Paul Krugman economics: Deny, deny, deny!

"The Social Security administration’s post on the issue:

" If we look at life expectancy statistics from the 1930s we might come to the conclusion that the Social Security program was designed in such a way that people would work for many years paying in taxes, but would not live long enough to collect benefits. Life expectancy at birth in 1930 was indeed only 58 for men and 62 for women, and the retirement age was 65. But life expectancy at birth in the early decades of the 20th century was low due mainly to high infant mortality, and someone who died as a child would never have worked and paid into Social Security. A more appropriate measure is probably life expectancy after attainment of adulthood.

" As Table 1 shows, the majority of Americans who made it to adulthood could expect to live to 65, and those who did live to 65 could look forward to collecting benefits for many years into the future. So we can observe that for men, for example, almost 54% of the them could expect to live to age 65 if they survived to age 21, and men who attained age 65 could expect to collect Social Security benefits for almost 13 years (and the numbers are even higher for women).

" Also, it should be noted that there were already 7.8 million Americans age 65 or older in 1935 (cf. Table 2), so there was a large and growing population of people who could receive Social Security. Indeed, the actuarial estimates used by the Committee on Economic Security (CES) in designing the Social Security program projected that there would be 8.3 million Americans age 65 or older by 1940 (when monthly benefits started). So Social Security was not designed in such a way that few people would collect the benefits."

http://www.ssa.gov/history/lifeexpect.html

 

The fact that the dollar "seems" to have based is even more evidence that the "market" knows the Fed can't continue this much longer, and rates will have to rise.

 

Assuming you're right, rising rates in a zero rate environment should make the dollar even more attractive.

 

Well done.

 

You are correct. It is precisely the rate spread between, say Bunds and TBills that is a primary driver of EUR/USD going down (the dollar going up).

 

Gawd, just how stupid are you?

 

Uh...I was pointing out your stupidity dumb shit. I guess it went over your pointy little head though.

 

1980 and Volcker..........not possible today. Any rise in rates beyond a small, nominal amount will spell doom for the US Treasury Mkt. I wonder what economic model Bernanke has for this scenario, simply amazing that the ponzi has held up this long. All the great economists have passed, so we are left with clowns of financial alchemy like Krugman.

 

Speak of the devil...

Volcker Says Weakening the Fed’s Stimulus ‘Liquor’ a Challenge
By Alex Kowalski - Mar 4, 2013 12:22 PM MT

"Former Federal Reserve Chairman Paul Volcker said U.S. central bank officials may find it difficult to rein in their historic stimulus at the appropriate time because “there is a lot of liquor out there now.”

“At some point when the worm turns and the party is getting under way, to use that old analogy, at what point do you begin retreating?” Volcker said today in a forum discussion in Washington. “You can make a mistake and go too quick, but the much more frequent mistake in my judgment is you go too slow, because it’s never popular to take the so-called punch bowl away or to weaken the liquor.”

“There’s a lot of liquor out there now,” he said during the National Association for Business Economics annual policy conference today.

"Fed officials have expanded the central bank’s balance sheet to a near-record $3.09 trillion by purchasing assets in an effort to stimulate economic growth and reduce an unemployment rate at 7.9 percent. The actions have raised concerns the Fed may risk contributing to financial instability.

"Earlier in the day, Fed Vice Chairman Janet Yellen told the conference attendees that while “the potential costs” of asset purchases “definitely need to be monitored over time,” she did “not see any that would cause me to advocate a curtailment.”
Risk Balance

“I view the balance of risks as still calling for a highly accommodative monetary policy to support a stronger recovery and more rapid growth in employment,” Yellen said. The Fed should press on with $85 billion in monthly bond buying, she said.

"Volcker said the current policies Fed officials’ put in place are “OK at the moment” because there’s “no inflationary problem at the moment, and they want to support growth.”

Wrapping up the stimulus will be “mechanically” possible, Volcker said. Doing it at the “crucial time, in a delicate way that can be done without creating expectations in the other direction that will be harmful” is the difficult part, he said.

“It’s not impossible, but it’s a real challenge,” said Volcker, 85. He spoke at the event after receiving NABE’s first lifetime achievement award for economic policy.

"The Federal Open Market Committee in January affirmed its plan to continue buying $40 billion per month in mortgage bonds and $45 billion in Treasuries. "

http://www.bloomberg.com/news/2013-...ng-the-fed-s-stimulus-liquor-a-challenge.html

 

One day Paul Krugman was standing on the observation deck of a 100-story building. All of a sudden, he grabs the guy standing next to him and leaps off the building, taking the other guy with him.

Krugman is serene as can be, but the guy he pulled over with him is screaming hysterically as they plummet toward the concrete sidewalk below. As they fall past the 50th floor, Krugman calmly says to the guy, "See, I told you there was nothing to worry about."