28 Jul 11
Originally posted by Metal BrainWhy's that? Inflation?
Due to quantitative easing one could argue that we have already defaulted on our debt, yet our credit rating remains unchanged.
http://research.stlouisfed.org/fred2/graph/?id=CPIAUCSL
Oh, let me guess, the imaginary numbers in your head are the real ones for inflation.
28 Jul 11
Originally posted by PalynkaThe inflation numbers may not have gone up, but prices at the grocery store have. Prices at the gas pump are up too. That might not be inflation's fault, but nobody really cares when it comes time to vote. They're gonna blame the people in office because milk is up 50 cents a gallon.
Why's that? Inflation?
http://research.stlouisfed.org/fred2/graph/?id=CPIAUCSL
Oh, let me guess, the imaginary numbers in your head are the real ones for inflation.
28 Jul 11
1 edit
Originally posted by dryhumpSo...real bond prices should be calculated in terms of eggs at the grocery store?
The inflation numbers may not have gone up, but prices at the grocery store have. Prices at the gas pump are up too. That might not be inflation's fault, but nobody really cares when it comes time to vote. They're gonna blame the people in office because milk is up 50 cents a gallon.
28 Jul 11
Originally posted by dryhumpDowngrades are not that innocuous because they can serve as coordination mechanisms for selling.
I thought this was an informative story about what a non issue a cut to the US credit rating would be.
http://www.npr.org/2011/07/26/138706125/what-a-credit-ratings-cut-could-mean-for-the-u-s
28 Jul 11
Originally posted by PalynkaI didn't say anything about inflation.
Why's that? Inflation?
http://research.stlouisfed.org/fred2/graph/?id=CPIAUCSL
Oh, let me guess, the imaginary numbers in your head are the real ones for inflation.
Jean Chatzky on the Today show this morning said that we may get a credit downgrade even if the debt ceiling is raised.
28 Jul 11
Originally posted by PalynkaAll I'm saying is that the average voter isn't that interested in bond prices. They care about prices of things they buy on a weekly basis. Our economic system is so complicated most people are totally shut out of it.
So...real bond prices should be calculated in terms of eggs at the grocery store?
28 Jul 11
Originally posted by Metal BrainThat's the same thing they said in the npr story I linked. One guy said he would have downgraded the credit rating 10 years ago.
I didn't say anything about inflation.
Jean Chatzky on the Today show this morning said that we may get a credit downgrade even if the debt ceiling is raised.
28 Jul 11
Originally posted by dryhumpThat's another conversation, though, isn't it? This was about quantitative easing being equivalent to default.
All I'm saying is that the average voter isn't that interested in bond prices. They care about prices of things they buy on a weekly basis. Our economic system is so complicated most people are totally shut out of it.
28 Jul 11
Originally posted by PalynkaBecause it is like cheating. QE leads to the bonds having less returns.
Well, then, can you explain why QE means the US is "already defaulting on [its] debt"?
If the returns remained the same it would not be cheating.
China has made this claim among others.