The Financial Markets Are Spooked by Debt, So Why Aren't We?: Podcast

Reason editors debate The Memo, situational libertarianism, Super Bowl highlights, and the political road back to fiscal sanity.

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The Financial Markets Are Spooked by Debt, So Why Aren't We?: Podcast

Reason

As you slept last night, yields on U.S. Treasury 10-year bond notes hit their highest level (2.885 percent) since January 2014. Coming on the heels of Friday's 666-point plunge in the Dow Jones Industrial Average, this spike in the cost of federal borrowing has the financial markets all herky-jerky today. "Economists and money managers fear that the increase to the $20 trillion U.S. national debt could carry major blowback to markets," Yahoo Finance reported. And for good reason: In a bit of news last week that escaped political attention but hit Wall Street like a sack of wet rats, "The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It's the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year."

So on today's Reason Podcast, which features Nick Gillespie, Katherine Mangu-Ward, Peter Suderman, and Matt Welch discussing news of the week, we start speculating on how to begin the long political road back to a fiscal sanity both major political parties have recklessly abandoned. What, Gillespie asked, will be the symbolic equivalent for debt realists of feminists burning their bras?

Other topics include (of course) The Memo, the hysteria, the weird FBI-love, right-to-try, deregulation, and how Howard the Duck is holding up after all these years.

Audio production by Ian Keyser.

Relevant links from the show:

"Trump's Critics Worry That He's Undermining Trust in the FBI, As If That's a Bad Thing," by Jacob Sullum

"If You Think The Nunes Memo Will 'Discredit' FBI and DOJ, You Haven't Been Paying Attention For the Past 50 Years," by Nick Gillespie

"Right To Try Laws Are a Fine Start. Comprehensive Reform of the FDA's Drug Trials Would Be Better," by Ronald Bailey

"What About the Debt? Trump's SOTU Ignores a $20 Trillion Time Bomb," by Eric Boehm

"Why Libertarians Should Want More Trust in Government," by Nick Gillespie and Todd Krainin

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Comments

[The Last American Hero]

The financial markets should be spooked by debt. Yet they soar every time a new debt ceiling is announced and they are at all time highs in spite of record debt.

[Diane Reynolds (Paul.)]

Probably because they anticipate a new bubble.

[dustavalti]

I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life.

This is what I do... http://www.onlinecareer10.com

[Leo Kovalensky]

^ This guy isn't spooked by debt!

[Diane Reynolds (Paul.)]

Speaking of bubbles.

1 Bitcoin equals
6561.23 US Dollar

Huh, it dropped $200 in just the last 20 minutes.

[Palin's Buttplug]

Bitcoin is the ultimate fiat scam.

But if it gets back to $100 buy buy buy.

[Mark22]

Bitcoin is the ultimate fiat scam.

Money is a medium of exchange, not an investment. Its value is arbitrary and shouldn't concern people.

[Palin's Buttplug]

As I mentioned in the morning links, The Dotard's $2 trillion deficits are spooking everyone including even TEAM RED! idiots.

[Unlabelable MJGreen]

*jumps out window*

[Stormy Dragon]

Good thing we just passed a tax cut that increased the deficit 84%!

[Palin's Buttplug]

HEY! CUT OUT THE TEAM BLUE NONSENSE!

[Stormy Dragon]

As I said before the tax cut passed, the last time a taxcut actually improved the economy was in 1981. Ever since then, every time the Republicans have cut taxes, the economy has tanked, and every time the Democrats have repealed those cuts, the economy has recovered.

[BYODB]

Last I checked every tax cut is 'good' for the economy even while the end results often get muddied in translation given the extent to which our economy is bent out of shape by central planners.

[BYODB]

The specific boogeyman you might be looking for is 'spending', but of course you can't kill babies or grandma so we can only ever talk about 'tax rates' rather than 'for fucks sake, stop spending like a drunken sailor in a whorehouse'.

[MarkLastname]

This is false. You are literally making pure shit right up.

[Diane Reynolds (Paul.)]

We didn't care about it before, why do we care about it now?

[Palin's Buttplug]

Way back when the GOP used to call themselves the "fiscally responsible" party. I know that is a fucking hilarious knee-slapper know - obvious to everyone.

Especially since deficits go down substantially with Democratic administrations and leap back up with the GOP. Cheney himself said "Reagan proved that deficits don't matter".

[Diane Reynolds (Paul.)]

