> I include just a part of a much longer article. Goldman explains why US
> treasuries are so popular and why this discourages investment. What are
> economists opinions on this analysis?
>
> David P Goldman was global head of fixed-income research for Banc of
> America Securities and global head of credit strategy at Credit Suisse
> http://www.atimes.com/atimes/Global_Economy/JK13Dj01.html
I'm not an economist, but judging by the article, Goldman is an outright sado-monetarist - loopy Far Right types who deify the bond market and have no clue that someone, somewhere, needs to actually buy products for businesses to flourish. It's the usual Far Right swill, about how slashing taxes on the rich, crushing unions and welfare states, and deregulating everything will create prosperity. Their policies have been a planetary disaster.
> contraction. If the Treasury tries to spend its way out of recession, the
> results are likely to be very disappointing.
This is where Goldman falls into neo-Hooveresque lunacy. Private consumption is falling off a cliff, which means governments MUST spend, and massively, or we fall into a decade of hell. And governments can certainly spend - the Treasury can create money, and Congress can spend it on green jobs, infrastructure, etc. The only danger in printing money is kicking up inflation, which tends to hit bondholders - precisely the section of the ruling class Goldman worked for ("fixed-income" means bonds). But infrastructure investments don't create inflation, they create productive assets, which then pay for the debt.
True, the US won't be able to finance its current account deficit by borrowing abroad forever. But that's a long-term problem which needs a long-term solution - short-term austerity would only make things worse. First boost the economy, then boost savings.
-- DRR