Wednesday, March 8, 2017

Bill Mitchell — US Bond Markets cannot bring down Trump

By the time this blog is published I will be heading to Malta. I will have very little spare time in the coming days so the blogs will be shorter and perhaps non-existent or as normal as the case might be. There was an article in the ABC Opinion series (March 8, 2017) – Donald Trump’s presidency might be short-lived, because ‘something’s gotta give’ – which more or less claimed that the private US Treasury Bond markets had the capacity to bring Donald Trump’s Presidency to a halt. Apparently, if the bond markets form the view that Trump won’t deliver on his promises they can somehow end his term in office. What, by driving yields up? Not likely. And even if there was a way that higher US Treasury bond yields had some link to his political tenure, the central bank could control the yields at whatever level they wanted....
Bill Mitchell – billy blog
US Bond Markets cannot bring down Trump
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia


Andrew Anderson said...

Of course, and it bears endless repeating, positive yielding sovereign debt is "corporate welfare" per Professor Bill Mitchell or, as I like to say, "welfare proportional to wealth".

Matt ("Generalissimo") Franko defends such welfare even though it implies (falsely) that the monetary sovereign can run out of its own fiat - a view that Franko calls "moronic" even though he defends that which implies it.

You're hoist by your own petard, Franko. I suggest you investigate a Biblical concept called "straightforward" to see your err.

Neil Wilson said...

Don't feed the troll.

Andrew Anderson said...

It's Bill Mitchell himself who calls positive yielding sovereign debt "corporate welfare". Are you publicly declaring his statements in that regard trollish, Neil?

Also, who are you to give orders? Hmmm? And as I've said, I don't need to be fed.

(Now to switch to a browser where I can block that arrogant mug of yours. Ouch!)

Michael Norman said...

Bill Mitchell is correct with respect to his theoretical understanding of the bond market and in a broader sense on the currency issuer as monopolist with rates dictated by the central bank. However, he doesn't seem to realize that the current Fed and most in high policy positions, view themselves as slaves to the markets. Remember Bernanke "surveying" market participants as to what size QE the Fed should conduct? The Yellen Fed is even worse; they follow Fed funds' futures in their policy decisions. And of course, we have the Treasury Borrowing Advisory Committee (TBAC), populated with complete and utter, out-of-paradigm, Wall Street hedge fund and brokerage/bank morons.

The bond market can, indeed, take down Trump because the monopolist clearly doesn't understand its monopoly power.

John said...

Mike, very interesting political dissection. So James Carville wasn't too wide of the mark when he said that he wanted to be reincarnated as the bond market so that he could intimidate everyone? Time to offer a bond market course!

I've been watching a little of your courses when I can with a friend of mine who bought them some time ago. Super wealthy guy. So wealthy that he allows me to live rent-free in one of his gorgeous homes! The videos are superb stuff, I must say, although if you were ever thinking of doing a futures course I know someone who'd happily sign up. Hell, even I might sign up...

Neil Wilson said...

"The bond market can, indeed, take down Trump"

That's not the bond market bringing down Trump. That's Trump's generals bringing down Trump.

You can't say nuclear fission or the Tsunami caused the problems in Fukushima. It was caused by out of date equipment, out of date thinking and complacency amongst those in charge. And arguably still is.

Japan does show us though that the idiots can stay in charge longer than you can stay solvent.