Tuesday, May 1, 2012

"infinitely better"

From Robert Reich's #21788301646:

...the real issue isn’t debt per se but the ratio of the debt to the size of the economy.

In their haste to cut the public debt, Europeans have overlooked the denominator of the equation. By reducing public budgets they’ve removed a critical source of demand — at a time when consumers and the private sector are still in the gravitational pull of the Great Recession and can’t make up the difference. The obvious result is a massive slowdown that has worsened the ratio of Europe’s debt to its total GDP, and is plunging the continent into recession.

A large debt with faster growth is preferable to a smaller debt sitting atop no growth at all. And it’s infinitely better than a smaller debt on top of a contracting economy.

Infinitely better. The words of a man who does not understand numbers. The chosen word should be interesting, perhaps aggressive, never irritating. Reich is irritating.

I like "the gravitational pull". Wealth has gravity, or something like. That's the reason people say it takes money to make money.

I don't so much like "the real issue" and "per se". Here: The problem is not the debt itself, but the ratio of debt to the size of the economy.

But Reich -- Santovenia once referred to him as "the diminutive Mr. Reich" -- isn't really talking about debt. He's talking about "the public debt" and that's a whole other animal. The way the economy responds to "debt" is by no means the same as the way it responds to public debt.

We can argue till the cows come home about more or less public debt and the benefit or harm of it. Twill solve nothing. Public debt is not the problem.


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