Saturday, June 26, 2021

Sanders: We’ll borrow money to fund ‘one time infrastructure programs’ due to low interest rates

 

Looks like Bernie wants to take advantage of today’s low interest rate environment to borrow more munnie from China so we can have the munnie to maintain our own infrastructure….  What a f-ing uneducated douche bag unqualified commie idiot…





36 comments:

lastgreek said...

OK, Matt, but at least his intentions are good.

Matt Franko said...

Right I should edit: “ What a f-ing uneducated douche bag unqualified commie idiot……. but in a good way….”

lastgreek said...

It's all relative.

Tom Hickey said...

Is Bernie listening to Krugman rather than Kelton?

lastgreek said...

Bernie is the closest to an FDR that you guys have right now.

Also, what do you guys think they're going to do to Bernie if he starts publicly talking like Kelton? Right, they're going to skewer him in the media.

Peter Pan said...

Sheepdog thinks money = sheep

mike norman said...

I thought Stephanie Kelton "educated" him on MMT?

mike norman said...

When did Trump ever say he was going to borrow money to fund national investments (military) because "interest rates were low?" NEVER. He just f*cking did it. Dems suck.

lastgreek said...

Trump says the Fed should cut rates so the US can pay down its $23 trillion debt

"We would then focus on paying off & refinancing debt!" [Trump]wrote.

https://www.cnbc.com/2020/01/28/trump-says-the-fed-should-cut-rates-so-the-us-could-then-focus-on-paying-off-refinancing-debt.html

As for the military... well, you know how it is, Mike. You go against the military and next thing you know you're called a commie -- or worse, a pacifist!

PS: Yes, I know that you guys have had lousy politicians since after FDR (Wallace getting the boot in favor of the hick Truman), and that the election of Trump was the result of your super corrupt politics. But, still -- Trump? (Imagine that there were actually Americans (albeit idiots) who took his nationally televised advice and injected themselves with bleach and some even shoving UVC lights up their rectums...)

Tom Hickey said...

I thought Stephanie Kelton "educated" him on MMT?

She did. Apparently, either he did not buy into it or else he didn't think it was salable politically.

lastgreek said...

The latter.

Tom Hickey said...

The latter

That is what I suspect, too.

Too big a jump to educate the electorate to that level of sophistication. And in the course of trying to do so, there would be a barrage of bullshit and countering it would eat up political capital and waste valuable time. What this means is that practical strategy matters more than abstract truth.

Matt Franko said...

I think he’s always been skeptical of SKs teachings…

His is a classic dialogic synthesis Tom it’s a “deficit dove” thesis in figurative terms..…. Synthesis of balanced budget thesis and deficit doesn’t matter antithesis…. You get this paradoxical synthesis where the person sometimes thinks it’s a good time to borrow munnie and sometimes not a good time to borrow munnie…

He was probably trained to believe in a balanced budget so the best he can do is this synthesis… whereas SK was trained to believe MMT …. He can no more just start fully believing MMT as SK could start to think we’re out of munnie….

Dialogic method doesn’t allow a full transition to an antithesis it only allows some form of synthesis…

Peter Pan said...

Sanders practical strategy is to shepherd voters into the fetid Dem swamp.

He and Noam Chomsky are absolutely useless strategists.

Tom Hickey said...

Strategically, the synthesis is a good political choice. Bernie is speaking to as wide a group of likely and potential supporters of a Democratic candidate regarding fiscal policy. The fiscal conservatives can be persuaded to deficit spend and increase the deficit by the argument it's temporary, conditioned by low rates. The center basically agrees since it is Krugman's position. The MMT crowd will complain about the rationale but go along anyway. That is pretty much the whole group that might vote for Democrats. He keeps his socialist credentials burnished by calling for taxing the rich. This is a rational strategy for him as a politician.

Peter Pan said...

It's a rational strategy for a comfortable, sodden old fool.

Remember him and people like him when blood is running in the streets. They are complicit.

Peter Pan said...

And to top it off, Sanders uses the Dem electoral machinery for his own benefit.

Unknown said...

For nearly a 1000 years Roman governments just created currency by minting it. No government bond in sight! Longest continuous currency creating period in human history. What's so difficult for politicians to understand how this was possible and explain to voters?

Matt Franko said...

They probably had fixed interest rate… so we can’t do that today… we have to issue the bonds to reduce bank reserve assets as the interest paid on the reserve assets is the technique used to set the variable interest rate…. If the depositories accrue too many reserve assets they fall below regulatory minimums of capital/total assets…

If you understand the procedures it’s not a problem…

Matt Franko said...

And it’s not really some revolutionary understanding to know nobody can ever run out of scientific units of abstraction…

Any qualified science degree graduate knows and understands this ..

These Art degree morons deserve our disrespect and ridicule 24/7/365…

Peter Pan said...

What doesn't fit the narrative may not be spoken.

