The Treasury Borrowing Advisory Committee (TBAC) consults with the US Treasury and advises them on the strength of the US economy (I thought the Fed is charged with that task) and provides recommendations on debt management issues.
Here is the statement from the Treasury's website:
| The Treasury Borrowing Advisory Committee ("Borrowing Committee”) of The Securities Industry and Financial Markets Association (SIFMA) is an advisory committee governed by federal statute that meets quarterly with the Treasury Department. The Borrowing Committee’s membership is comprised of senior representatives from investment funds and banks. The Borrowing Committee presents their observations to the Treasury Department on the overall strength of the U.S. economy as well as providing recommendations on a variety of technical debt management issues. The Securities Industry and Financial Markets Association does not participate in the deliberations of the Borrowing Committee. |
So who are these people who are not accountable to Congress, to the President, to taxpayers, to no one but themselves? They are Wall Street money managers, traders and hedge fund operators.
They are people like, Paul Tudor Jones of Tudor Investment Management, a billionaire hedge fund trader. Or Richard Axilrod of Moore Capital Management, another commodity speculator. Then there's Stephen Rododsky, Managing Director of Pimco, whose boss, Bill Gross, SHORTED US TREASURIES even as his employee, Mr. Rodosky SITS ON THIS VERY BOARD ADVISING THE US TREASURY HOW TO OPERATE IN THE BOND MARKET!
Then there is this "genius" statement from the "genius" chairman of this committee, Matthew E. Zames:
This "genius" doesn't even understand how rates are set, the role of the Fed, risk (or lack thereof) to fiat currency issuers when it comes to their own debt/spending.
Are you kidding????????
This is beyond outrageous. This is a total hijacking of the American economy by a bunch of speculators and market operators that have no interest in the average American whatsoever. This is a sham! The public needs to know about this! Please distribute to as many people as possible!
and they still lose their asses!
ReplyDeleteWe Austrians are SHOCKED, shocked I say, to learn that the fiat money system has been taken over by a vile, self interested thieving elite. Who knew?
ReplyDeleteBob,
ReplyDeleteAre you advocating the system be manipulated by the gold sellers instead? No thanks on that either.
Thanks for the comment, Bob, your sarcasm notwithstanding.
ReplyDeleteYes, this is outrageous. However, I fear that it gets worse.
ReplyDeleteYou have to wonder how many congressmen and other political leaders have money under management with these hedge funds (including Goldman Sachs).
If it is as many as I think it might be, then you also have to wonder if they are not deliberately manipulating the economy.
Without sarcasm, we all do agree that the government has been taken over by a vile, lying thieving warmongering elite, right? We just disagree about the cause and cure, right?
ReplyDeleteYes, we agree on the first part. I'm not sure we agree on the second because I am not sure what your view is? Is it that fiat money is bad and has created inflation? I thought we went over that in a previous post. We haven't lost purchasing power. It's quite obvious when purchasing power is expressed in terms of units of labor and not nominal dollar amounts.
ReplyDeletebob, it has nothing to do with the fact that we run a fiat currency system. all systems are prone to manipulation - it just depends whether you can put the appropriate checks and balances in place to limit manipulation.
ReplyDeleteone must examine why the system has become so dysfunctional that the "financial elites" have resorted to using predatory practices against their own kind.
these "vile thieves" were not born that way you know. look at the profiles of hank paulson, jamie dimon, ben bernanke etc. - they were literally your next door neighbors before they entered the system.
populist anger and bias do not help solve the problem - they are part of the problem we are facing.
SR,
ReplyDeletegood point I believe Lloyd Blankfeins dad was a postal worker and Dennis Kozlowskis was a cop... they somehow lose view of where they come from.
A very interesting follow up on our elected representatives:
ReplyDeletehttp://thedailywh.at/2011/11/01/rich-get-richer-of-the-day
If fiat money does not cause a loss in purchasing power, what is Dean Baker saying here by advocating “pushing down the value of the dollar“ in 2009:
ReplyDelete"Tax cuts directed at low and moderate-income families are a good way to jump-start the economy, as would be government investment aimed at neglected infrastructure needs, such as re-building New Orleans and preventing the collapse of more bridges. Pushing down the value of the dollar should also be a top priority.There is no way to correct our trade imbalance with an overvalued dollar providing a massive subsidy for imports and imposing a tariff on U.S. exports. A lower dollar will make U.S. manufactured goods far more competitive in the [p.130] world economy, and will thus create a large number of relatively high-paying jobs. One benefit of the housing meltdown is that it should be much easier to get our trading partners to go along with a lower dollar now that we can show them how much money they lost by investing in U.S. financial assets that have gone bad.”
From “Meltdown” pages 129-130.
What, no one from S&P or Moody's? I'm appalled!
ReplyDeleteThere is no such thing as a Trade imbalance. When the Chinese or any other nation exports goods & services to the U.S. they receive nothing more than greenbacks. At anytime in the future they can purchase goods & services from America if they so wish.
ReplyDeleteSo this Trade Imbalance that you speak of is nothing more than a pile of unspent cash held by people who are non U.S. citizens.
