Hoisington Investments, of Austin TX, has some interesting data on the relationship between interest rates and debt – both government and private in its current newsletter.
“It is often said that economic conditions would have been much worse if the government had not run massive budget deficits and the Fed had not implemented extraordinary policies.
“This whole premise is wrong.
“In all likelihood the governmental measures made conditions worse, and the poor results reflect the counterproductive nature of fiscal and monetary policies.”
We found this on a wonderful post by Mish, who includes a video encapsulating his advice on whether to go short or long on US Treasuries, after reviewing the mixed and conflicting history of government bonds.
Notice that the EU nations have been doing this in the face of massive evidence that it won’t work. Japan did it. It didn’t work. Why do they all do it then, if their stated goal is to revive a moribund private economy? Because that is not their real goal.
The real goal is to increase government/bureaucratic power. To do that you have to either debase the currency by creating more (can’t say ‘printing’ any more since it’s all electrons now) or taxing the private economy more (known as ‘the rich,’ but in reality everyone in the private sector) or both. These tactics shrink the private sector and bulk up the government sector.
Oh, the video? It’s Aretha Franklin in a show-stopping number called “Think!” from a Blues Brothers movie. It should cheer you up and relax you after the mental strain of trying to process all the information in Hoisington’s newsletter.