tag:blogger.com,1999:blog-2761684730989137546.post5173163316422666550..comments2024-03-29T07:30:30.121-04:00Comments on Mike Norman Economics: Bill Mitchell — Overt Monetary Financing would flush out the ideological disdain for fiscal policymike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-2761684730989137546.post-9813196009479159502016-07-29T01:34:59.689-04:002016-07-29T01:34:59.689-04:00"i see nothing wrong with Koo's statement..."i see nothing wrong with Koo's statement there. if business and household borrow in earnest that would obviously expand money supply - M2/M3 or whatever you look at. Would you not agree?"<br /><br />But that would have nothing to do with excess reserves.<br /><br />"When that happens, inflation can quickly spiral out of control unless the central bank drains the liquidity it pumped into the market under quantitative easing or helicopter money."<br /><br />Koo is saying the liquidity is the constraint that needs to be applied. Kristjanhttps://www.blogger.com/profile/09592440548093816331noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-56824263439704683382016-07-28T22:57:21.271-04:002016-07-28T22:57:21.271-04:00Michael Spacey, Quantitative Easing is not the sam...Michael Spacey, Quantitative Easing is not the same as Helicopter Money.<br /><br />Quantitative Easing does not alter the money supply if you believe like me that QE is an asset swap. (Whether the payback on the treasury security is paid by the US Treasury or the Fed is immaterial. That money was already clocked as part of the money supply when originally issued.) In fact, the interest income those treasury securities generate were removed from the real economy and returned to the federal government annually under the 1947 or 1948 law that requires all net Fed profits to be returned to the US Treasury. It added reserves for the banks--<b>did not increase the money supply</b>--and increased the value of the dollar since 2008 because there were less of them in the real economy.MRWhttps://www.blogger.com/profile/13878920695841363553noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-18653342742583109082016-07-28T14:56:00.072-04:002016-07-28T14:56:00.072-04:00Eventually the private sector will complete its ba...<i>Eventually the private sector will complete its balance sheet repairs and resume borrowing. When that happens, inflation can quickly spiral out of control unless the central bank drains the liquidity it pumped into the market under quantitative easing or helicopter money. For example, excess reserves created by the Fed currently amount to some 15 times the level of statutory reserves. That implies that if businesses and households were to resume borrowing in earnest, the US money supply could balloon to 15 times its current size, sending inflation as high as 1,500%. The corresponding ratios are 28 times for Japan and Switzerland, five times for the eurozone, and 11 times for the UK. Once private-sector demand for loans recovers in these countries, confidence in the dollar, euro, and yen will plummet unless the Fed reduces excess reserves to one-fifteenth of their current level, the ECB to one-fifth, and the Bank of Japan to one-twenty-eighth.</i><br /><br />Quantity theory and money multiplier.<br />Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-28784613008281053712016-07-28T14:42:26.615-04:002016-07-28T14:42:26.615-04:00i see nothing wrong with Koo's statement there...i see nothing wrong with Koo's statement there. if business and household borrow in earnest that would obviously expand money supply - M2/M3 or whatever you look at. Would you not agree?mspacey4415https://www.blogger.com/profile/11868322471454225634noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-18767582710523376052016-07-28T13:30:00.859-04:002016-07-28T13:30:00.859-04:00"Eventually the private sector will complete ...<br />"Eventually the private sector will complete its balance sheet repairs and resume borrowing. When that happens, inflation can quickly spiral out of control unless the central bank drains the liquidity it pumped into the market under quantitative easing or helicopter money. For example, excess reserves created by the Fed currently amount to some 15 times the level of statutory reserves. <br /> <br />That implies that if businesses and households were to resume borrowing in earnest, the US money supply could balloon to 15 times its current size, sending inflation as high as 1,500%. The corresponding ratios are 28 times for Japan and Switzerland, five times for the eurozone, and 11 times for the UK."<br /><br />Koo cannot be taken seriously. He is a true believer in money multiplier. Kristjanhttps://www.blogger.com/profile/09592440548093816331noreply@blogger.com