The fallacy of the belief that countries that print their own currency are immune to sovereign crisis will be disproven in the coming months and years. Those that treat this belief as axiomatic will most likely be the biggest losers. A handful of investors and asset managers have recently discussed an emerging school of thought, which postulates that countries, as the sole manufacturer of their currency, can never become insolvent, and in this sense, governments are not dependent on credit markets to remain fiscally operational.
It is precisely this line of thinking which will ultimately lead the sheep to slaughter.Zero Hedge
Kyle Bass: Fallacies Such As MMT Are "Leading The Sheep To Slaughter" And "We Believe War Is Inevitable"
Submitted by Tyler Durden
We'll see who is correct. I hope people aren't putting money on this bet based on what Kyle Bass thinks. Not only that, this excerpt doesn't even have MMT right. Only currency sovereigns are immune operationally from insolvency, although they can voluntarily default for political reasons.
I guess Kyle Bass hasn't heard what both Alan Greenspan and Ben Bernanke have said about this. It's not just MMT.
18 comments:
Another example of ideology blinding an otherwise bright person.
We need to start a permanent "claim chowder" thread for future posterity.
Follow up on each claim 1 year later.
Unfortunately the current Greenspan is not the same as the younger Greenspan who schooled Ryan.
Have you seen this from today?
http://money.cnn.com/2012/11/16/news/economy/greenspan-recession-debt/index.html
i don't think that today's Greenspan actually contradicts yesterday's. Today he is saying that in order to "finance its debt," govt must draw on nongovt savings, either domestic or external. His argument presumes the loanable funds doctrine, which is in error. He doesn't seem to realize that tsy issuance is a reserve drain that simply swaps the reserves created by deficit expenditure for tys, which is similar to switching funds from a deposit account to a savings account or CD. But surely he knows how Fed auctions work and how the Fed can expand and contract its balance sheet at will.
Maniac,
Check out the revealing backdrop he is in front of in the title frame of that video.
That explains his recent about face on the debt and deficits... Mr Magoo is a 100% bought whore of Peterson looks like... he'll say whatever the person giving him money wants him to say... a dangerous man!
My first thought when I heard him say "social programs are a tumor starving the organ of investment" (OK, I admit that's more of a translation than a quote) was that if only someone could explain endogenous money to him he'd come around and then... and then I caught myself and realized how naive I was being.
This isn't Joe the Plumber, it's Alan frickin' Greenspan. The notion that Greenspan is "ignorant" in any regard when it comes to monetary operations strikes me as far fetched. It seems far more likely that it's simply him laying out his ideology on a bed of whatever word salad suits the occasion.
It just so happens that loanable funds was handy to the task at hand.
Why do we care what a bloviated air headed no-nothing hedge fund manager thinks?
Why do we care what a bloviated air headed no-nothing hedge fund manager thinks?
Greenspan is all over the map on the money issue. I always keep in mind that Michael Hudson had him pegged as a "banking lobbyist" since the 1970's. I think it still goes.
Tom, Steve Keen is doing a series of articles on the Benes and Kumhof (IMF) paper. He thinks they have advanced significantly from standard neoclassical thought:
The contrast between Kumhof and Jaromir Benes (the paper’s co-author) and run-of-the-mill neoclassicals like Paul Krugman on the role of banks is quite stark. Krugman stated the essence of the Loanable Funds model in his opening salvo on my primer on Minsky earlier this year
IMF Gets Radical?
Why do we care what a bloviated air headed no-nothing hedge fund manager thinks?
Because we are keeping score. :)
He has lost a lot of dough on the short Japan trade.
geerussell,
The notion that Greenspan is "ignorant" in any regard when it comes to monetary operations strikes me as far fetched.
What do "monetary operations" have to do with it?
vimothy,
It's a question of whether his position stems from a lack of understanding that the loanable funds model is inapplicable to the real world or from a core ideological opposition to social programs.
Whaddya expect... it's Zero Hedge
If Kyle Bass wants to lose his money, have at it. He won't be the only one - remember Phil Falcone?
Geerussell,
What I'm wondering is how monetary operations gets you there, leaving aside the rightness or wrongness of Greenspan's argument.
The only one being led to slaughter is Kyle Bass, wfo's been short Treasuries for, like, two years. (And short JGB's.) If he's not short and just saying it, he's a phony.
I think it's encouraging when we've gotten so much support that Kyle Bass has taken notice.
I'm going to enjoy watching his trades go sour.
Hey, with all due respect, Kyle Bass isn't any more wrong than Herbert Hoover was.
http://news.google.com/newspapers?nid=1928&dat=19350506&id=79MgAAAAIBAJ&sjid=6WoFAAAAIBAJ&pg=1522,2944240
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