Why is it ridiculous? Because you need both houses of Congress to borrow that money.

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Something that good old Larry's past advice on how to treat Wall Street practically insured the GOP 2010 sweep of the House. If you look at dissuading Obama from taking his preferred step of nationalizing and dismembering the banks. This was amply documented in Ron Suskind's book "Confidence Men".

Thanks Larry for the advice. And no, you don't belong at Davos or heading the world bank. You are an educated, motor mouth fool.

Republicans find all of this ridiculous. Why? I haven't the foggiest idea.

Mainly because this statement isn't true...

and then pay back $900 million.

The money will never be paid back. The bonds will simply be heaped upon the ever growing pile of IOU's we have that will never be honored. The last year our debt pile got smaller was 1969, and that's only because LBJ started stealing from SS. Before then the last reduction in Fed debt was 1957. Section 7 - Debt

http://www.gpo.gov/fdsys/pkg/BUDGET-2011-TAB/pdf/BUDGET-2011-TAB.pdf

Our debt is a fraud, a game of who gets stuck with paper when the music stops. That is why Republicans don't like taking other people's money. Consider Japan, they have 200% of GDP in debt, that they currently pay 1% or less for. If that ever rises up to 3%, it will literally cost ever tax dollar collected from the people to pay the interest. That's why Republicans don't want to borrow more.

http://www.businessinsider.com/five-things-you-need-to-know-about-japans-debt-crisis-2011-3#ixzz1JPRjLcXy

Clinton started paying down the debt.

W fixed that. He wanted to increase the debt to impossible levels in order to starve the beast.

Reigniting the consumer economy would help get us back to a Clinton like economy with revenue surpluses. So the deficit hawk position is actually to reignite the economy by getting more purchasing power into the hands of consumers rather than less. That is, decrease taxes on the middle class, increase those on the 1% who are doing nothing with the 2 trillion in investment dollars they are not using, and temporarily inject more cash into the hands of the consumers by spending heavily on infrastructure programs that generate lots of middle class jobs.

Clinton started paying down the debt.

Nope. Check the cite.

All the rest is supposition and fantasy. Giving consumers money that you took away from other people isn't going to ignite anything in debt driven recession. The reason all that money sits on the sidelines is to keep it away from redistributionists like yourself. I'm not being mean, I'm being literal. Risking that money in this kind of environment is negligence.

Certainly, there a lot of people with your common sense philosophy. The point of view projected at FOX is that economics is not about empirical studies concerning which measures work and which do not- instead it is a morality play. "We overspent. Now we must do penance."

The counter intuitive evidence is the way to get back to a strong economy where you are able to pay down debt is to spend not save. Smart countries of Europe and Japan ignored the evidence and were swayed by the intuitive sorts of arguments that it was time to be realistic and tighten the belt.

I understand the point of view. It is just tragically mistaken and the kind of medicine that kills patients. It's like the GOP is running around prescribing leaches and blood letting.

Now for the facts. What this austerity philosophy cost Japan was a lost decade of GDP growth. What it is costing EU countries is recession combined with inflation. (source) And what it cost Hoover was deeper economic collapse and his job. Keynes rescued the American economy during FDR and in 2008.

Of course, if you like the European/ Austrian solution of austerity, maybe you should move to Austria. You'll have plenty of company with your economic perspective.

The counter intuitive evidence is the way to get back to a strong economy where you are able to pay down debt is to spend not save.

A man goes into his grocery store and confronts a clerk in the frozen food section. The clerk has told him that easting a certain diet ice cream will shed pounds, but apparently he's gained. To which the clerk replies, "You must need to eat more of it , sir!"

Smart countries of Europe and Japan ignored the evidence and were swayed by the intuitive sorts of arguments that it was time to be realistic and tighten the belt.

