Dean Baker explores what Donald Trump might actually have meant.
I'm pretty sure we are going to be hearing a lot more about this.
Beat the Press
Did Donald Trump Get the Story on Buying Back Debt at a Discount Right?
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C
Beat the Press
Did Donald Trump Get the Story on Buying Back Debt at a Discount Right?
Dean Baker | Co-director of the Center for Economic and Policy Research in Washington, D.C
9 comments:
Didn't Mosler have a similar proposal to finance the government using only short term paper at the central bank policy rate?
Yes! It predated and/or was an alternate to the platinum coin. He suggested using 90 day paper with ZIRP, rolling the 'debt' over forever (if I understand correctly).
Intended or unintended, the PC was/is a distraction: it diverts attention away from the fed/tsy/pd bond operations. These (along with sectoral balances) must be understood to fully understand the fiat monetary system.
Baker fixed it...
http://www.nytimes.com/2016/05/07/us/politics/donald-trumps-idea-to-cut-national-debt-get-creditors-to-accept-less.html?hp&action=click&pgtype=Homepage&clickSource=story-heading&module=first-column-region®ion=top-news&WT.nav=top-news&_r=1
the numbers are yuuuugggggeeee! says the dumbfuck donald
I don't think Treasuries are callable. Not that the US government provides a legal agreement or prospectus to investors, we are sort of left guessing the details, the rules are probably flexible, being what the treasury says they are at any given time.
Ryan Harris,
Warren Mosler suggested a permanent zero rate – see last two paragraphs here:
http://www.huffingtonpost.com/warren-mosler/proposals-for-the-banking_b_432105.html
I agree with that. Milton Friedman advocated the same. Though I wouldn’t totally rule out interest rate hikes in an emergency, i.e. where the economy is seriously overheating.
Yes! It predated and/or was an alternate to the platinum coin. He suggested using 90 day paper with ZIRP, rolling the 'debt' over forever (if I understand correctly).
The issue was not rolling over existing debt but adding new debt that would exceed the debt ceiling.
US public debt issuance includes shot-term bills and the Fed buying them doesn't remove them from the amount of public debt, therefore, doesn't avoid the debt ceiling.
In part, the debt ceiling is imposed to prevent the Fed from "monetizing" the debt.
So that would not be a replacement for the 14th Amendment or the platinum coin in getting around the debt ceiling to avoid default.
eHow
Are Treasury Bonds Callable?
By Carmelo Montalbano
Short answer: The US Treasury has not offered a callable feature on US debt since 1985.
Post a Comment