Please ignore the debt jump from $9 trillion to 19$trillion from '08 to 16. But I know, we're only talking about "deficits"

I know I know, it was all necessary to save America. Obama inherited it, he ran outta gas, he had a flat tire, he didn't have money for cab fare, his tux didn't come back from the cleaners, an old friend came in from out of town, someone stole his care, a terrible flood, locusts, it wasn't HIS FAULT HE SWEARS TO GOOOODDD!

[Palin's Buttplug]

Obama inherited a $1.2 trillion deficit.

http://money.cnn.com/2009/01/0.....t_outlook/

If he had done NOTHING and the economy stayed as lousy then 8 x 1.2 = 9.6 trillion.

so his policies added little to the debt.

Bush inherited a surplus and left a $1.2 trillion deficit by contrast. (and you know why)

[Diane Reynolds (Paul.)]

But he didn't do 'nothing' he doubled down on Bush's policies and oversaw one of the slowest recoveries in history.

[Tony]

You mean the worst financial crisis since the Great Depression had the slowest recovery since the Great Depression!?

And even with those Republicans doing everything they could to help Obama!

[Diane Reynolds (Paul.)]

Obama's recovery.

As for the Fed's quantitative easing ? under which the central bank printed more than $3.5 trillion in new money as "stimulus" ? and 0% interest rates, they were also a bust for growth.

If Obama's recovery had been just average ? in other words a C grade ? JEC calculates that "after-tax per-person income would be $3,339 (2009 dollars) per year higher." That's about $278 a month per person in missing income.

This lack of growth is especially bad for those at lower incomes. Not only can they not climb the ladder of opportunity in a stagnant, slow-growth economy, but a substantial number actually fall back into poverty.

[Tony]

Something every liberal who was not parsing for politics said at the time--remember "the stimulus is too small"? It was. Republicans sabotaged the recovery and caused needless misery for years. But that is what they do, so people should quite know that going into the voting booth.

[BYODB]

Stop Tony, you're launching torpedo's at PB's argument in his own mini-thread.

Actually, you know what...fire away.

[MarkLastname]

The stimulus wasn't too small; the stimulus didn't work to begin with.

This is the same bullshit story profs spin every time; same as the Great Depression: "it didn't work because it was too small." No, it just doesn't work, period. Go read about monetary offset. The only reason the economy began to recover during Roosevelt's first term was because he devalued the dollar; and the economy after the recession only began a significant recovery *after* Republicans sabotaged Obama's attempt at continued fiscal stimulus.

Remember when dipshits like Paul Krugman were predicting a double dip recession for 2013, and the exact opposite happened?

[Palin's Buttplug]

This wasn't a "recession" in 2008-09. It was a financial collapse with thousands of insolvent banks. The only comparable event was the Great Depression.

[BYODB]

There wasn't any surplus during the Clinton years you lying fuck. There wasn't then, there isn't now, it never happened.

Jesus you're an idiot.

[Palin's Buttplug]

There was a surplus - two years of such in fact.

Yes, wingnuts have brought up the fact Treasury bonds were sold during those two years. By law, in fact, SS excess must be put into new Treasuries.

[BYODB]

There was a surplus - two years of such in fact.

False, but it's a common misconception so I'll leave you to it. If you haven't figured out why yet than it's really not worth the time it would take to correct you. At least you cite the two year B.S. figure instead of the wildly false 'all four years' narrative.

[EscherEnigma]

They only call themselves "fiscally responsible" when there's a Democrat in the White House.

And anyone fooled by this charade only has themselves to blame.

[Domestic Dissident]

Yep, Boehner, Ryan, and the rest of their fellow RINOs in congress really fucked up by not doing the right thing and siding with the Freedom Caucus and shutting the government down to force fiscal responsibility.

By helping to enable the Negro Nixon's $9.3 trillion in debt, as a result they have created a completely fraudulent market that can be wrecked by scumbags like Ben Bernanke and Janet Yellen on a whim.

Drain the swamp. Shut the government down, fire a bunch of people, cut spending across the board, and tell the bureaucrat goldbrickers that the party's over.

[Palin's Buttplug]

This is all on your boy, moron:

"The U.S. Treasury expects to borrow $955 billion this fiscal year, according to a documents released Wednesday. It's the highest amount of borrowing in six years, and a big jump from the $519 billion the federal government borrowed last year."

[Domestic Dissident]

Shouldn't you be back in Delaware or Philly setting something on fire, asswipe?