Now if you want to lead America down a road of export driven growth, then America via some government organisation must 'print' a heap of money and start purchasing other currencies around the world. This would cause other nations to start holding significant amounts of U.S dollars. They would have no choice but to spend them on American Goods & Services, boosting the U.S export sector. But remember to sustain this, the U.S must continually create new money to purchase overseas currencies, thus building up stockpiles of overseas currencies(that may or may not have future value) and devaluing their own labor.
shaun.hingston@hushmail.com
@Bob Roddis
ReplyDeletePushing down the value of our currency relative to the currencies of our trading partners - which makes our products more affordable to them and theirs less affordable to us - so we might get money spent here. Are you saying thats bad? Because I care more about whether I am working not about how much worthless junk i can buy. My mortgage payment won't go up and that's my biggest expense.
PaulJ:
ReplyDeleteOf course as an Austrian, I think such a policy to "push down the value of the dollar" is an illegal and immoral outrage.
However, Mr. Norman said that fiat money did not result in a loss of purchasing power. I wanted someone to square Mr. Norman's claim with Mr. Baker's proposal.
@Shaun Hingston Agree totally with your viewpoint, but I believe that in fact there are certain strict limits to what the US gov't will let the Chinese purchase in the US. The US does not want China to own important industries here. However, they can buy anything abroad, and many things in the US.
ReplyDelete@Bob:
ReplyDeleteI didn't say it doesn't push down the value of the dollar, I said there is no evidence that it has so far. Obviously, if you "print" enough, you'll create broad inflation and reduce purchasing power both in nominal and real terms.
Bob,
ReplyDeleteAs far as "push down the value of the dollar" I dont think Dean Baker really knows what he is talking about here; he is a bit out of MMT paradigm.
I dont think the US can unilaterally "push down the value of the dollar" no more than they can set an exact fiscal deficit by policy.
Both have to do with savings desires. As far as the floating exchange value of the dollar, that is ultimately driven by external USD savings desires (exception being when the TWO currency monopolist CBs get together to set an exchange rate); and as for the fiscal deficit, that is ultimately determined by domestic USD savings desires...
Japan has had to intervene lately to push down their currency vs USD but you can see at the following link how Japan has accumulated high amounts of USTs over the last year. I submit that if Japan did not have any such YoY USD savings desires, they probably would not have had to intervene recently....
http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
A lot comes down to USD savings desires out there...
Resp,
@Bob Roddis
ReplyDelete"Of course as an Austrian, I think such a policy to "push down the value of the dollar" is an illegal and immoral outrage."
Not allowing the dollar to float with respect to other currencies would be the illegal and moral outrage. In a closed economy there must be safety valves or the system will (must) become unstable.
I agree with you Matt. Baker gets ever closer to MMT, but still not yet. You are of course right that the US can't unilaterally push down the value of the dollar. The floating exchange value needs agreement or acquiescence on both sides to stably fix.
ReplyDeleteWhat he should have said is that Doing things which will have the natural effect of pushing down the foreign exchange value of the dollar should also be a top priority. The effect of printing money to attain full employment at home will not cause domestic price inflation if done sensibly,but will naturally cause prosperity and an increase in imports and therefore tend to push down the foreign exchange value of the dollar.
Baker does understand this and has said so in comments on his blog, but he does not emphasize it, mistakenly IMHO, blaming a strong dollar, which in a sanely run economy is always, by definition, a benefit. And thus leaves himself open for criticism like Bob's.
But because the foreign exchange value of the dollar is something beyond US control, it is not in any way a responsibility of the USA. The responsibility of the USA to any of the savers in its own currency, domestic or foreign, is to keep domestic inflation low or predictable, to maintain stable domestic prices.
A country with dollar savings, but whose currency appreciates against a dollar that has not inflated, and complains about it is like someone who wins a lottery and whines "I wuz robbed" to his bank because the dollars in his account have lost value relative to his lottery ticket.
Calg,
ReplyDeleteI think back to how many times I've heard moron Larry Kudlow say that the US should always 'pursue a strong dollar policy'... like Treasury has some type of unilateral policy lever at it's disposal.
And I should add that I believe the Japan devaluation was not unilateral that Japan and the US had to agree on that correct?
This topic requires more thought on my part, if you would engage...
Do you see any fallacies in this article:
http://citywire.co.uk/wealth-manager/intervention-is-unlikely-to-kill-yens-safe-haven-status/a537715
Here's one I believe: The article sez: " The coordinated intervention by the G7 in March did succeed in capping the yen for several months. However, the upward pressures which subsequently followed were essentially speculative and the yen was back above its pre-intervention levels within three days in August."
Now it you look at the TIC data in the link in my comment above, you can see how the level of japans UST holdings paused around the earthquake time in March/April as their exports probably paused but then it was back off to the races by August and the currency starts to strengthen again and then another intervention.
This pattern will probably continue yes? Even the moron japanese official seems to be blaming it on 'speculators' when it is really the USD savings desires of his country?
So if this Japan official thinks that he 'taught the specs a lesson' and the Yen will hold here he is deluded. If japan continues to run these 6B/mo trade deficits w the US it should fall back down to the low 70s and then look for another intervention...
Data on japan trade here (fits):
http://www.census.gov/foreign-trade/balance/c5880.html
Resp,
Great way to get a good suggestion to solve financial matter.That's really provided good way how to recommendations on debt management issues.
ReplyDeleteMy apologies, Matt. I know I am a hit & run poster, especially as Mike's blog gets more popular & filled with new posts. Your analysis looks right to me, the savings desires / the trade deficit is always there, speculators can do something, but not forever against fundamentals.
ReplyDelete