If you do a Google search for “Romney data driven,” 2,290,000 results come up. This is supposedly one of his big selling points. You know, he looks at the data. And yet, of course, he doesn’t, not even on economic issues that are supposedly his strong-suit.
In his now infamous talk to donors, in addition to insulting half the country and vowing to just ignore the Israeli-Palestinian issue, Mitt opines on
qualitative (oops) quantitative easing:
Romney: Yeah, it’s interesting…the former head of Goldman Sachs, John Whitehead, was also the former head of the New York Federal Reserve. And I met with him, and he said as soon as the Fed stops buying all the debt that we’re issuing—which they’ve been doing, the Fed’s buying like three-quarters of the debt that America issues. He said, once that’s over, he said we’re going to have a failed Treasury auction, interest rates are going to have to go up.
Except, this isn’t true. As Kevin Drum points out:
So is this true? Is the Fed really buying three-quarters of all treasury debt? The short answer is no. The longer answer is that the Fed has engaged in two rounds of quantitative easing and just recently announced a third. The first one, which started at the end of 2008, mostly involved the purchase of mortgage-backed securities. Purchase of treasury debt was fairly small. The second round, which took place in the first half of 2011, did consist mostly of treasury debt. It amounted to $600 billion, and led to a spate of horror stories about how the Fed was purchasing 61% of all treasury issues. Since then, however, the Fed has maintained a steady level of treasury debt, and the third round of quantitative easing, like the first, is mostly focused on the purchase of mortgage-backed securities.
In total, the Fed holds about 10-15% of treasury debt. And since interest rates are not just set at auction, but also through the general functioning of the bond markets, we are already in a situation where interests rates could go up if the markets were leery of U.S. debt.
Look at the following graph and, as a data driven analyst, tell me if Mitt’s analysis makes sense.