tag:blogger.com,1999:blog-2761684730989137546.post6431631376148005564..comments2024-03-29T02:11:14.885-04:00Comments on Mike Norman Economics: Joe Firestone — Lavoie's Critical Look at Modern Money Theory: A Replymike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger99125tag:blogger.com,1999:blog-2761684730989137546.post-77582146504456804212013-06-27T23:13:54.136-04:002013-06-27T23:13:54.136-04:00@DanKervick == But setting a target interest rate ...@DanKervick == But setting a target interest rate doesn't work to control inflation. It has some short term effect, but not the permanent effect that is required to turn around fundamental inflationary or deflationary forces.<br /><br />This discussion reminds me of Paul Krugman's dismissal of MMT based upon the fact that raising interest rates (in the face of high fiscal deficits) would just lead to hyperinflation. He <i>assumed</i> (as do most people) that raising interest rates would be used to bring down inflation, then proceeded to demonstrate that this would not in fact work. Instead of questioning his assumption of how to fight inflation, he said that high fiscal deficits can cause hyperinflation. Krugman has since backed off this and noted that there are no empirical cases of high deficits causing hyperinflation in modern monetary economies.<br /><br />We need to learn the lesson that central banks are not effective in managing inflation by raising or lowering interest rates.<br /><br />I think we agree on the solution (fiscal triggers). The bar is very low in finding a solution better than monetary policy...Detroit Danhttps://www.blogger.com/profile/03718490473585220856noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-31324004881492843382013-06-27T22:46:25.409-04:002013-06-27T22:46:25.409-04:00This comment has been removed by the author.yhttps://www.blogger.com/profile/03233997168975370006noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-13008498853958272772013-06-27T22:02:55.496-04:002013-06-27T22:02:55.496-04:00Well, I'm sure there must be trillions in coin...Well, I'm sure there must be trillions in coins issued by the Treasury to finance its deficit spending - hidden somewhere inside the books of financial institutions.<br /><br />Since no one can see all those trillions, however, I have no doubt that our "I never err" accounting expert can provide a helping hand for such searches.<br /><br />That said - I'll leave the noble task for those who are ready to withstand the bad humour of the mentioned expert. Happily, I can count upon better company for different, less hopeless, adventures.<br /><br />May you all have a nice day.Jose Guilhermehttps://www.blogger.com/profile/00313496015841693181noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-15573575358363582722013-06-27T20:58:10.548-04:002013-06-27T20:58:10.548-04:00"Glad to know you approve some accounting pra..."Glad to know you approve some accounting practices, after all"<br /><br />I haven't made any accounting errors that I'm aware of. On the other hand, you've repeatedly erred by claiming that 'the government' or treasury must necessarily "borrow from the central bank". <br /><br />I've tried to explain to you what a meaningless concept that is, and you've not really come up with any decent rebuttal other than to simply re-assert your unfounded belief that all money must originate with a bank loan. <br /><br />If you could at least explain why in some sort of satisfactory manner, that would at least be something.yhttps://www.blogger.com/profile/03233997168975370006noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-57823387027173119142013-06-27T20:19:23.175-04:002013-06-27T20:19:23.175-04:00The dollar is pegged to oil
and oil is pegged to d...The dollar is pegged to oil<br />and oil is pegged to dollar<br /><br />I'd say that the present cost of oil shows that the dollar has inflated along with oil<br /><br />Therefore ALL hype of the dollar being debased and lowered is complete and total nonsense.googleheimhttps://www.blogger.com/profile/14459089745473598235noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-71746604926414812222013-06-27T20:17:47.944-04:002013-06-27T20:17:47.944-04:00y,
Glad to know you approve some accounting pract...y,<br /><br />Glad to know you approve some accounting practices, after all.<br /><br />:)Jose Guilhermehttps://www.blogger.com/profile/00313496015841693181noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-24658060047572079412013-06-27T20:03:24.006-04:002013-06-27T20:03:24.006-04:00"The coin is "owned" by the CB so i..."The coin is "owned" by the CB so it must be "owed" by the Treasury"<br /><br />Not according to standard US accounting practices.<br /><br />As Beard says, the coin is Treasury equity, which it deposits at the Fed. <br /><br />It becomes an asset of the Fed, offset on the Fed's books by a Fed liability to the Treasury (i.e. a Fed debt to the Treasury). <br /><br />That's monetary hierarchy in action.<br />yhttps://www.blogger.com/profile/03233997168975370006noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-1317440553946429722013-06-27T19:56:22.876-04:002013-06-27T19:56:22.876-04:00The coin is "owned" by the CB so it must...The coin is "owned" by the CB so it must be "owed" by the Treasury.Jose Guilhermehttps://www.blogger.com/profile/00313496015841693181noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-24681377632396974712013-06-27T19:44:18.101-04:002013-06-27T19:44:18.101-04:00Since it would be about the sacred temple of money...Since it would be about the sacred temple of money, any campaign (money) contributions would of course have to be abolished.