An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
I will be on @AC360 at about 9 PM tonight to discuss recent comments by @realDonaldTrump about US #debt and other key fiscal issues. DW— Dave Walker (@DeficitRanger) May 9, 2016
I will be on @AC360 at about 9 PM tonight to discuss recent comments by @realDonaldTrump about US #debt and other key fiscal issues. DW
Somebody tell the Donald to read Scott Fullwiler's Twitter feed @stf18
LOL! Moron fest is right, Matt. :)David Walker. The only man who can out "irrelevant" Donald Trump. ... Well, in their own ways, they're all neckless & neckless with Peter Schiff.
If the goal is reducing debt service why wouldn't Trump argue the interest rate be set permanently to zero and simply roll over higher yield securities? He appears to understand the link between the short-term rate and Treasury yields.
Ben it sounds to me like he would consider "retiring" the bonds with "cash"....iow in business you typically operate at some sort of "debt ratio" which is a regulatory ratio of how much debt to total assets...Think of callable bonds... sometimes firms call in the bonds if they think it is in their best interests...Trump has said he wants Yellen out of there... so he is perhaps looking to put someone in there that will work with him like this... it would take a lot of increased cooperation between Treasury and the Fed to pull something like this off... Trump would probably just demand these two work together for a change or he would get rid of the people there...
Are the Fed's open market operations essentially "calling-in" bonds? If so, Donald's scheme will be quite late to the party. It's also how we get to ZIRP.
Imo yes but I put the Fed in the govt sector... (as agent of the US Treasury )
Are the Fed's open market operations essentially "calling-in" bonds?Yes and no. It is on the government's consolidated books, but the government doesn't officially consolidate it's books, so the debt would still be reported as outstanding on the Treasury books and as an asset on the Fed's books. The interest that the Fed collected from the Treasury would be revenue to the Fed, which after expenses are deducted would be remitted to the Treasury.However, the debt on the Fed's books would count toward the total Federal debt and the public would not see a reported reduction in the total debt.It would take some explaining for the public to get this, especially since a lot people believe that the Fed is a primate corporation. So in the end, it's not actually calling in the bonds the way that a private institution would do it, and Trump's analogy is pretty loose. But at least he knows that the government is not like a firm.It would be interesting to hear how he explains this and what changes to the existing institutional arrangements he might propose.
Post a Comment