ECB President Christine Lagarde lets the cat out of the bag.
“As the sole issuer of euro-denominated central bank money, the Eurosystem will always be able to generate additional liquidity as needed,” Lagarde said in response to a question by an Italian member of the European Parliament.
“So, by the definition, it will neither go bankrupt nor run out of money. In addition to that, any financial losses, should they occur, would not impair our ability to seek and maintain price stability....
Alan Greenspan testified to a congressional committee about the Fed's ability to do this, adding that the issue was availability of real resources rather than affordability…
Some people still don't get it. They can't get beyond the idea of money being a"thing" and can't fathom the concept of money as entries on a spreadsheet, now a digital spreadsheet and created merely by stroking a keyboard.
7 comments:
ISTM some MMTers don't get it either.
Otherwise they'd be pushing for the current debt ceiling row to be resolved by the courts declaring the Fed has no power to refuse a Treasury payment order.
Which would then push the Fed into negative equity - because that's what Congress has decreed by passing an unbalanced budget.
I always get a kick out of that Greenspan clip. Greenspan's comments go right over that dummy Paul Ryan's head.
They only get it when it's of benefit for elites.
Unfortunately, what she doesn't say is that Eurozone members CAN go bankrupt. If she did, politicians may realise how reckless they've been to join.
“ Which would then push the Fed into negative equity”
They are already in -100B in negative equity due to having to pay the IOR and RRP with the rate now at 4.4%…
The ECB is saying this now because the Fed went first…
Fed was first to demonstrate that a CB could go negative and no financial disaster..,
So once the ECB saw it was safe to do this now they are going to do it..,
Europe still on a post WW2 US leash..,
“They only get it when it's of benefit for elites.”
Nice conspiracy theory… maybe call Alex Jones show …
Economists are too boring to go on Alex Jones.
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