Friday, March 25, 2011
I will be on "Bulls & Bears" on Fox Business today at 4pm EDT
I will be on "Bulls & Bears" on Fox Business today at 4pm EDT. This is the new segment called, "Mike vs Charlie," where I will be debating Fox Business editor, Charlie Gasparino on topics related to economics, the markets and policy. This is going to be a regular Friday segment. Who knows...maybe if it's successful it will be turned into a show so be sure to watch!
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14 comments:
Roll over him, Mike. :)
Here is the topic. Your comments are appreciated. Please keep it in very simple, layman terms.
"Will Japan have to sell its Treasuries to 'finance' reconstruction of its country? If so, does that mean the U.S. is at risk since foreigners hold so much debt?"
Awesome. I'll post the link to Western New England College's economics club so some of our students can watch it.
Karl Petrick
'First they ignore you. Then they laugh at you. Then they fight you. Then you win' - Mahatma Ghandi
Great!!
Mike: Here is the topic. Your comments are appreciated. Please keep it in very simple, layman terms. "Will Japan have to sell its Treasuries to 'finance' reconstruction of its country? If so, does that mean the U.S. is at risk since foreigners hold so much debt?"
No. (You said to keep it simple.)
Seriously, though, I think that what is needed is messages that are simple are repeated constantly. A good message can fit on a sign or bumper sticker.
"A monetarily sovereign nation like Japan funds itself directly by issuing currency." So Japan, the US, UK, etc. don't need to tax, borrow, or sell assets to get funding, although the EZ nations do because they have given up monetary sovereignty by joining the EMU.
"Foreign holdings of USD are savings accounts at the Fed." Foreign assets held as tsys do not constitute borrowing in any ordinary sense because the US funds itself by issuing currency. Tsy securities held by foreign nations are like savings accounts at the Fed, where a foreign country saves its trade surplus with the US at interest, instead of letting them sit idle as reserves.
"The Fed can set not only the overnight interbank interest rate (FFR), but also control the yield curve if it wishes." Sales of tsy securities do not necessarily elevate the yield curve because the Fed can control the yield curve if it wishes by setting the yield it wants and purchasing the quantity necessary to target it. The Fed doesn't seem to have figured this out yet.
Excellent news, Mike! Been an avid viewer/fan for a while (my folks watch Fox nonstop, so that's how I found out about your blog).
On an unrelated note, I've gotten tired of defending MMT over here at The Motley Fool: http://www.fool.com/investing/general/2011/03/22/proof-that-gold-is-not-a-bubble.aspx?source=iaasitlnk0000003
Feel free to come on over to the comments section.
FWIW, I'm a recent convert to MMT from a generally Austrian - Monetarist blend. Don't give up the fight!
Scott
Mike,
The latest on Japan's total holdings of Treasuries is here I believe. ($885.9B)
This is about 6% of ONE YEARs US GDP (output) or about 21 Days of total US output. After that they would be out of USD NFAs....
So it looks like the only thing they can do is perhaps sell some Treasuries and use the balances to buy US made equipment and supplies for the reconstruction effort.
This gets back to Tom's point that 'currencies stay within their currency zone'. If Japan sells it's Treasuries, they can only receive USD balances in exchange and those basically always end up back in the US system.
For instance, a Sikorsky SH-60 Blackhawk helicopter costs $14M each. with that $885B, Japan could have bought over 63,000 Blackhawk helicopters and been over prepared for disaster relief, etc.....
Were only 'at risk' of getting HUGE orders for equipment and supplies that Japan will need and this will help to boost US output and employment!
A negative person could point out that a sudden demand shock may cause some short term 'inflation' in the US....
Good Luck Mike!!!!
(Take it easy on Charlie!)
Resp,
Good point, Matt.
Stay on Gasparino's lack of knowledge. (on all subjects)
He blushes like a little girl when you call him out..............!
I yell at the TV all the time when he is on (because he is such a fool) and through your knowledge I get the satisfaction of seeing him squirm !!!!!!!!!!!!!!
I Love you !!
In a manly way of course !!!
I already commented at Krugman's blog chiding him for was setting up a straw man and recommending he take the trouble to inform himself before he comments on something he clearly doesn't understand. Warren reports he has posted a comment, too. I haven't had a chance to read the comments yet. I'm sure it will be interesting.
The Japanese don't have to sell their USD Treasuries or their own.
They just print what is the gold standard today : Yen.
Oh, I mean "credit."
Tom H : Are you saying Gasparino has made a straw man or Krugman himself ?
Krugman had a very Keynesian borderline MMT column today. He did point to raising taxes on super duper rich who own the ratings agencies ( like Buffett ) and get away with downgrading and insider trading as well as other almost tax payer advocacy items.
which do you refer to ?
g., I was talking about Krugman's post on MMT today.
'ok
i forgot in a fog his blog existed
because on the flip side in his standard issue column at the NYTimes is a case for stimulus as if he were at least looking at MMT.
he's hanging on to the idea that taxation will help and stimulus
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