Politics, Weather, Photography, and the Dog
Tuesday 24 July 2012

Krugman yesterday reminded us that people are so desperate for the security that investing in the U.S. brings them, they're paying us to take their money, at alarming rates of negative interest:

That’s right: for every maturity of bonds under 20 years, investors are paying the feds to take their money — and in the case of maturities of 10 years and under, paying a lot.

What’s going on? Investor pessimism about prospects for the real economy, which makes the perceived safe haven of US debt attractive even at very low yields. And pretty obviously investors do consider US debt safe — there is no hint here of worries about the level of debt and deficits.

Now, you might think that there would be a consensus that, even leaving Keynesian things aside, this is a really good time for the government to invest in infrastructure and stuff: money is free, the workers would otherwise be unemployed.

But no: the Very Serious People have decided that the big problem is that Washington is borrowing too much, and that addressing this problem is the key to … something.

Conservatives here and in the UK (another country with unprecedented low government interest rates) have either a delusion or a willfully dishonest belief in the dangers of deficits. Yes, both countries have long-term deficit problems that need resolution, and both countries will need lower defense and entitlement spending to close their gaps. But that's in 20 years.

Right now, we need to take this free money (five-year Treasuries are at -1.18%; ten year notes are at -0.68%) and abundant labor (nationally still around 9% unemployment) and rebuild. We need to repair our roads, upgrade our trains, fix our sewers and electric grids, and restore our countries to the economic strengths they have had in decades past.

Those on the right, however, want to continue bloodletting, draining us of our strength when we're weakest. Or, put another way, if someone is starving, withholding food won't help him. Lending him some food might just get him feeling better again.

Ten years from now we're going to look back on this period of Republican and Tory intransigence, laugh nervously, and change the subject. If we're supremely lucky, we'll be out of the economic traps that their misguided policies have created for us.

Tuesday 24 July 2012 10:21:46 CDT (UTC-05:00)  | Comments [0] | Politics | US | World#
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David Braverman is a software developer in Chicago, and the creator of Weather Now. Parker is the most adorable dog on the planet, 80% of the time.
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