tag:blogger.com,1999:blog-1740670447258719504.post1261005789777878813..comments2024-03-27T03:00:27.024-04:00Comments on Facts & other stubborn things: Future cohorts and future national income are differentEvanhttp://www.blogger.com/profile/12259004160963531720noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-1740670447258719504.post-84226825728432218032012-10-15T20:22:22.428-04:002012-10-15T20:22:22.428-04:00Daniel, what makes debt unique from transfers is t...Daniel, what makes debt unique from transfers is the interest. The debt *principle* transfers are a red herring, as Gene Callahan shows. It's the so-called interest rate transfers that result from when r>g that are the problem.<br /><br />But Nick's spreading FUD about the debt. He's exploiting the bias against transfer payments by creating a model with no growth. The government had no logical reason to borrow to begin with. Unless it was their intention to exploit the young.(It's like the bush tax-cuts for the old instead of the wealthy.)<br /><br />Almost everyone agrees we should not raise the debt (relative to GDP) when outside of a liquidity trap given accommodating monetary policy. The idea that we would, at full employment, decide to finance transfer payments, with borrowing, seems so obviously wrong, that it's no wonder people like Krugman aren't warning about the burdens of the future.<br /><br />Because outside of full-employment, given their assumptions (would our children be better of if we're unemployed?), they're right. (Any costs of borrowing today are surely offset.) And even if on the margin there are winners and losers these will not neatly fall across generational lines.<br /><br />But that's not all: Nick keeps saying "NGDP" targeting "doesn't have these problems," but what could he mean? It's true there is no interest to pay, but there is inflation. If inflation grows faster than the economy then anyone born (working) after that time will be burdened, if it grows slower anyone born before that time will be "burdened."<br /><br />But it's not only NGDP and debt, it's everything. If there is a bubble in the economy there will be winners and losers too. Maybe we should and go back to barter trade lest we succumb to money illusion and are burdened.<br /><br />So this is at best a libertarian morality tale that it is wrong for the government to influence the economic outcomes we all face. Perhaps, Rowe is an Austrian at heart, because unless he's arguing for long-term efficiency he's arguing we face short-term unemployment based on the inherent unfairness of life. Alternatively, he could be a communist.<br /><br />(To be fair, he could possibly say NGDP targeting is more "neutral," as it could eliminate government discretion.)anonnoreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-26128716372783632482012-10-15T20:04:59.304-04:002012-10-15T20:04:59.304-04:00I dont see how the relative income among cohorts i...I dont see how the relative income among cohorts isn't relevant. That's the basis of the whole Social Security Ponzi scheme. A smaller young cohort can support a larger older cohort if growth continues apace. Again, the assumption that all cohorts are the same size is another reason this debate only makes sense on it's own terms.Andrew Bossiehttps://www.blogger.com/profile/00353842153288646125noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-12315886215964254272012-10-14T10:47:42.092-04:002012-10-14T10:47:42.092-04:00Well - I meant more that I wasn't doing a lot ...Well - I meant more that I wasn't doing a lot of linking or providing a lot of background on the debate... if you don't understand the post you probably haven't been following the debate, so don't worry about it.<br /><br />Granted, if you've been following the debate and you don't understand the post you should probably worry about it because I'm not exactly contributing the economic equivalent of quantum mechanics here!Danielhttps://www.blogger.com/profile/17192667997950934790noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-24441926444115880702012-10-14T10:17:17.173-04:002012-10-14T10:17:17.173-04:00And if anyone doesn't understand your post, th...And if anyone doesn't understand your post, they *should* worry about it.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.comtag:blogger.com,1999:blog-1740670447258719504.post-42697052014333751562012-10-14T09:52:50.540-04:002012-10-14T09:52:50.540-04:00I understand this post. It's a good one.
&quo...I understand this post. It's a good one.<br /><br />"Anyway, Nick Rowe, if we are genuinely facing a "Borges Problem" it seems unfair to call the other side "zombies"."<br /><br />OK. Semi-fair point.Nick Rowehttps://www.blogger.com/profile/04982579343160429422noreply@blogger.com