[Stormy Dragon]

Negro Nixon

But don't anyone dare suggest DD is racist!

[$park? leftist poser]

He's probably not racist, he's just really fucking stupid.

[AlmightyJB]

I do love when the price of stocks go down. Hate paying more than I have to.

[$park? leftist poser]

So on today's Reason Podcast, which features Nick Gillespie, Katherine Mangu-Ward, Peter Suderman, and Matt Welch discussing news of the week, we start speculating on how to begin the long political road back to a fiscal sanity

Like any of you would know... pssh

[Protip]

People don't want fiscal sanity. Any plan that doesn't recognize that (which torpedoes the idea anway) is mental masturbation.

and I like masturbation.

[Tony]

This is the economy in good shape, except with Republicans doing their usual anti-Keynes routine and stimulating an expanding economy. To their credit, they didn't care about that, they cared about giving their donors a trillion dollars in free money, the purpose for which they were elected.

[$park? leftist poser]

they cared about giving their donors a trillion dollars in free money, the purpose for which they were elected

It's totally different when the Democrats do it.

[Tony]

Oh so since Democrats are just as tax-cut happy as Republicans, you'll stop sucking so much Republican cock on that basis alone, right?

[$park? leftist poser]

Sorry, as much as you keep trying to convince me it's the best thing ever, I'm not into sucking cocks. I'm just highlighting partisan hackery.

[BYODB]

Point me to a Democrat that understands that austerity must follow stimulus if you follow the Keynes model and I'll show you a god damn unicorn.

Of course, leave it to Tony to ignore that the 'stimulus' is a payout to Democrat supporters whereas a 'tax cut' is...keeping more of your own money. I don't think he's capable of understanding the difference.

[DJK]

Exactly. Both parties fucked us. Blind partisans like Tony are the reason they continue to get away with it.

[BYODB]

It's just a throwaway comment to shine light on Tony's utter misunderstanding of all things economic in nature. He doesn't understand Keynes much like he doesn't understand anyone else, yet of course he must by necessity pretend that Keynes wasn't a raging idiot.

The fact that Democrats only like the stimulus part of Keynes was never a wake-up call that they just wanted access to the credit cards, nor was the part where Democrats are utterly resistant to any calls for lesser spending levels.

To a Democrat, spending is the cure for everything so by necessity spending less must be more illness. Nevermind that no economist actually thinks that, by golly he'll find one that's close and misquote them!

[Palin's Buttplug]

Obama supported the austerity (spending cuts) of Simpson-Bowles - the one fiscal reform package of my 40 years watching these assholes.

I don't mince words with conservatives. Conservatives are dull, slow-witted idiots, Even Hayek said so in his "Why I am not a conservative". Read it.

[BYODB]

Everyone supports spending cuts until it's time to actually decide what to cut.

[Tony]

Whether because they want to or because they are forced, Democrats tend to at least pay for the spending they do. Obamacare reduced the deficit, which is quite a feat for a new healthcare entitlement. I'm sure we all agree that with the Trump tax cut, Republicans have now sacrificed any credibility they ever had on fiscal responsibility. Though the Bush tax cuts should have already done that.

[BYODB]

Whether because they want to or because they are forced, Democrats tend to at least pay for the spending they do.

Absolutely 100% false.

[MarkLastname]

"Obamacare reduces the deficit..."
By imposing unsustainable future price controls through fixing Medicare compensation below the market rate; which in turn drove up and continue to drive up premiums for non-Medicare patients. I.e. he did this by imposing a tax by another name, knowing that someday a successor of his would have to bring compensation for Medicare treatment in line with prices and pay for his policy.

Politicians are indeed brilliant at finding ways to make future administrations pay for their hand outs. Even you would see that if you weren't busy fellating Obama.

[Mark22]

This is the economy in good shape, except with Republicans doing their usual anti-Keynes routine and stimulating an expanding economy.

Tax cuts aren't a stimulus in the Keynesian sense.

[Diane Reynolds (Paul.)]

It's fun to watch the "deficits matter/don't matter' oscillation wave swing back and forth between Democrats and Republicans.

[Tony]

Consult mainstream economic theory and you'll find that it matters more or less depending on the circumstances.

[Leo Kovalensky]

Are you saying that planned economies are flawed because politicians aren't actually infallible god-like creatures? Is this finally the libertarian moment???

[Tony]

All economies, like children's birthday parties, are planned. Some are simply planned to be more chaotic than others.

