March 27, 2014

Yesterday, a new one-and-a-half-minute economics video from Ezra Klein's newly formed Vox Media hit the internet. In it, Vox Executive Editor Matt Yglesias explained why the current level of the national debt is neither dangerous nor worrying:

He concludes that "debt just isn't a problem right now," because inflation is currently near historic-lows.

The video stirred up some pretty angry responses from people who think that debt is a problem right now. Red State's Erick Erickson claims some of the video is incorrect and calls Yglesias a liar who is spreading "left-wing propaganda."

Erickson contends that: "[Yglesias] tries to explain the National Debt and out of the gate begins with a lie. He claims the national debt is $5 trillion less than the U.S. Treasury says it is."

But Yglesias is pretty clear that he's excluding debt owed from one arm of the government to another, and only including federal debt held by the public. That is completely rational. After all, money the government owes to itself is simply money moved from one side of the government balance sheet to the other. There's nothing dishonest or disingenuous about citing the lower figure that only includes debt held by the public, especially given that Yglesias was clear about this.

Erickson then contends that: "[Yglesias] uses deficit and debt interchangeably."

But the debt is just the sum of the deficit over many years. So there's nothing wrong with treating them as two manifestations of the same thing so long as you understand that one is an annual figure and the other is the total. Yglesias' point is that the reason to worry about deficits is when they lead to elevated inflation and interest rates, something which we are not currently experiencing. This bases the assessment of debt and deficits around the real world consequences of debt and deficits, instead of hand-wringing over the size of the number, which seems to be what Erickson would rather have us do.

Erickson's next point is that: "[Yglesias] claims the U.S. government can never run out of money."

This, of course, is true. The U.S. government is a monetary sovereign that controls its own state-backed fiat money. Does Erickson think this is untrue? Does he think that the U.S. government can run out of paper and electronic dollars? Does Erickson think that the U.S. is back on the gold standard and therefore can run out of money?

Erickson concludes: "This isn't education. It is not explaining. It is left-wing propaganda. It is also sponsored by General Electric. Why is General Electric sponsoring left-wing propaganda?"

Now, to be fair, I'm not sure Yglesias' video will change many minds. It crams in a baffling quantity of information into a relatively short period. Viewers might on first viewing find it more confusing than enlightening, especially given that the mainstream narrative of the terribleness of government debt and deficits has become so deeply ingrained as "common knowledge."

But everything in the video is technically correct. At the very least it has succeeded in sparking a public debate on the issue of the national debt. And it is very definitely not left-wing propaganda, no matter how much Erick Erickson and other debt fearmongers would like it to be. John Aziz

Crisis in Syria
6:59 a.m. ET

On Monday, NATO ambassadors held an emergency meeting after Russian fighter jets in Syria flew at least two sorties into Turkish airspace over the weekend, once locking its weapons onto Turkish fighter jets. The NATO officials warned that Russia's "irresponsible behavior" could have serious consequences. Russia responded that the incursions were an accident and that "there is no need to look for conspiratorial reasons." U.S. and NATO officials dismiss that explanation and suggest Russia is trying to intimidate Turkey and its allies.

In Chile on Monday, U.S. Secretary of State John Kerry said the U.S. is "greatly concerned" about the Russian incursions "because it is precisely the kind of thing that, had Turkey responded under its rights, could have resulted in a shootdown." If Russia attacks Turkey, NATO is obligated to come to Ankara's defense.

Russian fighter jets join an increasingly crowded aerial battlefield over Syria, where Russian and Syrian jets are bombing one side of the country and the U.S.-led coalition — which includes Turkey as well as France, Australia, Canada, Jordan, and Saudi Arabia — is bombing Islamic State and other Islamist targets around the country. "What we're seeing now is a lot of different countries and coalitions operating in the skies over Syria," said Stephane Dujarric, a spokesman for U.N. Secretary-General Ban Ki-moon. "I think it creates a situation that is fraught with danger and very delicate, as we'd seen in the issue of the violation of the airspace with Turkey.... This should really refocus people's attention on finding a political solution." Peter Weber

6:15 a.m. ET

On Tuesday, the Royal Swedish Academy of Sciences awarded the 2015 Nobel Prize in Physics to two particle physicists, Takaaki Kajita in Japan and Arthur B. McDonald in Canada, for their discovery of neutrino oscillations and the resulting evidence that subatomic neutrino particles have mass. "The discovery has changed our understanding of the innermost workings of matter and can prove crucial to our view of the universe," the academy explained in a news release. Those findings "have yielded crucial insights into the all but hidden world of neutrinos. After photons, the particles of light, neutrinos are the most numerous in the entire cosmos."