If you want to hear about MMT, listen to Tucker Carlson.

Ralph Musgrave said...

It is delusional to think a country can get new infrastructure cheaper by borrowing, even given low interest rates, than by raising taxes. Bridges can only be built by enduring a cost in the form of people sweating their guts out producing steel, concrete etc. Borrowing won’t make that cost disappear.

If those people are paid with borrowed money, that will tend to push up interest rates which is effectively a tax on everyone with a mortgage in the country and every business that borrows.

S400 said...

Bernies only job is to gain support for the Biden administration. This is fits right in there.

Peter Pan said...

What Bernie says: I'm an independent, I'm a democratic socialist.
What Bernie does: carries water for the Democratic party.
What Bernie has accomplished legislatively: zero

He is possibly the most incompetent politician in office today.

Matt Franko said...

Ralph they have bridges in Europe and interest rates are NEGATIVE… blimey!

Ralph Musgrave said...

Franko, But the Europe and negative rates does not disprove my claim that the more government borrows, the more interest rates will tend to get pushed up. It may push them up from 1% to 2% or from minus 2% to minus 1%, but there's bound to be a "push up" effect, far as I can see.

lastgreek said...

Here, let me tell you the so, so, really so obvious. The thought of giving blacks, hispanics, immigrants anything that they don't pay for is anathema to white Americans.

Yeah, so obvious but you don't say it out loud -- you keep it to yourself. My aunt in Florida had a temporary memory lapse a few years ago and said the obvious to me: "They [you know who] will all be demanding handouts. I work hard while they sit around and they get government help? Forget it," was the jist of it.

Peter Pan said...

If she's your Greek aunt, she probably meant Turks.

lastgreek said...

My aunt, her family, are Americans thru and thru. Voted for Trump, too. Mind you , they are all fully vaccinated :)

Peter Pan said...

Vaccinated, spayed and neutered - its good for your pets, its good for your in-laws.

Ahmed Fares said...

Ralph Musgrave,

If those people are paid with borrowed money, that will tend to push up interest rates

Government deficits are self-financing. The government spends first and borrows back its own spending. As such, there is no financial "crowding out effect".

Of course, if there are resource constraints, then you get inflation, central banks respond, and you get higher interest rates that way. MMT says that it doesn't have much effect in the aggregate, but it does have distributional effects. So yeah, people with mortgages will pay more, while those who earn interest will receive more.

Ahmed Fares said...

Matt Franko,

Ralph they have bridges in Europe and interest rates are NEGATIVE… blimey!

You can still borrow from foreigners at negative interest rates. They make it up on the change in the exchange rate. So in that sense, it's a positive interest rate for foreigners.

The implied forward exchange rates for any pair of currencies is determined by the spot exchange rate, the differential of the money market rates for that tenor and the cross-currency basis swap, which essentially measures the demand and supply mismatch for the two currencies. For the purpose of this discussion we don’t need to understand the details of the basis swap. The only thing that the reader needs to know is that if he buys a German Bund at a negative yield of -0.25%, and then if he hedges the currency risk by selling the Euro currency forward to convert the proceeds over the hedge horizon into dollars, he is selling the forward exchange rate at a higher price than the spot exchange rate, so the difference between the forward exchange rate and the spot exchange rate can be considered additional “yield” coming from the hedge.

This forward currency hedging generates about 3%, so when we add 3% to -0.25%, we now have a negatively yielding ten year German Bund yielding +2.75% for a US investor! Similarly, a 3 month German Bund yielding -0.50% is about 2.5% hedged yield, and a two year German Bund yielding -0.67% is equivalent to a 2.30% hedged yield. On the other hand, for a Euro based investor, the act of hedging the currency risk reduces the yield of a ten year maturity Treasury note to -0.83%! In other words it converts positive US dollar yields (for a US Dollar investor) to negative yields (for a Euro investor).


source: Trading Sardines: The Case Of Currency Hedged Negative Yielding Bonds

Matt Franko said...

“As such, there is no financial "crowding out effect".

Yes there is if the Treasury increases its TGA balance… somebody in the non govt sector has to lend the Treasury USDs for treasury to maintain a large credit balance in its account..

If they hold the TGA consrant I would agree with you but they don’t do that…

Matt Franko said...

There is a lot more to it than the deficit…

Matt Franko said...

H.8 loans and leases in bank credit is down by 100s of billions from its previous highs in 2020 and UST holdings are way up… as Treasury ran the TGA balance up over 1.5T last year and then never spent the munnie…

This is “crowding out” so- called… ie in non figurative language banks have to use their limited capital to finance the USTs rather than finance loans as regulatory leverage ratio is held constant…

Matt Franko said...

Loans and leases in bank credit is currently stuck at about 10,350b …. as treasury keeps issuing $75b of Cash Management Bills every week with its account at 750b… they’ve increased their account form about 600b to 750b in June…