The Deficit Does Not Matter .... This Does

[Teatownclown]

This Collapse In US Interest Rates Is History In The Making—Here's What It Really Means


http://www.businessinsider.com/what-the-collapse-in-interest-means-2012-5

Well, the fact of the matter is that the size of the U.S. debt or deficit just doesn't matter that much. Actually, it's never mattered at all.

So you have no growth, no inflation, huge fear, and a shortage of safe assets. Understand this, and you start to grasp why there's incredible demand for U.S. Treasuries, and why interest rates are at record lows.

Gonna print money and raise taxes....just ask the Fed and your Senators and Congressmen. They won't tell you their plan until after the election.

[nathanm]

The Fed and Congress both need to be ready to raise interest rates and taxes rather quickly should something actually kick start the economy into serious growth (a resolution of the Euro crisis might do this). As it stands, significant inflation is basically impossible. There simply isn't enough demand for currency to spend. That could change very quickly, so complacency isn't a good idea.

What is stupid is that the Republicans are all about austerity when in fact it would be a great time to spend a crap ton of money on construction projects. Unemployment in that sector is somewhere around 20% nationally and we can borrow money for 5 years for pretty much nothing. (TIPS out to 5 years had a negative yield last I checked, yes, people are willing to pay the US Government to please take their money and give them back less later) Last I looked we have both a lot of deferred maintenance and a lot of new construction needs. Why are we waiting for the cost of labor and materials to go back up?

[Townsend]

Why are we waiting for the cost of labor and materials to go back up?

November