Documentary of the Week: Paying For the Past

June 26th, 2015
in econ_news

Econintersect: In May a conference was held in Washington, DC, Fiscal Summit 2015:  Opportunity for America, sponsored by the Peter G. Peterson Foundation.  The panel discussion entitled "Paying for the Past: How Will Rising Interest Costs Affect Economic Growth?"  The session was moderated by Betty Liu of Bloomberg TV with panelists Alan Greenspan, Richard W. Fisher and Lawrence B. Lindsey.

greenspanfisherlindsey

Follow up:

Greenspan is the former Chairman of the Federal Reserve Board, Fisher is the recently retired President and CEO of the Federal Reserve Bank of Dallas and Lindsey is a former Federal Reserve Board Governor and former Director, National Economic Council under Pres. George W. Bush.

Econintersect:  This is a distinguished panel.  One would think that "pronouncements" by these gentlemen would be acceptable without question.  However, we would like each of them to define what assumptions are required for some of the statements made.  Two examples (some paraphrasing):  (1) Lindsey (ca. 2:40) 'The Fed purchasing government bonds is unsustainable.'  Why?  He says that paying interest on 'that debt' is a problem.  We would ask him to explain because interest paid by debt held by the Fed is returned to the U.S. Treasury.  Where is the problem?  What is unsustainable about about the Fed purchasing government bonds?  Please be specific.   (2) Lindsey (ca. 2:50) 'Ultimately the Fed is going to have to dump the debt it now has ontothe market.' What is the basis for saying that the Federal Reserve will have to sell assets from its balance sheet?  What conditions are likely necessary for the Fed to reduce its balance sheet?  How distant is 'ultimate' likely to be?  We would suggest that selling assets by the Fed will only make sense if inflation is rising and money needs to be drawn out of the economy.  'Dumping' is not an appropriate term in our opinion - selling would only make sense in a measured process.

There are some very good points made as well.  For example, Greenspan emphatically states that the use of the term 'Social Security Trust Fund' is nonsense - Social Security is funded out of current tax flows and/or fiscal deficits.

Source









Make a Comment

Econintersect wants your comments, data and opinion on the articles posted.  As the internet is a "war zone" of trolls, hackers and spammers - Econintersect must balance its defences against ease of commenting.  We have joined with Livefyre to manage our comment streams.

To comment, just click the "Sign In" button at the top-left corner of the comment box below. You can create a commenting account using your favorite social network such as Twitter, Facebook, Google+, LinkedIn or Open ID - or open a Livefyre account using your email address.















 navigate econintersect.com

Blogs

Analysis Blog
News Blog
Investing Blog
Opinion Blog
Precious Metals Blog
Markets Blog
Video of the Day
Weather

Newspapers

Asia / Pacific
Europe
Middle East / Africa
Americas
USA Government
     

RSS Feeds / Social Media

Combined Econintersect Feed
Google+
Facebook
Twitter
Digg

Free Newsletter

Marketplace - Books & More

Economic Forecast

Content Contribution

Contact

About

  Top Economics Site

Investing.com Contributor TalkMarkets Contributor Finance Blogs Free PageRank Checker Active Search Results Google+

This Web Page by Steven Hansen ---- Copyright 2010 - 2016 Econintersect LLC - all rights reserved