Wealth (savings) in the form of US Treasury securities in the private sector that are default risk free in that they are liabilities of the US government, a currency sovereign capable of meeting its obligations in the currency it issues as monopoly supplier. But why issue these liabilities in the for place if they are not necessary operationally in the current floating rate monetary system? While there is a a rationale for a government issuing some securities based on the role they play in the financial system, a one-too-one correspondence to fiscal deficits is not needed. Moreover, it may not be warranted in terms of serving public purpose in the system. Understanding how the system operates institutionally clarifies this and suggests re-thinking current policy.
The Lens
What $31 Trillion Looks Like Through the MMT LensStephanie Kelton | Professor of Public Policy and Economics at Stony Brook University, formerly Democrats' chief economist on the staff of the U.S. Senate Budget Committee, and an economic adviser to the 2016 presidential campaign of Senator Bernie Sanders
4 comments:
“But why issue these liabilities in the for place is they are not necessary operationally? “
Yo they ARE required operationally the banks and others need them as HQLA to maintain a positive Capital position..
A-L =C
And the C has BOTH quantitative AND QUALITATIVE requirements…
Hey Tom,
“The MMT people are making a “straw man!” and haven’t read the bank regulatory literature!”
:p
I’m going to write a book titled: “the not operational required myth”
Maybe you should title it: "Read the F****** Manual"
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