The two scientists will share the $960,000 prize as well as the honor of winning the same award as Albert Einstein, Marie Curie, and Niels Bohr. Peter Weber

This just in
5:25 a.m. ET

On Tuesday, the European Court of Justice, the European Union's highest court, threw out a 15-year-old agreement allowing companies to transfer data freely between the U.S. and EU. The ruling, which can't be appealed, appears to prohibit Facebook, Google, and other tech companies large and small from moving data about their European customers to the United States, and nobody is quite sure what will happen next.

The case was started by an Austrian law student, Max Schrems, who sued Facebook in Ireland — Facebook's European headquarters — arguing that due to revelations by U.S. National Security Agency contractor Edward Snowden, European consumer data wasn't given adequate privacy protections by Facebook and other U.S. tech companies. The ECJ agreed, immediately invalidating a "safe harbor" agreement in place since 2000 that allows about 4,000 U.S. and European companies to transfer data overseas on the understanding that that data will be given the privacy safeguards applicable to each country's consumers.

Under the new ruling, national regulators will be able to judge whether companies meet their national privacy rules, and stop them from transferring data if they don't. "Companies may not be able to move people's data until domestic data protection authorities give their approval," London privacy lawyer Marc Dautlich tells The New York Times. "In some of Europe's 28 countries, that is not going to be easy."

The court's decision, and stalled two-year-old negotiations for a new safe harbor agreement highlights "the different approaches to online data protection by the United States, where privacy is viewed as a consumer protection issue, and Europe, where it is almost on a par with such fundamental rights as freedom of expression," notes The New York Times. The European Commission is expected to address the ruling on Tuesday. Peter Weber

last night on late night
4:40 a.m. ET

"I love shopping at Whole Foods," Stephen Colbert said on Monday's Late Show, "because I love organic produce, and I cannot stand having money." That was the beginning of a short rundown of a spate of Whole Foods mini-scandals, from overcharging for its prepackaged products to a new apology about selling tilapia and goat cheese made by prisoners. "Prison labor?" Colbert said in mock consternation. "But everything at Whole Foods is supposed to be cage-free!"

But this isn't the last thing Whole Foods will have to apologize for, Colbert predicted, so to help the grocery chain out, he issued a few pre-emptive apologies on their behalf. The mea culpas range from the gross (think "ground Chuck") to the absurd. The crowd favorite? "It is our solemn pledge that our cashiers will now add up the cost of your products, instead of just typing in the highest number they can think of." Watch below. Peter Weber

last night on late night
4:06 a.m. ET

Somebody at The Late Late Show is a dedicated Taylor Swift fan, and it might just be host James Corden. On Monday's show, Corden performed the fairly impressive feat of acting out a soap opera scene using only (mostly) Taylor Swift lyrics. He had some help from Julianne Moore and John Stamos, and while Moore is a fine actress, Stamos clearly has the daytime soap thing down cold. If you don't appreciate smashed vases, Corden as a greaser, and the wisdom of Taylor Swift, well, haters gonna hate (hate hate hate). Peter Weber

colbert nation
3:50 a.m. ET

Stephen Colbert was going over Sen. John McCain (R-Ariz.) résumé on Monday's Late Show when McCain stopped him at mention of being the Republican Party's 2008 presidential candidate. "Thanks for bringing that up," he said sarcastically, before softening the line with a joke: "After I lost, I slept like a baby: Sleep two hours, wake up and cry, sleep two hours, wake up and cry." Lest you think there were no hard feelings, McCain followed it up with another zinger. "If you'd won..." Colbert started, and McCain finished: "I wouldn't be on this show." Still, if you think about what could have been, the senior senator from Arizona continued, you'll just needlessly drive yourself crazy. And then McCain had one more quip, which you can watch below. Peter Weber

A little piece of history
2:09 a.m. ET

When Abraham Lincoln Salomon tucked the first-class lunch menu into his jacket pocket on April 14, 1912, he had no idea that 103 years later, the yellowed piece of paper would sell at auction for $88,000.

Salomon was a first-class passenger aboard the Titanic, who survived the shipwreck by securing a spot on Lifeboat No. 1, dubbed the "Money Boat" because it sailed off with only 12 people aboard instead of the 40 it could fit (rumors later circulated that the wealthy passengers bribed crew members to row away from the ship instead of letting more people climb aboard). The menu was expected to bring in $50,000 when it went up for auction Sept. 30, but an anonymous buyer — who may be a relative of a Titanic survivor — shelled out $88,000 for the keepsake, Live Science reports.

During their last lunch aboard the ill-fated ship, first-class passengers enjoyed such dishes as corned ox tongue, fillets of brill, grilled mutton chops, and cockie leekie. Salomon also escaped with his ticket from the ship's Turkish baths, which recorded how much he weighed and was inscribed with the names of three of his fellow lifeboat passengers: Miss Laura Mabel Francatelli, Sir Cosmo Duff-Gordon, and Lady Lucy Duff-Gordon. That tiny piece of history sold at auction for $11,000. Catherine Garcia

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