tag:blogger.com,1999:blog-2761684730989137546.post3161994525537720519..comments2024-03-28T04:13:36.779-04:00Comments on Mike Norman Economics: Global Links — 23 May 2018mike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2761684730989137546.post-43433480246238390302018-05-23T23:25:18.068-04:002018-05-23T23:25:18.068-04:00Below is yet more nonsense from RT.
RT wants to ...Below is yet more nonsense from RT. <br /><br />RT wants to make the USA look bad, but does so by repeating the lies about the U.S. government’s (non-existent) “debt crisis.” This gives ammunition to right-wing politicians who want to privatize Medicare and Social Security.<br /><br /><i>“Goldman Sachs has warned that the growing US deficit could pose a significant threat to the country's economic security during the next recession.”</i><br /><br />Goldman Sachs? The evil vampire squid? Those liars would never lie, right? <br /><br /><i>“Goldman Dachs’ chief economist Jan Hatzius forecast the federal deficit to increase from $825 billion (or 4.1 percent of gross domestic product) to $1.25 trillion (5.5 percent of GDP) by 2021. The number will balloon to $2.05 trillion (seven percent of GDP) over 10 years, he said.”</i><br /><br />Let’s hope that is correct. The U.S. economy needs deficit spending in order to remain strong. <br /><br /><i>“An expanding deficit and debt level is likely to put upward pressure on interest rates, expanding the deficit further,” said Hatzius.</i><br /><br />The only thing that would put “upward pressure” on interest rates is Fed decisions, which are based on inflation factors. <br /><br /><i> “While we do not believe that the US faces a risk to its ability to borrow or repay, the rising debt level could nevertheless have three consequences long before debt sustainability becomes a major obstacle.” </i><br /><br /><b> He admits </b>that the Fed’s “rising debt level” (i.e. the amount of money deposited in Fed savings accounts) poses <b>no threat</b> to the U.S. government’s ability to keep creating money out of thin air. <br /><br />So what is the “crisis”?<br /><br />https://www.rt.com/business/427491-goldman-us-fiscal-outlook/Konradhttps://www.blogger.com/profile/01739209449391854796noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-69146786737007434312018-05-23T23:06:41.429-04:002018-05-23T23:06:41.429-04:00This is off topic, for which I apologize, but I ju...This is off topic, for which I apologize, but I just saw an RT article that spouts the usual nonsense…<br /><br /><i>“Beijing is by far the largest holder of US Treasury bills, meaning China can affect their price and yield. It could be China's trump card in the trade war with Donald Trump.” </i><br /><br /><b>WRONG. </b> “Holder of US Treasury bills” means that Chinese parties have deposited money in Fed savings accounts. Chinese parties can sell their Treasury securities, or take back their deposits early, but in either case the Chinese parties would lose the interest they would have gained. <br /><br />Moreover, how much or how little money those Chinese parties have deposited into Fed savings accounts has nothing to do with the price and yield of Treasury securities. The price and yield is based entirely on internal Fed decisions, which are based on inflation control.<br /><br />Then RT repeats the “dumping securities” nonsense that we have heard for years...<br /><br /><i>“If China wanted to pull the nuclear switch, if they committed to dumping Treasuries, it would have an immediate and temporary impact on money markets in the United States,” said Jeff Klingelhofer, a portfolio manager who oversees more than $6 billion at Thornburg Investment Management.” </i><br /><br />Nonsense. “Dumping securities” means selling securities at a loss (since Chinese parties would lose the interest they would have gained). This would hurt only China. It would not hurt the Fed, or the U.S. government. And I repeat that the Fed decides the yields and prices of T-securities based on inflation factors, not on the amount of securities sold. <b> “Dumping securities” </b> is meaningless.<br /><br /><i> “Jeffrey Gundlach, chief executive of DoubleLine Capital LP, agrees, saying that China can use US Treasuries as leverage. ‘It is more effective as a threat. If they sell, they have no threat. It would only escalate the situation and eliminate their leverage’.” </i><br /><br />Do you see the self-contradiction? He admits that “dumping securities” poses no threat to the USA, yet he claims that China could somehow gain “leverage” by threatening to go through with this non-existent threat.<br /><br />Think, people. <b><i>THINK. </i></b><br /><br />Source:<br />https://www.rt.com/business/423288-us-treasuries-china-trade-war/Konradhttps://www.blogger.com/profile/01739209449391854796noreply@blogger.com