Not so much. Japan has debt equal to 225% of GDP. Surely you're not going to call that tightening? As for Europe, the austerity is a myth, and Hoover actually increased percapita spending 88%.

http://www.nationalreview.com/corner/299233/show-me-savage-spending-cuts-europe-please-veronique-de-rugy#

http://www.cato.org/pubs/journal/cj16n2-2.html

The real bottom line here is that Krugman et al are treating a debt driven recession like a demand driven recession. People can't avoid saving when they are up to their neck in debt. They have to pay it off, forestalling more borrowing and/or spending. Sadly such economists are wedded to their models rather than the people they seek to emulate. It's why they're almost always wrong.

Ice cream?!? Oh I get it. Anecdotes trumps empirical data. Nice talking point, but if you want to talk economics, stick to data, not old wives tales.

umm. Were you paying attention? When was Japan's lost decade? And what caused their liquidity trap? You betcha. Tight money policies.

The bottom line is we have an economy driven by consumer spending. If consumers have no money, they cannot spend. Take more and more money out of their pockets as the 1% has done, and the consumer economy has no purchasing power. The 1% pumped it dry, and lined their accounts to the tune of 3 trillion dollars, which they will not spend why? Because the consumers aren't buying.

If their lunatic thinking were not so tragic for the millions of people unemployed, it would be comical.

As for paying down the debt, where are the GOP masters of economies who did so? Silence- what? Why? Clinton paid down the public debt by $450 billion. The Republicans? Heck- W jacked it up over a trillion, and the country holding the bag for the cleanup of the republican toxic waste of their deregulatory delusional economic policies.

Thanks a lot GOP.

But you go right ahead eating those Austrian brownies. You betcha!

The moral of the story of course is that you can't solve a debt problem with more debt.

Japan's problem is exactly the same as ours, a real estate bubble bursting. Banks didn't want to lose face over all the bad loans and kept them on the books to this day. A liquidity trap is just a reaction to all that debt.

http://en.wikipedia.org/wiki/Japanese_asset_price_bubble

As for Clinton reducing our debt, I'm going to need an official cite. Mine says he didn't.

Public debt has increased across all presidencies since 1973. There are two exceptions. It was paid down by two Presidents: Bill Clinton and Jimmy Carter. If you'd like to review the citations for this, feel free to refer to the wikipedia article on the history of US public debt.

Excuse me, I have to understand something about your intentions in this discussion.

I have reviewed some of your notes and it appears to me you might not be interested in factual evidence. Do you actually deny the consensus opinion of the world's scientists regarding the human role in climate change?

John - We should emulate the practice of paying down debt under Clinton and Carter, not run up the deficits, debt and continuously raising our credit limits. The european debt crisis and the only possible option to unchecked deficit spending is austerity because the markets are demanding higher and higher interest rates for their debt because the markets have no faith in the countries being able to control their spending. So the same bond markets have sold the euro debt and bought US debt not because we are the shining example of fiscal responsibility, but because we are the least worse house in a deteriorating neighborhood. The markets also price in to our low interest rates that the republicans, particularly the Tea Party are serious about fiscal restraint with the sequestration and imminent fiscal cliff If not for this debt ceiling sequestration, our interest rates would be much higher. If Dems were in control of both houses, then deficit spending and the debt would be much higher along with higher interest rates.

You have merely repeated the Austrian school line of argument represented by thinkers such as Hayek.

Sorry. The argument was that Keynesian economic have been proven historically to work, whereas austerity measures do the opposite of their well meaning intent. Now is the time to invest in the economy, not starve it of purchasing power.

The problem with the austerity argument as I pointed out to Shooter, is that when austerity measures are used during an economic downturn, they exacerbate economic downturns, not relieve them. That's an empirical fact about responses to bubbles going all the way back to the 1825 British banking crisis. Just one example I cited was the Japanese who used such tight money techniques and generated a lost decade of economic growth.

Even the loose proposition you present doesn't make much sense.