<br /><br />And then Stephanie Kelton might just win it over Kenneth Rogoff.<br /><br />:)Jose Guilhermehttps://www.blogger.com/profile/00313496015841693181noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-79559567533804385452013-06-27T19:42:19.866-04:002013-06-27T19:42:19.866-04:00"If the coin is an asset of the Central bank,...<i>"If the coin is an asset of the Central bank, it must be a liability of the Treasury".</i> Jose G<br /><br />Why could it not be Treasury Equity? People deposit their equity into banks all the time.Anonymoushttps://www.blogger.com/profile/13859046687902645077noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-78352021531774162152013-06-27T19:39:36.763-04:002013-06-27T19:39:36.763-04:00"If the coin is an asset of the Central bank,..."If the coin is an asset of the Central bank, it must be a liability of the Treasury".<br /><br />Coins are not counted as liabilities of the Treasury. <br /><br />"if the CB presents that coin for "payment" it will be entitled to get ... a similar coin from the Treasury"<br /><br />If the CB presents the coin for "payment" it can get exactly the same same coin back "in payment".<br /><br />"This minor (putative) cost with minting future coins may be eschewed by entering a "grant" on the asset side of the CB's balance sheet".<br /><br />As I said, the Tsy wouldn't have to mint another coin, but you do raise the interesting question of how to "pay for" the original coin in the the first place. The answer is that, as I said, the physicality of the coin is of no importance. It can be an electronic coin or paper coin, it makes no difference. The only reason I use the coin as an example is to try and shake you out of the strange mindset you seem to be stuck in, in which only banks are strangely and mysteriously endowed with the ability to create money. You really need to lose that, super fast.yhttps://www.blogger.com/profile/03233997168975370006noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-88485987412971536452013-06-27T19:38:36.513-04:002013-06-27T19:38:36.513-04:00An alternative, of course, could be to have direct...<i>An alternative, of course, could be to have direct elections for the post of central bank president. </i> Jose G<br /><br />So the population gets to vote for the banking cartel's puppet? Who'll end up being blackmailed by the banks anyway? How sweet!<br /><br />Pass. Instead, we should just bailout the population with new fiat and abolish the central bank and other government backing for the counterfeiting cartel.<br />Anonymoushttps://www.blogger.com/profile/13859046687902645077noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-53588634128800847042013-06-27T19:35:48.810-04:002013-06-27T19:35:48.810-04:00The central bank may well "grant" - prov...The central bank may well "grant" - provided it's the Executive (or an elective body, in general) who maintains the right to nominate, as well as fire, the chairman of the bank.<br /><br />An alternative, of course, could be to have direct elections for the post of central bank president.Jose Guilhermehttps://www.blogger.com/profile/00313496015841693181noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-8932914765877309862013-06-27T19:33:31.244-04:002013-06-27T19:33:31.244-04:00This comment has been removed by the author.Jose Guilhermehttps://www.blogger.com/profile/00313496015841693181noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-78642797523201983012013-06-27T19:24:35.576-04:002013-06-27T19:24:35.576-04:00Grants are costless items ... Jose G
But without ...<i>Grants are costless items ...</i> Jose G<br /><br /><i>But without any dispute the lesser is blessed by the greater. </i> Hebrews 7:7<br /><br />A "grant" from the Fed to the Treasury elevates the Fed over the Treasury. Is that what you want?Anonymoushttps://www.blogger.com/profile/13859046687902645077noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-33503134929070900222013-06-27T19:20:10.027-04:002013-06-27T19:20:10.027-04:00Of course abolishing government deposit insurance ...Of course abolishing government deposit insurance and the lender of last resort would create a massive run on banks so it is important that all deposits be 100% covered by reserves first. That's where a universal bailout with new fiat comes in ...Anonymoushttps://www.blogger.com/profile/13859046687902645077noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-15036379065516112632013-06-27T19:18:28.754-04:002013-06-27T19:18:28.754-04:00y,
The coin is alright - with just one (admittedl...y,<br /><br />The coin is alright - with just one (admittedly minor) quibble: we still have not totally overcome that problem with "debt".<br /><br />If the coin is an asset of the Central bank, it must be a liability of the Treasury.<br /><br />In the sense that, if the CB presents that coin for "payment" it will be entitled to get ... a similar coin from the Treasury.<br /><br />This minor (putative) cost with minting future coins may be eschewed by entering a "grant" on the asset side of the CB's balance sheet.<br /><br />Grants are costless items - just like "reserves" on banks' balance sheets.<br /><br />:)Jose Guilhermehttps://www.blogger.com/profile/00313496015841693181noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-29874247635519589702013-06-27T19:03:42.084-04:002013-06-27T19:03:42.084-04:00Or maybe they's just like to have a quite simp...