Thursday, July 16, 2020
The Federal Government Always Money-Finances Its Spending: A Restatement — Nathan Tankus
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Notes on the Crisis
The Federal Government Always Money-Finances Its Spending: A Restatement
Nathan Tankus
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13 comments:
He says here:
“ MMT’s argument that U.S. budget deficits are always money-financed relies on two claims about Federal Reserve-Treasury coordination which are reaffirmed constantly:
The Federal Reserve continuously generates, indirectly or directly, liquidity in U.S. Treasury markets”
THEN next sentence he says RIGHT HERE:
“ the Federal Reserve launched a massive Treasury Security purchase program in response to signs that the U.S. Treasury market was beginning to malfunction. ”
Next sentence....
??????????
“The system always works!”
Then ... next sentence:
“The system started to malfunction!”
?????????
“The system always works! MMT Reaffirms this constantly!”
Then ... next sentence:
“The system started to malfunction!”
?????????
Why not ask Nathan for clarification if you're not clear on what is being said.
Words on a page are interpretable.
I think you mean he can ask me for clarification...
Here this is better from these Brookings people:
https://www.brookings.edu/blog/up-front/2020/05/01/how-did-covid-19-disrupt-the-market-for-u-s-treasury-debt/
“ Regulations: Banks and dealers are central to the business of trading. They make markets by buying and warehousing assets to facilitate the eventual matching of buyers with sellers. Since the global financial crisis, however, they have been less willing to warehouse assets for long periods, in part because of post-crisis regulations. As selling of Treasuries picked up in March, banks and dealers faced balance sheet constraints and internal risk limits amid the elevated volatility. This led to higher costs for even modest transactions and crowded out their ability to intermediate in other asset classes such as credit and municipal debt.”
No numbers provided but generally describes what was going on.... and btw no mention of “liquidity!”...
Q: what’s the difference between the situation in 2020 here where we see the US Treasury can’t get their USTs issued, or sept 2008 where we saw Primary Dealer Lehman Bros couldn’t get their debt issued?
A: None.
Primary dealers have to make bids for Treasuries or they stop being Primary dealers.
https://www.newyorkfed.org/markets/pridealers_policies.html
“I think you mean he can ask me for clarification...”
Nope. You’re the one having problem with interpreting what’s being said. You ask for clarification or live with it.
Yo I’m not the one saying there is never any problem and then in the next sentence saying there was a problem....
Im the one saying that all this kid’s buddies at the Fed are total fuck ups...
He says: “ the U.S. Treasury market was beginning to malfunction. ”
THAT is the problem... figure out why THAT was happening and correct it...
MMT has NO CLUE why that was happening...
Figure it out...
“ Primary dealers have to make bids for Treasuries or they stop being Primary dealers. ”
Obviously that is not true...
Neil, if they don’t have the regulatory capital to cover ANY additional Assets then they can’t add ANY additional Assets including USTs...
It’s eighth grade Algebra...
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