Is the US economy in recession?

[Kidlicious]

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.

http://www.ncpa.org/pub/ba611/

[Ben Kenobi]

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

The reason why he does it, is to reduce the value of USD denominated debt across the board. It also increases the value of all goods vs the dollar, which has the effect of counteracting the deflationary state of the economy. Deflation is bad if you're in debt because that means instead of lowering your debt every year - it increases.

I ask again - you believe it's a free lunch?

[Ben Kenobi]

Gribbler - Kidicious - does it make sense that QE is a 'free lunch?'

[Kidlicious]

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.

No doubt in the long run we are all dead, that is, there will eventually be a turning point in economic growth and deflationary spiral. Let's avoid it at all costs in the short run if we can. I just can't believe what goes on in your head.

[giblets]

The reason why he does it, is to reduce the value of USD denominated debt across the board. It also increases the value of all goods vs the dollar, which has the effect of counteracting the deflationary state of the economy. Deflation is bad if you're in debt because that means instead of lowering your debt every year - it increases.

I ask again - you believe it's a free lunch?

Yes, it's a free lunch. One person's gain is not necessarily another person's loss. Unless Pareto optimality has been achieved, which is clearly not the case in the middle of a depression.

[Aeson]

QE can definitely have both positive and negative effects. Operating off the idea that there are no negative possibilities could very well lead to bad or even absurd implementations.

[Ben Kenobi]

Yes, it's a free lunch

Well, I'm done here then. We've left the realm of economics as a science and are into magic. If there's enough people like you gribbler - default is inevitable.

[Kidlicious]

Gribbler - Kidicious - does it make sense that QE is a 'free lunch?'

There is no such thing as a free lunch. No one knows what a specific monetary policy will do or won't do. But your explaination of the workings of the fed is bizarre and incorrect.

[Ben Kenobi]

Let's avoid it at all costs in the short run if we can.

Here's a question for you. When does the short term become the long term? 4 years ago was 'short term'. Now its long term. We're paying for the mistakes made 4 years ago now.

[giblets]

Well, I'm done here then. We've left the realm of economics as a science and are into magic. If there's enough people like you gribbler - default is inevitable.

Why don't you go learn some actual economics.

http://en.wikipedia.org/wiki/Pareto_efficiency

Let's say, hypothetically, the top marginal tax rate was 90% and the government cut it to 70%, leading to additional tax revenue. Would this qualify as a free lunch?

[Ben Kenobi]

No one knows what a specific monetary policy will do or won't do.

So we're still in the realm of economics as magic.

[Ben Kenobi]

Why don't you go learn some actual economics.

I do and one of the core economic principles is that there ain't no such thing as a free lunch. If someone claims that a free lunch exists then someone's lying. Or you're GM.

[Kidlicious]

Here's a question for you. When does the short term become the long term? 4 years ago was 'short term'. Now its long term. We're paying for the mistakes made 4 years ago now.

The mistake being increasing temporary food stamps and unemployment benefits? Hogwash.

[Ben Kenobi]

Why don't you go learn some actual economics.

How does that justify intervention in the market?

[giblets]

I do and one of the core economic principles is that there ain't no such thing as a free lunch. If someone claims that a free lunch exists then someone's lying. Or you're GM.

Let's say, hypothetically, the top marginal tax rate was 90% and the government cut it to 70%, leading to additional tax revenue. Would this qualify as a free lunch? Or did someone lose?