<i>Or maybe they's just like to have a quite simple thing: a central bank under democratic control.</i> Jose Guilherme<br /><br />According to Warren Mosler, the central bank MUST create new reserves as needed to insure that the check clearing system does not break down.<br /><br />Under democratic control, you say?<br /><br />Let the monetary sovereign ITSELF provide, as it should, a risk-free fiat storage and transaction service that makes no loans, pays no interest, is free up to normal household limits on account size and number of transactions and then abolish government deposit insurance, the legal tender lender of last resort, and sovereign borrowing. <br /><br />Then we can have democratic control of fiat creation without being blackmailed by the banking cartel.Anonymoushttps://www.blogger.com/profile/13859046687902645077noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-61005659014328234402013-06-27T19:02:31.256-04:002013-06-27T19:02:31.256-04:00Perhaps you'd like to take a look at page 22 (...<i>Perhaps you'd like to take a look at page 22 (2-9) of this BEA publication on NIPA methods (link: http://www.bea.gov/national/pdf/methodology/ALLchapters.pdf ):<br /><br />"In the NIPAs, subsidies are shown as a subtraction from taxes...because they are transfers from government...and thus, in effect, represent a negative tax by government".</i><br /><br />Thanks, Jose. That's what I was looking for. Evernoted.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-58858361114414060962013-06-27T18:55:05.445-04:002013-06-27T18:55:05.445-04:00Jose,
as I said, "accounting terms are ofte...Jose, <br /><br />as I said, "accounting terms are often quite arbitrary", especially when it comes to government accounts.<br /><br />All the MMT people are quite clear that a government "IOU" simply means "a promise to accept in payment". It's not a "debt" in the way that the term applies to currency users like ourselves, or to commercial banks.<br /><br />By the way, Chris Cook has some interesting comments on this subject over at NEP:<br /><br />http://neweconomicperspectives.org/2013/06/lavoies-critical-look-at-modern-money-theory-a-reply.html#comment-185291<br /><br />Anyway, back to my question: what is wrong with my coin example?yhttps://www.blogger.com/profile/03233997168975370006noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-61253143503039001512013-06-27T18:51:23.439-04:002013-06-27T18:51:23.439-04:00The central bank always supplies the money needed ...<i>The central bank always supplies the money needed to keep interest rates within their target range.</i><br /><br />Right Dan. But they can change the target rate. If they are concerned about growing inflationary pressure, that's what they would do.<br /><br />Seems to me that in a future system in which a combined monetary-fiscal policy is operated directly out of the Treasury, you need some alternative kind of policy regime to preserve stability. My guess is that we would want to target a specific size deficit that adjusts to macroeconomic conditions.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-62633689947862614532013-06-27T18:48:17.659-04:002013-06-27T18:48:17.659-04:00some of the MMT folks just wish to keep the system...<i>some of the MMT folks just wish to keep the system going long enough</i><br /><br />Or maybe they's just like to have a quite simple thing: a central bank under democratic control.<br /><br />That is, the very opposite of the formula presently (maybe eternally) imposed on the eurozone countries, with disastrous results.Jose Guilhermehttps://www.blogger.com/profile/00313496015841693181noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-79980349315831688202013-06-27T18:44:59.622-04:002013-06-27T18:44:59.622-04:00Tom,
Perhaps you'd like to take a look at pag...Tom,<br /><br />Perhaps you'd like to take a look at page 22 (2-9) of this BEA publication on NIPA methods (link: http://www.bea.gov/national/pdf/methodology/ALLchapters.pdf ):<br /><br />"In the NIPAs, subsidies are shown as a subtraction from taxes...because they are transfers from government...and thus, in effect, represent a negative tax by government".Jose Guilhermehttps://www.blogger.com/profile/00313496015841693181noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-61045381590002036342013-06-27T18:44:33.319-04:002013-06-27T18:44:33.319-04:00I suspect some of the MMT folks just wish to keep ...I suspect some of the MMT folks just wish to keep the system going long enough for them to acquire THEIR fortunes.<br /><br />Never trust someone who believes their reward can only be on this earth?Anonymoushttps://www.blogger.com/profile/13859046687902645077noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-24443399635934312612013-06-27T18:41:43.408-04:002013-06-27T18:41:43.408-04:00The few who understand the system will either be s...<i>The few who understand the system will either be so interested in its profits or be so dependent upon its favours that there will be no opposition from that class, while on the other hand, the great body of people, mentally incapable of comprehending the tremendous advantage that capital derives from the system, will bear its burdens without complaint, and perhaps without even suspecting that the system is inimical to their interests.” The Rothschild brothers of London writing to associates in New York, 1863.</i> from http://www.themoneymasters.com/the-money-masters/famous-quotations-on-banking/Anonymoushttps://www.blogger.com/profile/13859046687902645077noreply@blogger.com