A lot to digest! Look forward to going over this numerous times in next few weeks! Maybe I shld audit an accounting course too. Good stuff on the 'pairs' and the diff tween Powell Yellen and Biden!
As for another show. I'd like to hear how yall would see ramifications in fiscal flows and stocks etc for a Biden win in Nov vs a Trump win just assuming what they'd most likely would want to 'spend into existence ' along with Congress.
I am reading this piece a few months after the fact, but I was hoping you could explain in more detail what you mean when you call bitcoin a "monetary hedge?"
Very interesting. Thank you. One thing that was hitting my mind: when the Treasury issue, increasing cash of A (non bank) and Treasury holding of B (non bank), increasing the equity of non bank. In that case, is this equity predicated on capacity of Treasury to continue to borrow instead of raising taxes to pay back the Treasury held by B.
In Randall Wray’s book “Making Money Work for Us: How MMT Can Save America”, he states:
“MMT rejects the notion that government chooses to tax, borrow, or print money. All government spending takes the same form: keystroke credits to bank reserves. We can choose to leave those in the banks or can sell bonds. This is not a borrowing operation. It does not crowd out any private borrowing, even if we do sell the bonds.”
Do you agree with this statement? How is that the government never seems to run out of funds? Where does the “new” money come from to buy the “new” issued debt? Thanks.
We would agree with those MMT ideas. The government spends money into existence as the issuer of its currency. First the government spends, and then, as a political decision, it can choose to "burn" some of that cash via taxes, or replace some of that cash with Treasury securities.
As a result crowd out is wrong because the government is not competing with the private sector for funding, it creates its own funding.
Ps. So when people or banks or foreign govts reap all the interest from Tbills and Bonds does that count as fiscal spending? Deficit spending? And do those as well as helicopter money from social security or shimmy checks have the same macro effect as the government spending into existence to build infrastructure or supply an army etc?
Yep when any entity receives interest payments, the government is deficit spending that money into existence. Obviously it's more stimulative for money to be spent on infrastructure than for it to be sent to a Japanese pensioner holding Treasuries, but a dollar spent is still a dollar spent.
We generally try to avoid the false precision that comes with statements like "XYZ players have no marginal propensity to consume so it doesn't matter that they get interest payments." The biggest thing is that the fiscal flow happened. That money can either go towards spending or towards buying assets; both are bullish for assets.
A lot to digest! Look forward to going over this numerous times in next few weeks! Maybe I shld audit an accounting course too. Good stuff on the 'pairs' and the diff tween Powell Yellen and Biden!
As for another show. I'd like to hear how yall would see ramifications in fiscal flows and stocks etc for a Biden win in Nov vs a Trump win just assuming what they'd most likely would want to 'spend into existence ' along with Congress.
Thanks
Thanks for the suggestion
I am reading this piece a few months after the fact, but I was hoping you could explain in more detail what you mean when you call bitcoin a "monetary hedge?"
Very interesting. Thank you. One thing that was hitting my mind: when the Treasury issue, increasing cash of A (non bank) and Treasury holding of B (non bank), increasing the equity of non bank. In that case, is this equity predicated on capacity of Treasury to continue to borrow instead of raising taxes to pay back the Treasury held by B.
In Randall Wray’s book “Making Money Work for Us: How MMT Can Save America”, he states:
“MMT rejects the notion that government chooses to tax, borrow, or print money. All government spending takes the same form: keystroke credits to bank reserves. We can choose to leave those in the banks or can sell bonds. This is not a borrowing operation. It does not crowd out any private borrowing, even if we do sell the bonds.”
Do you agree with this statement? How is that the government never seems to run out of funds? Where does the “new” money come from to buy the “new” issued debt? Thanks.
We would agree with those MMT ideas. The government spends money into existence as the issuer of its currency. First the government spends, and then, as a political decision, it can choose to "burn" some of that cash via taxes, or replace some of that cash with Treasury securities.
As a result crowd out is wrong because the government is not competing with the private sector for funding, it creates its own funding.
It all makes sense now. Thanks!
Considering that I only ended up with your Substack based on a recommendation by Michael Howell, this is quite a harsh feedback :D
Thanks for the post and I would love to see more of those!
Ps. So when people or banks or foreign govts reap all the interest from Tbills and Bonds does that count as fiscal spending? Deficit spending? And do those as well as helicopter money from social security or shimmy checks have the same macro effect as the government spending into existence to build infrastructure or supply an army etc?
Yep when any entity receives interest payments, the government is deficit spending that money into existence. Obviously it's more stimulative for money to be spent on infrastructure than for it to be sent to a Japanese pensioner holding Treasuries, but a dollar spent is still a dollar spent.
We generally try to avoid the false precision that comes with statements like "XYZ players have no marginal propensity to consume so it doesn't matter that they get interest payments." The biggest thing is that the fiscal flow happened. That money can either go towards spending or towards buying assets; both are bullish for assets.
Great read thanks