Re: Bush busts Social Security with massive deficits

From: William F Hummel (wfhummel_at_comcast.net)
Date: 10/03/04 

Date: Sun, 03 Oct 2004 22:54:40 GMT

On Sun, 03 Oct 2004 19:14:31 GMT, Igor <jjweatherby@houston.rr.com>
wrote:

>William F Hummel wrote:

>> The additional supply of Treasury bonds, if sold in long-term
>> maturities could temporarily increase long-term interest rates, but
>> would not effect on short-term rates.
>
>You really think the price of Bonds has no effect on the interest rate?

Yes, because I am not talking about "the interest rate", I am talking
about short-term rates like T-bills. They closely track the Fed funds
rate, which is an administered rate which the Fed controls closely.
Long-term bonds are the what speculators play with.
>
> >Your scenario about the
>> deficit raising interest rates is simply not consistent with the
>> facts. In truth, crowding out in financial terms is a myth, the kind
>> of dogma that pervades so much of academic economics.
>
>Prove it is a myth. Don't show me a simple correlation and assume it
>implies causation. Any statistics prof will teach a student on day one
>correlation does not imply causation. Show me how you have corrected for
>bias. Show me what data you used to find the correlation. Prove you used
>the correct data and used the right method. You just can't throw up a
>number and say it disproves something. Without references, I do not even
>know if you are making up the correlation or simply misunderstood
>something you read.

Two can play this game. Prove that deficit spending is the cause of
increasing interest rates. Are you asking us to simply accept it as
fact based on your word?