air. Have you ever noticed that dollar bills say "federal reserve note"? The fed creates money. Who exactly is the fed borrowing money from? If I wanted to invest in the fed how would I go about it? You are insane.

Yes, it is borrowed. From Americans themselves! The Fed is buying up their own Treasuries. What happens is that the Fed uses money that it gets from the taxpayer and uses it to buy up all the treasuries. Where does the Fed money come from? The Fed borrows to raise the money they need to pay for Treasuries. This raises the debt of the United States.

[Ben Kenobi]

Wait. Wait. You want the Fed to plan for decreasing GDP and deflation?

In a nutshell - yes. It will hurt, yes, but you stay solvent. The other course ensures that those who are in power now will stay in comfort but the end of the road is still to come. Some people get this already (Paul Ryan, etc), and hopefully more people will get this. Every step towards increased debt and spending, is a hard road that has to be traversed back.

[giblets]

Yes, it is borrowed. From Americans themselves! The Fed is buying up their own Treasuries. What happens is that the Fed uses money that it gets from the taxpayer and uses it to buy up all the treasuries. Where does the Fed money come from? The Fed borrows to raise the money they need to pay for Treasuries. This raises the debt of the United States.

The Fed doesn't get the money from taxpayers. Money is created electronically. Or if that's too hard for you to grasp, let's just say they fire up the printing presses. In the bizarre alternate universe where they did borrow money to buy treasuries, the government would in effect be lending money to itself, which would have no effect on the national debt, no effect on the economy, in fact it would only exist as a matter of accounting.

[Hauldren Collider]

The whole QE thing is an accounting gimmick to deal with the fact that printing money is a Treasury Dept power.