[TeftyJokip]

Housing prices are as a matter of fact coming down. When the government "inflates" it changes nominal prices, it doesn't change the price of houses relative to everything else. It does if the government inflates and provides benefits to those who are selling houses, ensuring that they keep prices up. Oh wait - look at what they did with Fanny and Freddy.

Gosh Obama - thanks for keeping houses expensive, AND jacking up prices on the stuff that I have to buy at the same time. Appreciate it Obama. I want the prices of houses to fall, and the prices of everything else to fall - but they don't because they owe money and that means that they have to pay more rather than less.

[ReneCM]

No, any money someone receives is income. So if someone leaves me a gift I'm required to report it? Income is earned - state benefits don't count as income because they are unearned.

Welfare lets someone consume more -> welfare is income That's a terrible definition. Does this mean I can get money off my taxes for each dollar I invest?

Investment lets someone consume less -> Investments are not income.

[domeffire]

so inflation does not help the government reduce its debt burden unless it is unusually high inflation. Completely wrong. The government borrows at zero, and with inflation running at far higher than this, they save a huge amount of money. There's a reason why they lowered the rate to zero percent interest, and why that will never go up, especially not with the government continuing to borrow at an unprecedented rate in an effort to stave off the deflationary collapse.

They can keep kicking the can down the road - but it won't last much longer. The money simply won't be there.

Also, it's silly to assume inflation will make the things you buy more expensive relative to the value of your labor. I have no idea why you think "providing benefits to those who are selling houses" would drive up housing prices Yeah, it would. Same way that education costs have jumped up. Give people 'free loans' for school, and suddenly school starts charging more. Imagine that. It's almost like that was designed.

[Erwtbimp]

Completely wrong. The government borrows at zero, and with inflation running at far higher than this, they save a huge amount of money. There's a reason why they lowered the rate to zero percent interest, and why that will never go up, especially not with the government continuing to borrow at an unprecedented rate in an effort to stave off the deflationary collapse.

They can keep kicking the can down the road - but it won't last much longer. The money simply won't be there.



Yeah, it would. Same way that education costs have jumped up. Give people 'free loans' for school, and suddenly school starts charging more. Imagine that. It's almost like that was designed.

I'm not sure what you are saying- are you claiming the entire yield curve for treasuries is at 0% interest or are you claiming that if short-term treasuries are near zero the government can stop paying interest on its debt. Either way you're wrong. If you believe interest rates "will never go up" then you are in for a surprise in the next several years.

Also, you claimed that people selling houses were getting a subsidy. Your student loan example would be equivalent to a subsidy for people who buy houses. Either way, if the government subsidizes something it becomes more affordable at the expense of everything else being less affordable.

[Stengapsept]

Expected inflation is priced into interest rates, so inflation does not help the government reduce its debt burden unless it is unusually high inflation.

This is not really true. The Treasury issues a large amount of long-term debt that would be eroded by inflation. In addition, higher inflation will generally imply that the Federal Reserve is purchasing a large proportion of the Treasury's short-term debt, effectively money-financing a portion of the deficit.

[vekiuytyh]

This is not really true. The Treasury issues a large amount of long-term debt that would be eroded by inflation. In addition, higher inflation will generally imply that the Federal Reserve is purchasing a large proportion of the Treasury's short-term debt, effectively money-financing a portion of the deficit.

Wouldn't the inflation need to be higher than the inflation that was expected when the long-term debt was issued in order for inflation to actually erode that debt?

[adsexpist]

Wouldn't the inflation need to be higher than the inflation that was expected when the long-term debt was issued in order for inflation to actually erode that debt?

Yes, but inflation expectations have been extremely stable for the past quarter-century or so (barring the past few years where they've plummeted).

[Sxedlawb]

Yes, but inflation expectations have been extremely stable for the past quarter-century or so (barring the past few years where they've plummeted).

Which wouldn't be true if, like Ben claimed, the government was deliberately trying to inflate debt away.

[Imiweevierm]

Which wouldn't be true if, like Ben claimed, the government was deliberately trying to inflate debt away.

I haven't read any of his posts.

[letmelogin]

So you've changed your mind about interest rates. Apparently you no longer believe the government has infinite flexibility in controlling the interest rate. They don't have infinite flexibility, but they are using what they do have to keep interest rates low, well below the inflation rate.

But unless you think the supply of houses is completely inelastic, which is an absurd assumption, the price increase is not enough to fully offset the subsidy. True, but it does hurt the overall value of money, and negates a substantial proportion of the subsidy. It makes money itself less valuable. Not having the subsidy in the first place, keeps the money supply down, and keeps the housing price down. Looking at education - it used to cost about 3 months wages, each year for my father. Now it costs about a full year's salary for each year. So even taking into account for inflation - the subsidy itself gets eroded away. A subsidy is valuable if few people get it and worthless if everyone does.

[7UENf0w7]

Ben isn't worth arguing with. Argue with Kuci, he provides thoughtful responses that are mostly right.

Take the exact same opinion - you'll call Kuci right and me wrong. We're arguing the exact same thing and you can't even admit that!

[elects]

You lack the authority to make such statements.

[DoctoBuntonTen]

Get yourself a bodyguard and you can flaunt your wealth with impunity.

[HexcewlyRette]

There's nothing "incoherent" about defining income as the amount someone takes in.

Feel free to study accountancy then, and leave the econ to others.

[BiseCreesia]

Sure you can. They're building my pyramid as we speak.

[TriammaMade]

Back to the OP...

http://www.nytimes.com/2012/03/26/op...ef=todayspaper

93% of all the recovery in income in 2010 went to the top 1%. 65% went to the top .1%.

In previous recessions this occurred, but not nearly at this rate.

In the Clinton era expansion, 45 percent of the total income gains went to the top 1 percent; in the Bush recovery, the figure was 65 percent; now it is 93 percent.



There is a recovery going on for the country as a whole. But almost everyone in the country wouldn't know it from their own financial situation.

No, it's because this recovery is far more anemic than the others compared. In fact, as employment continues to fall in absolute numbers (the gummint is still reducing the number of official job seekers to make the unemployment numbers drop) one can argue we aren't in a recovery at all, we just have deficit spending and depletion of savings bumping our nominal GDP growth over the official recession threshold.

[Stengapsept]

I think that was pretty clear in the article.
But as Romney tries to push back the uncaring corporate raider identity that the Obama campaign is trying to foist onto him, he appears to be grappling with how to describe his economic beliefs in a way that does not play into his opponent's hands. He's still grappling