They should rather be talking about what they can reasonably get thru reconciliation…
The Fed will not purchase “the coin” with reserves… The “coin” doesn’t pay a coupon where is the Fed going to get the USDs to pay the IOR or the RRP rate on the newly issued reserves? Fed doesn’t operate under an appropriation… they factor the govt guaranteed interest bearing securities they buy when they add reserves…
Quit whining and pass something via reconciliation… this whole “the coin!” thing is a feckless distraction…
!!!!!
— Joe Weisenthal (@TheStalwart) September 28, 2021
*it's happening gif* https://t.co/VhRuCK34v7
All day long I got tagged in one or Muchas threads and it was an eye opener listening to leftists. The
ReplyDeleteBot talking points are that it's all GOPs fault that they can't get their bills passed and a debt ceiling (when Ds control Senate, House and White House). Obvious, to me at least, the 3.5 Trillion bill isn't even popular enough among Dems to pass. Nancy has it out there like a Confederate statue in a liberal university. Provocative. Red meat for the base. But given the bill had zero input from GOP and zero input from moderate Dems, it's sole purpose is to get torn down and titilate the squad. Surely Blaming lawmakers that they excluded from bill amendments for not voting for the bill is just a ruse? The Debt ceiling is the tool to ensure that the communist/progressive caucus has to come to compromise, like legislators have to do, if they want to get it passed. If they don't, and econ slows down because falling deficits, Nancy will primary them get moderates to replace them. Devious and brilliant. If you look at the dark money supporting progressive caucus members, I'm doubtful that even they really want this bill. Pure antifa wish list items. I might be jaded and wrong but I doubt it. GOP and Moderate Dems no longer pretending to support JEDI and SDG / ESG of progressive wing. Interesting political battle Tho..
"The “coin” doesn’t pay a coupon where is the Fed going to get the USDs to pay the IOR or the RRP rate on the newly issued reserves? "
ReplyDeleteFrom their other assets - which pay much more than the IoR requirement, or failing that the recapitalisation process.
Or alternatively they can drop the fund rate rate to zero and stop paying anything.
The Fed has no alternative other than to accept the coin. It has a face value, the Treasury is depositing it and the law requires that it accepts coinage. End of story.
Neil said...
ReplyDelete"Or alternatively they can drop the fund rate rate to zero and stop paying anything."
Yes. Thank you.
Or they can let rates go negative like ECB and BoJ, which would have happened were it not for the RRPS they're doing.
"Or alternatively they can drop the fund rate rate to zero and stop paying anything." NeilW
ReplyDeleteMore precisely, the Fed should stop ALL fiat creation for private interests including IOR, asset purchases, and loans.
As for the so-called "natural interest rate" in fiat being ZERO, that's because the DEMAND for fiat is unjustly suppressed in that ONLY banks in the private sector may use fiat in account form (via Accounts at the Fed) and because of other privileges such as government guarantees of private, including privately created*, bank deposits.
Not that low interest rates are not good but the way to create them should be ethical such as an equal Citizen's Dividend and negative interest on excessively large fiat accounts.
Also, we need land reform to end concentrated and foreign land ownership ala the Old Testament.
*"Bank loans create bank deposits"