Gold buying like this functions as ‘off balance sheet deficit spending’. It’s off balance sheet as the payments by the CB don’t count as fiscal expenditures as they are accounted for as CB asset. And it’s functionally state deficit spending as the purchases add income in the form of net financial assets to the non government sectors:
China’s on a bullion-buying spree. The world’s second-largest economy expanded its gold reserves for the fourth straight month, adding to optimism that central banks globally will continue to build holdings.
The People’s Bank of China raised reserves to 60.62 million ounces in March from 60.26 million a month earlier, according to data on its website. In tonnage terms, last month’s inflow was 11.2 tons, following the addition of 9.95 tons in February, 11.8 tons in January and 9.95 tons in December.
China, the world’s top gold producer and consumer, is facing signs of a slowing economy, even as some progress is being made in trade negotiations with the U.S. The latest data from the PBOC indicate that the country has resumed adding gold to its reserves at a steady pace, much like the period from mid-2015 to October 2016, when the country boosted holdings almost every month. Should China continue to accumulate bullion at that pace over 2019, it may end the year as the top buyer after Russia, which added 274 tons in 2018.
Governments worldwide added 651.5 tons of bullion in 2018, the second-highest total on record, according to the World Gold Council. Russia quadrupled its reserves within the span of a decade amid President Vladimir Putin’s quest to break the country’s reliance on the U.S. dollar, and data from the central bank show that holdings rose by 1 million ounces in February, the most since November.So far, it's only the MMT folks that I have seen saying that central bank gold buying is "off balance sheet deficit spending."
Gold price is sensitive to central bank buying and selling.
The Center of the Universe
Auto sales, Lumber, Rail loadings, Global survey, Profits comments, Las Vegas Real Estate, Central Banks buying goldWarren Mosler
2 comments:
Why is Mosler talking about this and not the fact that the Federal deficit is now $750 bln or roughly the same size as full-year 2018 deficit? That's his big thing, the deficit, right? He has been bearish for years. Who cares what he says anymore. I am the only MMTer who has been correctly bullish because I focus on FLOWS.
Link on ‘Warren Mosler — Central Banks buying gold’
Warren Mosler claims: “Gold buying like this functions as ‘off balance sheet deficit spending’. It’s off balance sheet as the payments by the CB don’t count as fiscal expenditures as they are accounted for as CB asset.” and “So far, it’s only the MMT folks that I have seen saying that central bank gold buying is ‘off balance sheet deficit spending’.”
This is one of many Moslerian Chicago steam room hallucinations. Gold buying by the Central Bank has been dealt with here
Reconstructing the Quantity Theory (I)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1895268
Reconstructing the Quantity Theory (II)
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1903663
Egmont Kakarot-Handtke
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