The architect of Obamanomics and huge deficits

[Denny Crane]

I just want to point out that this woman is either an outright liar or incompetent.

http://www.nytimes.com/2011/05/22/business/economy/22view.html?ref=business

This example describes conditions in the early 1980s, when President Ronald Reagan’s tax cuts and military buildup led to large deficits. Those deficits, along with the anti-inflationary policies of the Fed, where Paul A. Volcker was then the chairman, led to high American interest rates. The dollar was very strong in this period.

http://www.infoplease.com/ipa/A0908373.html

Fed funds 1980 13.35%, 1985 8.10%
Prime rate 1980 15.26, 1985 9.93
Discount rate 1980 11.77, 1985 6.98

WTF is she talking about?

 

[barfo]

I just want to point out that this woman is either an outright liar or incompetent.

http://www.nytimes.com/2011/05/22/business/economy/22view.html?ref=business

This example describes conditions in the early 1980s, when President Ronald Reagan’s tax cuts and military buildup led to large deficits. Those deficits, along with the anti-inflationary policies of the Fed, where Paul A. Volcker was then the chairman, led to high American interest rates. The dollar was very strong in this period.

http://www.infoplease.com/ipa/A0908373.html

Fed funds 1980 13.35%, 1985 8.10%
Prime rate 1980 15.26, 1985 9.93
Discount rate 1980 11.77, 1985 6.98

WTF is she talking about?

I think the first thing we have to ask is, what the fuck is Denny Crane talking about?
What do the rates in 1980 have to do with anything?

barfo

 

[PapaG]

I think the first thing we have to ask is, what the fuck is Denny Crane talking about?
What do the rates in 1980 have to do with anything?

barfo

Ask Christina Romer, since she brought them up in the article Denny linked. Derrrrr

It helps if you actually read the article before offering a stupid post.

 

[barfo]

Ask Christina Romer, since she brought them up in the article Denny linked. Derrrrr

It helps if you actually read the article before offering a stupid post.

Funny, thing, I did read the article, and Romer did not bring up the rates in 1980. She brought up rates in the early 1980s, when Ronald Reagan was president.
Here's a little clue for you: Reagan became president in 1981. Derrrrr back atcha.

barfo

 

[PapaG]

Funny, thing, I did read the article, and Romer did not bring up the rates in 1980. She brought up rates in the early 1980s, when Ronald Reagan was president.
Here's a little clue for you: Reagan became president in 1981. Derrrrr back atcha.

barfo

It's called a baseline. Derrrrr

That's the entire fucking point of using 1980. You then compare it to 1985, after Reagan's policies had 5 years to work. 1980 was the last year to use prior to Reagan taking office.

Derrrrrrrrrrr

Stupid fucking post, as usual.

 

[barfo]

It's called a baseline. Derrrrr

That's the entire fucking point of using 1980. You then compare it to 1985, after Reagan's policies had 5 years to work. 1980 was the last year to use prior to Reagan taking office.

Derrrrrrrrrrr

Stupid fucking post, as usual.

Well, that's rather different from what you said before. Makes me think you are making this up as you go along. And, of course, in 1985 Reagan's policies hadn't had 5 years to work, since he only became president in 1981.

I'll just wait for Denny's explanation about what Denny meant, if you don't mind.

barfo

 

[PapaG]

Well, that's rather different from what you said before. Makes me think you are making this up as you go along. I'll wait for Denny's explanation about what Denny meant, if you don't mind.

barfo

You can't figure out what Denny meant by comparing 1980 to 1985? I'm not surprised.

 

[barfo]

You can't figure out what Denny meant by comparing 1980 to 1985? I'm not surprised.

Hey, you actually provided some value here! I'm totally surprised.

See, I hadn't noticed that Denny had provided 1985 values. Not sure how I missed that, but I did.

So thanks! Derrrr at me indeed.

barfo

 

[Denny Crane]

Hey, you actually provided some value here! I'm totally surprised.

See, I hadn't noticed that Denny had provided 1985 values. Not sure how I missed that, but I did.

So thanks! Derrrr at me indeed.

barfo

Yeah, I did. The interest rates were sky high when Reagan took office and steadily declined over the next 3 decades. I bought my first house in 1983. When we applied for the loan, the rate was 18.75%. Over the 90 days it took to close, we ended up with a 12.75% rate.

What the hell is Romer talking about?

 

[barfo]

So now, with PapaG's help reading Denny's message, I can now reply: The fact that interest rates were even higher in 1980 doesn't mean that what Romer said was wrong. More than one thing can lead to high interest rates, and she didn't say interest rates were high relative to 1980. She just said that interest rates were high (which they were according to your 1985 data). She could be correct that deficits + anti-inflationary Fed policies = higher interest rates than what would be obtained in the absence of those factors.

barfo

 

[Denny Crane]

So now, with PapaG's help reading Denny's message, I can now reply: The fact that interest rates were even higher in 1980 doesn't mean that what Romer said was wrong. More than one thing can lead to high interest rates, and she didn't say interest rates were high relative to 1980. She just said that interest rates were high (which they were according to your 1985 data). She could be correct that deficits + anti-inflationary Fed policies = higher interest rates than what would be obtained in the absence of those factors.

barfo

Now you need to go read up on when Volker instituted his anti-inflationary policies. Hint - it was after Reagan took office.

 

[barfo]

Now you need to go read up on when Volker instituted his anti-inflationary policies. Hint - it was after Reagan took office.

Link?

barfo

 

[MARIS61]

Why is Denny referencing 1985, before most of Reagan's rape of the common man had had time to show it's full effect?

Why not look at 1989? Or even 1993, since Bush didn't change the course?

I think there was an historically high deficit around that time, and then a Democrat saved the country from economic collapse and left a historically high surplus.

Then another Bush took that historically high surplus and turned it into an even higher deficit than Reagan left us, historically high again.

I think history indicates we should just sit back and wait for this Democrat to turn that historically high deficit from Bush Jr into an even higher historical surplus.

History also indicates it takes 2 terms in office to reverse the economy's direction.

 

[Denny Crane]

Link?

barfo

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

Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983.[12]

Good

Volcker raised the federal funds rate, which had averaged 11.2% in 1979, to a peak of 20% in June 1981. The prime rate rose to 21.5% in 1981 as well.

Bad.

 

[barfo]

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



Good



Bad.

Ok. Now maybe I'm not reading carefully enough once again, but I don't see your point about Volcker in relation to Romer's article. Care to explain in small words so that I can understand? Use Derrrr liberally (ha ha) if needed.

barfo

 

[Denny Crane]

Ok. Now maybe I'm not reading carefully enough once again, but I don't see your point about Volcker in relation to Romer's article. Care to explain in small words so that I can understand? Use Derrrr liberally (ha ha) if needed.

barfo

She explicitly referenced Reagan and the tax cuts, etc. That would be 1981, when Volker had hiked the Fed Funds rate to 20%.

 

[barfo]

She explicitly referenced Reagan and the tax cuts, etc. That would be 1981, when Volker had hiked the Fed Funds rate to 20%.

Ok. She claimed that Volcker's actions led to high interest rates. Isn't 20% a high interest rate?

barfo