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Originally Posted by sebastian_dangerfield
These things do not pay for themselves unless we have growth, which we are not getting, and govt spending will not create.
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No. An investment which makes sense on its own terms will pay for itself. If you can borrow money at 0% and earn return on it, you have made money whether or not the larger market grows.
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You seem to think that borrowing money only involves paying interest. Recall there's a thing called principal. That the interest is low doesn't mean jack if you can't pay the principal back. "We'll roll it over," you say? Oh, really? Infinitely? Because that's what we're talking. Summers' argument that while we can borrow cheap we must assumes decent to robust future growth. It's an all-in bet on a future most other economists don't see happening. If we borrow like mad, spend, and still lack the economic activity to create tax revenue to pay back debts, borrowing costs skyrocket.
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You keep bouncing back and forth between the state of the entire economy and the effect of things done at the margin, and the result is absolute incoherence. Summers doesn't say that just any investment will work. Of course you have to repay the principal. But you're not even thinking about the marginal effect of the steps he's proposing.
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Conversely, if we pull back, tell Wall Street to fuck off on its next whining demand for QE, and let the market give back 2500 (which would put it where it should be), and allow houses to fall another 10%, and have a few bank failures and break-ups, I think you'll see the money on the sidelines do what vultures do.
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This makes absolutely no sense. None. Someone owns those stocks and houses right now. If their values drop, those people have less money. Transferring their assets to someone with money "on the sidelines" right now will not help those stocks and houses generate economic activity.
