More questions. Still stuck in the old paradigm that base money matters.
The Money Illusion
Why money matters
Scott Sumner | Ralph G. Hawtrey Chair of Monetary Policy at the Mercatus Center at George Mason University
The Money Illusion
Why money matters
Scott Sumner | Ralph G. Hawtrey Chair of Monetary Policy at the Mercatus Center at George Mason University
6 comments:
“Money” is a figure of speech...
I left a comment at Scott's site as follows.
Scott seems to have completely the wrong end of the stick as to what the basic form of stimulus advocated by MMT actually is. MMT does not advocate swapping bonds for cash: it advocates having the Fed create new money with government then spending that into the economy and/or cutting taxes. The UK’s monetary reform organisation, Positive Money has long advocated the same. Plus Ben Bernanke gave his blessing to that sort of arrangement a year or two ago.
There’s a good argument behind that “monetary / fiscal coordination” as follows. Having two quite separate organisations with powers to influence aggregate demand (the central bank and second, government) makes about as much sense as a car with two steering wheels controlled by a husband and wife having a matrimonial row.
ZH/Morgan Stanley projecting there is an imminent large increase in the “liquidity money supply!” coming:
https://www.zerohedge.com/markets/2021-liquidity-supernova-not-just-fed-us-treasury-will-unleash-13-trillion-liquidity-next
Lots of “pumping!”...
And this tidbit I did not know (if this is true or legally binding):
“ However, what few may be aware of, is that there is a clause written into the law that prohibits the TGA from rising above levels prior to the debt ceiling deadline, which was in 2019.
This means that based on the 2019 debt ceiling, the Treasury cash will need to be at $200 billion by August 1, 2021. As such, there will be significant T-bill paydowns in 2021 through August in order for Treasury to reduce its cash balance - leading to a massive increase in reserves”
Not good if true Imo.... seems like whoever they give it to Trump or Biden is going to have to deal with this impending regulatory chaos...
Monetarists should be buying gold and selling bonds like banshees if they believe their own stuff... we’ll see...
Hold your horses Biden apparently is wanting a deficit hawk guy with an Arts degree (English Literature) Bruce Reed to be his manager of the Office of Management and Budget:-
https://www.theguardian.com/us-news/2020/nov/29/joe-biden-transition-left-centrists-democrats
AOC will be delighted.
Unknown, I think J Bernstein is another clarinet player too...
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