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Re:The Demoralization is just Beginning by AnthonyMouse on Wednesday March 05, 2025 @04:32AM (#43264649)
And that sort of thing is predictably wrong. It's premised on the combination of low interest rates and a lack of inflation, even though low interest rates generally cause inflation.

As soon as you get inflation, keeping interest rates low would make it worse, but raising them explodes the interest rate on the debt. And your other alternative to paying the high interest is to print the money to pay the debt, which also worsens inflation. So taking on that much debt is just a bomb that goes off as soon as inflation becomes non-trivial, and on top of that, is a thing that generally causes inflation.

To understand how people like that succeed, realize that there is always a market for someone who will tell you what you want to hear.

Re:The Demoralization is just Beginning by ryandamm on Wednesday March 05, 2025 @11:10AM (#43268490)
I think you’re confusing correlation for causation.

I trust a Nobel Prize winner has thought through it more deeply and integrated the causes and effects more than most random internet commentators. I am happy to report that “low interest rates” do not cause inflation by themselves on any scale less than a decade. Source: 1995-2021.

What actually causes inflation is more a function of overall demand and supply in an economy. Interest rates have an indirect effect on that balance that can also have higher or lower leverage depending on a lot of other factors.

Re:The Demoralization is just Beginning by tdullien on Wednesday March 05, 2025 @12:33PM (#43269650)
This is an important point, and thanks for pointing that out in this discussion.

The reason why raising interest rates breaks inflation is usually because it chokes off economic activity to a point where labor ceases to have bargaining ability to ask for higher wages, which then chokes demand, which then helps bring supply and demand back into equilibrium and breaks the inflationary spiral.

It's a mechanism that is quite clear, but also rarely discussed in polite company, because "breaking the bargaining power of labor by intentionally choking economic activity to create enough unemployment" is, when spelled out, prone to creating pretty emotional reactions.

Re:The Demoralization is just Beginning by jrflowers on Wednesday March 05, 2025 @12:33PM (#43269651)
I don’t think you are going to convince people to start liking or agreeing with Paul Krugman with your posts. People criticize him because they have read his stuff. The dude has been a very public figure for a very long time.

At some point “Actually he is good and strong and smart and he is my friend” posts start sounding more like a fandom argument than anything actually salient to a discussion about any particular economic subject.

Re:The Demoralization is just Beginning by AnthonyMouse on Thursday March 06, 2025 @12:27AM (#43276708)
> I am happy to report that “low interest rates” do not cause inflation by themselves on any scale less than a decade. Source: 1995-2021.

Interest rates in 1995 were about average, not particularly low. The zero interest rate period really started at the end of 2008 in response to the housing crash, with a very specific goal: To counteract the deflationary effect of the housing crash.

A major deleterious effect of that policy was to effectively re-inflate the housing bubble, which is now Causing Problems. But it was quite effective at doing the thing it does, which is increasing the rate of inflation relative to the alternative. When the rate of inflation would otherwise have had a minus sign in front of it, that can be what you intended to do, but that doesn't mean that's not what it does.