tag:blogger.com,1999:blog-17232051.post4216593028571209994..comments2024-03-28T03:16:14.104-04:00Comments on Noahpinion: Government bonds aren't net wealth...or are they?Noah Smithhttp://www.blogger.com/profile/09093917601641588575noreply@blogger.comBlogger7125tag:blogger.com,1999:blog-17232051.post-88171839590132750982011-03-07T22:03:05.501-05:002011-03-07T22:03:05.501-05:00"skeptical on a deep level"? So you shou..."skeptical on a deep level"? So you should be. RE is the biggest crock of s--t in economics....well if it's not, it's certainly in the semi finals....Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-14488342078052253762011-03-07T14:38:48.578-05:002011-03-07T14:38:48.578-05:00BSE: you're right that some conservatives use ...BSE: you're right that some conservatives use Ricardian Equivalence to argue that fiscal policy is ineffective. But Barro's original paper, like Cowen's NYT article, allows that Ricardian Equivalence can fail due to cognitive illusions. The theory says that "either fiscal policy is ineffectual, or people are irrational."Noah Smithhttps://www.blogger.com/profile/09093917601641588575noreply@blogger.comtag:blogger.com,1999:blog-17232051.post-91485524387884537882011-03-07T13:41:48.768-05:002011-03-07T13:41:48.768-05:00I would just like to point out that your character...I would just like to point out that your characterization of Ricardian Equivalence is wrong - but in a way that gives the conservatives too much credit.<br /><br />A correct statement of Ricardian Equivalence is that the time-path of macroecon aggregates is independent of the time-path of the funding. Here, funding is the time-path of taxes. The problem is, of course, that RE says absolutely nothing about spending. As you say, Barro just assumes that gov't spending is thrown into the ocean.<br /><br />Only by disregarding the fact that spending is not in fact the same as taxes can conservative arguments actually make sense. What's worse, is that RE says that if the gov't spends, there is no benefit to putting off paying for the spending. In short, RE refutes, directly, every position of modern conservativism. <br /><br />So, conservatives bringing up RE in their arguments is the worst kind of dishonesty.BSEnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-84725665462525903972011-03-07T12:38:32.581-05:002011-03-07T12:38:32.581-05:00I love the irony that the Internet, an enormous we...I love the irony that the Internet, an enormous wealth-creation engine created primarily by the government, has become such fertile ground for the likes of Cowen to spread the notion that all government spending is wasted.Devinhttp://www.freemarketsgoodbeer.blogspot.comnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-5600455976341116682011-03-07T09:38:20.013-05:002011-03-07T09:38:20.013-05:00You may want to take a look at this link to the mo...You may want to take a look at this link to the modern monetary theory perspective on deficit spending, where it is argued simple national income accounting dictates that "there can be no net savings of financial assets of the non-government sector without cumulative government deficit spending":<br /><br />http://bilbo.economicoutlook.net/blog/?p=332<br /><br />In other words, some argue that net financial wealth is only possible with government debt.AndyfromTucsonnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-56950971349349950652011-03-07T09:11:25.318-05:002011-03-07T09:11:25.318-05:00If your problem with debt is actually practical, r...If your problem with debt is actually practical, rather than moralistic (even semantic,) than it's difficult to see why it matters that notes & fed deposits are technically liabilities. It's not as if the existence of dollar bills represents some kind of looming intertemporal burden.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-17232051.post-46847982965700984142011-03-07T08:28:23.420-05:002011-03-07T08:28:23.420-05:00By "paying back" federal debt, I assume ...By "paying back" federal debt, I assume we are talking about exchanging it at some point for US currency of some sort. And yet, US currency itself is issued as debt.<br /><br />The question of course then becomes how does one pay back debt with debt and ever get out of debt?Benedict@Largenoreply@blogger.com