Ron Paul's debt ceiling solution

Originally posted by Metal Brain
Due to quantitative easing one could argue that we have already defaulted on our debt, yet our credit rating remains unchanged.

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.

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

Originally posted by Palynka
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.

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.

Originally posted by dryhump
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.

So...real bond prices should be calculated in terms of eggs at the grocery store?

Originally posted by dryhump
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

Downgrades are not that innocuous because they can serve as coordination mechanisms for selling.

Originally posted by Palynka
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.

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.

Originally posted by Palynka
So...real bond prices should be calculated in terms of eggs at the grocery store?

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.

Originally posted by Metal Brain
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.

That'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.

Originally posted by dryhump
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.

That's another conversation, though, isn't it? This was about quantitative easing being equivalent to default.

Originally posted by Metal Brain
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.

Well, then, can you explain why QE means the US is "already defaulting on [its] debt"?

Originally posted by Palynka
Well, then, can you explain why QE means the US is "already defaulting on [its] debt"?

Because it is like cheating. QE leads to the bonds having less returns.
If the returns remained the same it would not be cheating.
China has made this claim among others.

Originally posted by Metal Brain
Because it is like cheating. QE leads to the bonds having less returns.
If the returns remained the same it would not be cheating.
China has made this claim among others.

How does the QE leads to the bonds having less returns if not for inflation?