[DJK]

You know full well that the phrase "planned economy" is a synonym for "command economy". Both have technical definitions. Try not to be disingenuous for once.

[Tony]

But who is endorsing a command economy? Has anyone in the history of this comments board ever done so?

[MarkLastname]

You are, everytime you support more price controls, production regulations, or nationalized industries (like healthcare). Your vision if the economy is about 70 or 80% command economy. You seem to think anything important should be produced, provided, and paid for by the state. Own it, Tony, there's negligible daylight between you and full blown socialism.

And if we got to the 70% socialist paradise you might say you want, with socialized medicine and free college, who are you kidding? You won't defend what's left of economic freedom. Just like every other prog, next you'll want to nationalize banks and pharmaceuticals; then the auto industry; then the farms. People like you don't ever stop and realize the government has enough control over our lives.

[Mark22]

But who is endorsing a command economy?

You are.

[BYODB]

Can you plan chaos? Survey says 'no'.

[Tony]

My last New Year's Eve party says otherwise.

[Leo Kovalensky]

Sounds like the results were a crash?

[Tony]

Planned chaos, aren't you listening?

[BYODB]

You can't plan chaos. The best you can do is plan for nothing and see what happens.

[Mark22]

Consult mainstream economic theory and you'll find that it matters more or less depending on the circumstances.

Given that academic economists are overwhelmingly progressive, those circumstances being whether progressives are in power or not.

[Palin's Buttplug]

I had hoped that Gary Cohn would be the one sane member of the Trump administration but even he has sold out to voodoo economics.

[Palin's Buttplug]

TAX CUTS PAY FOR THEMSELVES is the biggest fucking lie in economics history.

If it were true we should just cut taxes to 1%.

so the only libertarian response is FUCK YOU, CUT SPENDING.

[BYODB]

If it were true we should just cut taxes to 1%.

Tell you what, lets try it out and see. Spending can be determined by allocating that 1%.

The sound of markets righting themselves would be deafening.

[Zeb]

Make a constitutional amendment that says that government expenditures cannot exceed the tax revenues of the previous year. Probably need some provision for actual emergencies in there, but with a very high bar.

[MarkLastname]

If you make it, say, three or five years, then they can smooth taxation over fluctuations in prices, which is what neoclassical theory suggests. It makes sense to run small deficits when prices are high in the business cycle and small surpluses when they're low.

It won't make a difference anyway though, the moment they want to, they'll find a way to circumvent any such amendment. How's the Supreme Court gonna enforce it? As Andrew Jackson would ask.

[Mark22]

If it were true we should just cut taxes to 1%

We should.

[Mark22]

There are borrowers and there are lenders. Lenders are spooked by borrowers who may not be able to pay back what they owe. Borrowers who can't pay back what they owe are not, and need not be, spooked by lenders who give them money nonetheless.

The main effect of irresponsible borrowing by governments is that, eventually, they won't be able to borrow anymore; it's self-limiting.

[Liberty Lover]

I am spooked by the market, yet I have no choice. The changes to retirement and Social Security means I now have a 401K (or for some a 403B). That means no matter how bad the market gets, I keep and put money into it at the least until I retire.

When do people make money on the market? When they liquidate. When is the last time you sold off your 401K? Yet people like Bill Gates can sell off enough to force his stock down, then buy at the reduced price and have a few million in his pocket and still have his stock. Pretty sweet deal for the really rich guy, not so great for the working stiff.

[Mark22]

I am spooked by the market, yet I have no choice. The changes to retirement and Social Security means I now have a 401K (or for some a 403B). That means no matter how bad the market gets, I keep and put money into it at the least until I retire.

You have plenty of choices: you can invest money in a business, you can buy real estate, etc.

Those aren't tax advantaged, and they are more work, but they are certainly choices.

[gayatara]

just before I saw the receipt that said $7527 , I accept that my mom in-law woz like actualey making money in there spare time from there pretty old laptop. . there aunt had bean doing this for less than twentey months and at present cleared the depts on there appartment and bourt a great new Citro?n 2CV . look here....... Clik This Link inYour Browser

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[hikiyaka]

I see what you mean... Jesse `s postlng is neat... on monday I bought a top of the range Jaguar E-type after I been earnin $7477 this-last/4 weeks and-even more than, 10-k last-munth . no-doubt about it, this really is the most comfortable job Ive had . I started this seven months/ago and right away was making more than $73 per-hr . go right here

+_+_+_+_+_+_+_+_+ http://www.homework5.com