Saturday, February 20, 2010
I got my answer:Two days ago, I posted this: The question that should be asked of all deficit panel/commission/hawks is:Do you advocate defaulting on the special Treasury bonds held by the Social Security Trust? It dispenses with the smoke and mirrors of CPI angst, detaches Social Security from Medicare/Medicaid, and basically asks if people who paid into a retirement-insurance program should get their money back. Instapundit yesterday: SO HERE’S A QUESTION: Would a default on Treasuries accomplish what the Balanced Budget Amendment was supposed to achieve, by forcing the government to spend no more than it takes in? With more collateral damage, of course. . . . Reynolds is speaking about more than just the special Treasuries held by the Social Security Trust. He's contemplating defaulting on all treasuries. Glenn Reynolds is a very moral man and Beauchamp Brogan Distinguished Professor of Law at the University of Tennessee. Of course, he might scale back from a radical "default on all treasuries" to a more sensible - and David Broder approved - "default on Social Security treasuries". That way the Chinese don't get upset and make life difficult for corporate business seeking to expand in that country. As for seniors, well, they can go back to work.
posted by Quiddity at 2/20/2010 02:53:00 PM
8 comments
Quiddity, check out Bruce Bartlett's smackdown on Reynold's faux-innocent question
http://wallstreetpit.com/17302-another-dumb-right-wing-idea-default-on-the-debt
Thoughtful and brutal.
Placing SS taxes into Treasuries meant that the govt. borrowed this $ from wager earners. The expectation is/was that the economy will continue to grow so there was no problem in paying out as the Boomers retired. In addition to squandering the money on wars, defense and other boondoggles like a little used airport for Congressman Jack Murtha's district, Wall Street bailouts, and so on, we should realize that the possibilities for economic expansion are pretty much gone. Why? Oil production peaked in 2005; and cheap oil production peaked in 1998, when oil was $11 a barrel. No cheap and increasing supply of oil = no grwoth and decline.
Peak oil? Not even close. Peak oil is wishful thinking on the part of anti-energy activists who have manufactured a pseudo-scientific fantasy to support their political wishful thinking.
Once the country votes the Democrats out of power and starts massive drilling and energy production, the United States is going to roar back.
^ ah, cargo-cult thinking.
Sink the wells and the oil will flow.
So childlike in its naivete.
The price of oil is a marginal point of pain in the economy. It's significant, but not as significant as the cost of land and ground rents.
Oil goes up, ground rents go down.
Cost of land? Ground rent? What are you talking about? Oil leases? Real estate?
I pay $100/mo on gas and perhaps another $100/mo for energy costs is incorporated into the stuff I buy.
I pay an order of magnitude more just for ground rent.
Ground rent is the site value of a property, what it costs without any capital improvements.
Energy is very marginal in our economy compared to the money we have to pay for land use rights.
The boom last decade was driven by over three trillion dollars of real estate mortgage lending 2003-2006.
Oil being $3 or $2 a gallon is really neither here nor there compared to that.
"Peak oil? Not even close."
A right-wing fool who swallows ExxonMobil accounting tricks hook, line and sinker. There's a difference between "oil reserves" and "oil-equivalent reserves." XOM is finding natural gas, not a lot of oil. It's easy to "find" a lot of natural gas when you purchase a company (XTO Energy) that is the country's largest producer of same.
Anonymous wrote, Cost of land? Ground rent? What are you talking about? Oil leases? Real estate?
Heh. The fact that someone doesn't understand the basic definitions of the economics of land, and how big a chunk of the economy land is, shows how pathetic our political debate is. (I'm saying that because this lack of knowledge is probably representative of 99.9% of the electorate, and a sizeable majority of practicing "economistsS".)
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