1. We should pay down debt because in Europe markets are demanding higher rates of interest because they do not have faith in governments.
2. Part of the reason we have low interest rates is thanks to the Tea Party (Who bring measures before congress resulting in the reduction of the US credit rating- WTF- are you serious?)
3. Our interest rates would be much higher if Dems were in control, because they deficit spend more. (WTF- repeat after me. ALL of the GOP presidents since Nixon have been deficit spenders. The only presidents who have paid down the debt are Democrats. If you want responsible economic policies, you should therefore vote in accordance with what politicians actually do, rather than the alternate reality that Fox and talk radio hosts spin. )

The propositions all ignore facts. The US debt does not have high interest rates, and a lot of this has nothing to do with Dem or GOP policies- it has to do with the US dollar's status as the global reserve currency. One eager buyer of US debt is the Chinese, who attempt to buy up US dollars as a way of pushing down the relative value of their currency.

The trap for the Chinese, is that they cannot dump this debt rapidly, nor will they get back the same value as they put in. Essentially, the debt is a great deal because we have to pay back less than what we borrowed as explained in the lead article.

John - Our AAA rating is lowered to AA and we have the lowest long term treasury rates ever!!! Ratings are relative when every other sovereign government rating is lowered as well - think reverse grading on a curve. So its the courage of the Tea Party to say no to rubber stamping an automatic debt ceiling increase which led to S&P to downgrade our rating, however its the actual buyers and sellers of our treasury debt who determine interest rates i.e. the market regardless of what S&P, Moody's, Fitch and other rating agencies opine.

Agreed that republicans are as profligate spenders if not more than democrats - they are politicians, aren't they??? However its the rise of the freshmen republicans tea party elected in BO's first mid-term shellacking that are not only taking the Dems to task, but more importantly their own talking out of both sides of their mouths Republican establishment. These freshmen did not keep their heads down and mouths shut as normally expected of freshmen congressmen, they actually practiced what they promised. And its the debt ceiling compromise, the sequestration, the fiscal cliff that pleases the bond traders. I for one see the fiscal cliff as the best thing for the long term health of our economy and would not be disappointed to see this happen. We will have automatic spending cuts in all areas of the budget including Pentagon spending as well as the raising of taxes back to Clinton levels for all income levels. The result is as close to BO's Simpson-Bowles recommendations that we can ever get close to under BO's 2nd term. The sequestration should put us on a path to reduce our debt so that S&P may raise our rating back to AAA.

As for your past examples of Japan and the 1825 British Banking crisis, all of the past crisis had different circumstances and you can't just say ceteris paribus, that because Japan did this, it wouldn't work in our unique and different situation. As for the 1825 British Banking crisis, I wasn't around to witness this, but apparently John you are old enough to cite this, God Bless you John. Now its time for your nap.

The irony here is that the far right and the far left agree. There is tyranny in America. As in the 19th century, the T Party believes the greatest threat to liberty is the government. The left on the other hand believes the greatest threat is mega corporations who own our government. In a sense they both are simply assigning different names to the same entity.

Trouble is, the tea party has been entirely co-opted by Wall Street.

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These representatives are voting on measures like abortion rather than in measures to deal with the fact our democracy is now coin operated, and Wall Street is feeding all the coins. How about breaking up the banks so they are no longer too big to fail. That when when they gamble with people's money, we can simply let them fail rather be forced to bail them out as Bush and Obama.

That would require the big banks/corporations to vote against their own interests. Too big to fail is driven by greed and never ending drive of increasing stock share prices. In a low demand market, the only meaningful way to increase earnings/share prices is to through acquisitions and taking outsized trading risks. However if we do let the big banks to fail, then we can address moral hazard and allow the smaller banks to take share back from the larger banks.

That talking point was dead on arrival, but it didn't stop them from propping it up and making the corpse dance.

It's not ignorance, they deliberately want to crash the country. I don't understand why, really. I mean, if a rising tide lifts all boats, then why not have a strong economy? The rich will be even wealthier.

All I can figure is that conservatives just die when they think that other people are making money.

Old school thought--As demand increases you put profits into raising production thus increasing profits by selling more goods rather than getting greedy and keeping supply short while raising prices to extremes thus cutting demand and enticing competition to undercut your price.