Who is being an "honest Broker" in the debt ceiling negotiations?

[fskimospy]

100% wrong. Greece's interest rates would be the same or higher if they controlled their own currency. Assuming they allowed the market to set long term rates, the rates would include expected inflation from printing to pay off the debt. If they did what the US is doing and had the central bank buy most of their long term debt, then interest rates could be low but the exchange rate would reflect the monetization of debt.

100% wrong. This current crisis has shown that conclusively; every last country that controls its own currency has significantly lower interest rates relative to their debt to GDP ratio than do countries in the Eurozone that do not.

What's funny is that people have been predicting exactly what you describe for years now, and they have been wrong over and over and over again across numerous countries, in both the actual interest rate and the relative exchange rate. The ECB is prohibited from monetizing debt, and even if there are workarounds they have not done so at the rate the US has... yet the dollar is flat vs. the Euro since the crisis began and the GBP has gained despite them monetizing their debt (and having low interest rates).

What you're saying is just not supported by reality, nor has it been for quite some time.

 

[the DRIZZLE]

100% wrong. This current crisis has shown that conclusively; every last country that controls its own currency has significantly lower interest rates relative to their debt to GDP ratio than do countries in the Eurozone that do not.

What's funny is that people have been predicting exactly what you describe for years now, and they have been wrong over and over and over again across numerous countries, in both the actual interest rate and the relative exchange rate. The ECB is prohibited from monetizing debt, and even if there are workarounds they have not done so at the rate the US has... yet the dollar is flat vs. the Euro since the crisis began and the GBP has gained despite them monetizing their debt (and having low interest rates).

What you're saying is just not supported by reality, nor has it been for quite some time.

There dollar hasn't weakened against the Euro because Europe has been such a train wreck over the past few years. That's the same reason the Pound has straightened against the Euro. Why do you think Greece was able to borrow at such a low rate in the first place?

 

[fskimospy]

There dollar hasn't weakened against the Euro because Europe has been such a train wreck over the past few years. That's the same reason the Pound has straightened against the Euro. Why do you think Greece was able to borrow at such a low rate in the first place?

That's awfully convenient. Also, for awhile last year the Fed actively stopped buying government bonds. What happened to our interest rates? Basically nothing. If monetizing our debt is what was keeping rates low, why didn't a stop to monetizing it make them increase?

We've had two quite useful natural experiments, the US and the Eurozone and the US compared to itself during bond buying and non-bond-buying times. Each and every time the people predicting inflation have made themselves look like fools.

 

[the DRIZZLE]

That's awfully convenient. Also, for awhile last year the Fed actively stopped buying government bonds. What happened to our interest rates? Basically nothing. If monetizing our debt is what was keeping rates low, why didn't a stop to monetizing it make them increase?

We've had two quite useful natural experiments, the US and the Eurozone and the US compared to itself during bond buying and non-bond-buying times. Each and every time the people predicting inflation have made themselves look like fools.

The Fed's balance sheet has grown fairly consistently since the crisis and they are now buying over 90% of net treasury issues. The long term rate can no longer be used as a signal of inflation expectations. Since most of the world's central banks have been engaged in coordinated and unprecedented effort to reduce long term rates you can't look at exchange rates either.

We haven't seen big increases in inflation as measured by the CPI because high unemployment has kept the services component in check. If you want to see what the these policies have done to the value of the dollar look at the price of a basket of commodities.

 

[Jhhnn]

The Fed's balance sheet has grown fairly consistently since the crisis and they are now buying over 90% of net treasury issues.

Hogwash.

http://www.motherjones.com/kevin-drum/2012/09/fed-really-buying-three-quarters-all-treasury-debt

 

[fskimospy]

The Fed's balance sheet has grown fairly consistently since the crisis and they are now buying over 90% of net treasury issues. The long term rate can no longer be used as a signal of inflation expectations. Since most of the world's central banks have been engaged in coordinated and unprecedented effort to reduce long term rates you can't look at exchange rates either.

We haven't seen big increases in inflation as measured by the CPI because high unemployment has kept the services component in check. If you want to see what the these policies have done to the value of the dollar look at the price of a basket of commodities.

Except of course the ECB was prohibited from this and you didn't explain the lack of interest rate increases in the US after the fed stopped monetizing debt as you said that was what was holding rates down.

Furthermore, if every country on earth is doing that, why would greeces rates be so high when no other nation, even those far more indebted, have that problem if they control their own currency? Is Greece a special case? If not, there is no reason to accept your premise. If it is, there's no reason to compare it to the US.

 

[TerryMathews]

http://www.salon.com/2012/12/18/is_this_what_winning_looks_like/

Looks like after all the blustering a fair compromise might have been reached.