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In a presentation cleverly named "Deficits Don't Matter," Jeff Gundlach asks "How could you...

  • Tuesday, May 8, 2012, 5:03 PM ET
    In a presentation cleverly named "Deficits Don't Matter," Jeff Gundlach asks "How could you raise interest rates?" Unemployment would be 11% if the participation rate hadn't dove as it has, and it could take 8 years to gain back all the jobs lost in the recession. Another reason is the size of the government debt. When Bernanke says he's in no rush to hike, Gundlach absolutely believes him.
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This news story has 13 comments:

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    Big Bro has to feed the beast and the beast votes.

    Interest rates will remain low for as long as the charade of solvency can be propped up.

    Understand. The people who want a return on their 'entitlements'(ss & medicare) and those on freebies(medicaid and welfare) will starve out those on fixed income. They mean more in terms of vote getting and vote buying. So starve granny. The 99% must be fed and their temper tantrums are getting louder. *chuckle* They will pay for it in the end. They will always pay for it whether through high unemployment or inflation or both. They're such smart people.
    8 May 2012, 05:10 PM Reply Like
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    Pick your poison: Spend 250 years of good will until the printing press runs out of ink, or raise rates until investors will buy the debt of a bankrupt nation. Either way, the end result is still the same. Kicking the can down the road does nothing for addressing the problem. Keep an eye on Europe. They are trying to reject the Paulson/Geithner model in favor of addressing the problems now. It will put some banks, and countries, out of business. But, it will also open the door to recovery and job growth. Four years is time enough to wait for the current model to create economic growth. Clearly, it has failed. Miserably. Time to move along.
    8 May 2012, 05:23 PM Reply Like
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    Ever get the notion we're the Europe of a few years ago and trying the same failed policies we are currently watching unravel?
    9 May 2012, 11:24 AM Reply Like
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    2014 .... FED hawk Fischer on the economy: ''I believe we will raise rates from 0 by at least 25 b.p. in early 2016 and not like the rest of the committee says late 2016. I am very firm on that.''
    8 May 2012, 05:52 PM Reply Like
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    Meanwhile, every federal government position is indispensable so if someone leaves, they must be replaced (and maybe more hired since we've lost the 'experience'). And so no progress is made in matching expenses to income.
    8 May 2012, 05:56 PM Reply Like
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    Raise interest rates to 3%: inflation plus 1.

    (1) Commodity and oil prices collapse, reducing the price of crucial food and energy, and boosting the economy.

    (2) Capital is sucked out of gold and other 'unproductive' assets and into businesses and equity capital.

    (3) The dollar soars and money is sucked out of socialist ratholes like Europe and slave labor kleptocracies like china.

    (4) savers are rewarded and profligate borrowers are penalized.
    8 May 2012, 06:19 PM Reply Like
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    Unfortunately the majority are ''profligate borrowers'' and they are not going to vote for that. This includes the government itself. There are $8 trillion in foreign hands due to past current account deficits. Do you mean that you pay that in stronger dollars?
    The debts out there are so huge that this kind of program is not going to work. It may work once the debts have been paid with printed money.
    8 May 2012, 06:55 PM Reply Like
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    5) "soaring" dollar makes US labor extremely uncompetitive: businesses slash jobs and ship them to China and Europe. Unemployment rate "soars" to 99%.
    8 May 2012, 10:22 PM Reply Like
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    " "How could you raise interest rates?"
    We won't, after all we can screw our senior citizens and foolish savers! The foreign lenders will when they realize The Emperor is not wearing any cloths anymore!!
    8 May 2012, 06:22 PM Reply Like
  •  
    I can't connect to his article but I presume he is just saying that our debt and other federal committments are so large that we cannot afford higher interest rates as that is just an additional burden we cannot shoulder.

    I have been saying that for years. We are really on an inflation pathway it appears.
    8 May 2012, 08:50 PM Reply Like
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    Inflation is exactly what the administration, entrenched congress members and the Fed want. I think Ben is exasperated that he can't produce it.
    9 May 2012, 10:39 AM Reply Like
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    He is producing it but not in the CPI but he is killing people on food and energy costs. The only constraint on upward pressure on pricing is at a certain point we go into recession so there is diminishing returns and the rest of the western world is so pathetic we are still a flight to safety refuge.
    9 May 2012, 03:42 PM Reply Like
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    Agree. As long as we are the flight to safety refuge, interest on our debt is low, so we won't get inflation to push the CPI over 3% or so. If we slip into recession, QE 3 will send prices of commodities up, including food. That will probably trigger higher CPI, but they are already exploring new ways to manipulate the numbers.
    10 May 2012, 10:40 AM Reply Like
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