tag:blogger.com,1999:blog-2761684730989137546.post920513167823956379..comments2024-03-28T07:50:06.102-04:00Comments on Mike Norman Economics: Ben Wray — The magic money tree is real: Treasury confirms taxes are not needed to fund government spendingmike normanhttp://www.blogger.com/profile/03296006882513340747noreply@blogger.comBlogger36125tag:blogger.com,1999:blog-2761684730989137546.post-42038762799238615432018-07-30T02:24:26.908-04:002018-07-30T02:24:26.908-04:00Interestingly, whilst the government does not want...Interestingly, whilst the government does not want to be seen performing any act which may undermine the stability of inflation expectations, governments existence has been utilized more than anything else to endorse and perpetuate the very property based system which causes the expansions and contractions, and thus the instability of economic expectations.Deanhttps://www.blogger.com/profile/17395348035867237331noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-37809627076380653292018-07-28T11:29:05.588-04:002018-07-28T11:29:05.588-04:00This comment has been removed by the author.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-83685642078549715552018-07-28T09:37:54.300-04:002018-07-28T09:37:54.300-04:00The Magic Money Tree is real ― too bad that the ma...The Magic Money Tree is real ― too bad that the magic is fraud<br />Comment on Tom Hickey/Ben Wray on ‘The magic money tree is real: Treasury confirms taxes are not needed to fund government spending’<br /><br />The often repeated argument goes as follows: “While it is theoretically possible for monetary authorities to finance fiscal deficits through the creation of money, allowing governments to increase spending or reduce taxation, without raising corresponding financing from the private sector, there is a risk that money financing could rapidly undermine the stability of inflation expectations.”<br /><br />It is true and known since time immemorial, that governments can do deficit-spending/money creation. It is NOT true that this causes inflation.#1 However, it is true that deficit-spending/money creation causes a profit explosion and as a consequence an extremely unequal distribution of income/financial wealth.#2<br /><br />Because of the Profit Law, which entails Public Deficit = Private Profit, the Magic Money Tree magically benefits the one-percenters but NOT the ninety-nine-percenters. As long as MMT academics use the Magic-Money-Tree-metaphor in their seminars they are doing junk economics just like their Walrasian, Keynesian, Marxian, Austrian colleagues. To the extent that MMTers use the Magic-Money-Tree-metaphor in discussions with the general public they are committing political fraud and scientific suicide.#3, #4. #5, #6<br /><br />The magic of the Magic Money Tree consists of WeThePeople unintentionally sponsoring WeTheOligarchy which in turn sponsors WeTheAcademics which in turn communicate the Magic-Money-Tree-story to WeThePeople.<br /><br />Egmont Kakarot-Handtke<br /><br />#1 MMT and the inflation-red-herring<br />https://axecorg.blogspot.com/2018/04/mmt-and-inflation-red-herring.html<br /><br />#2 Keynes, Lerner, MMT, Trump and exploding profit<br />https://axecorg.blogspot.com/2017/12/keynes-lerner-mmt-trump-and-exploding.html<br /><br />#3 MMT is gangsta economics<br />https://axecorg.blogspot.com/2018/07/mmt-is-gangsta-economics.html<br /><br />#4 The Kelton-Fraud<br />https://axecorg.blogspot.com/2018/07/the-kelton-fraud.html<br /><br />#5 Richard Murphy: the MMT fraudster dressed up as realist<br />https://axecorg.blogspot.com/2018/06/richard-murphy-mmt-fraudster-dressed-up.html<br /><br />#6 For the full-spectrum refutation of MMT see cross-references MMT<br />http://axecorg.blogspot.com/2017/07/mmt-cross-references.htmlAXEC / E.K-Hhttps://www.blogger.com/profile/10402274109039114416noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-1224420792562409642018-07-28T09:18:06.218-04:002018-07-28T09:18:06.218-04:00No, it isn't. I've read the entire thing ...No, it isn't. I've read the entire thing (https://www.newyorkfed.org/aboutthefed/fedpoint/fed21.html) and the US Treasury makes payments out of its accounts at the Federal Reserve, not out of any accounts it may have with banks except to its own accounts at the Federal Reserve.<br /><br />Still, thanks for pointing out another corrupt aspect of the current system: the US Treasury lending fiat to banks.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-57475140284704508412018-07-28T08:52:49.814-04:002018-07-28T08:52:49.814-04:00Yes it is...Yes it is...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-56646261246507264772018-07-28T04:48:57.298-04:002018-07-28T04:48:57.298-04:00Also, you are apparently conflating my "direc...Also, you are apparently conflating my "direct use of fiat" which just means that people should have accounts at the Central Bank themselves and not have to work through banks with "direct deposit", the electronic transfer of funds.<br /><br />In either case though, your bold assertion is not supported by the link you supplied.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-72506886257225812762018-07-28T04:29:53.139-04:002018-07-28T04:29:53.139-04:00Not even the US Treasury uses direct deposits at t...<i>Not even the US Treasury uses direct deposits at the Central Bank:</i> Franko<br /><br />I see nothing in https://www.newyorkfed.org/aboutthefed/fedpoint/fed21.html to support that very bold assertion.<br /><br />Instead, I see this:<br /><br /><i><b>Note Option Depositories<br /><br />When the Treasury needs funds in order to make payments, the Federal Reserve Banks tell TT&L note option (those classified as retainers and investors) depositories, generally medium-to-large size banks, to transfer funds to the Treasury's accounts at the Fed.</b> The Treasury may request, or "call," the full amount or a percentage of the amount in an account. </i>Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-69982109002432731882018-07-27T12:59:18.053-04:002018-07-27T12:59:18.053-04:00“Heed instruction and be wise“
You’re making my p...“Heed instruction and be wise“<br /><br />You’re making my point...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-84309111609508649812018-07-27T12:58:08.913-04:002018-07-27T12:58:08.913-04:00Lots of people in banking and banking regulation h...Lots of people in banking and banking regulation have Art degrees...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-68640538581617959322018-07-27T12:28:54.086-04:002018-07-27T12:28:54.086-04:00Or for that matter, a banker to understand banking...Or for that matter, a banker to understand banking or anything else, I should think.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-26319002727862496712018-07-27T12:26:16.882-04:002018-07-27T12:26:16.882-04:00Maybe you should study the US banking system inste...<i>Maybe you should study the US banking system instead of the OT?</i> Franko<br /><br />First things first:<br /><br /><i>Heed instruction and be wise, and do not neglect it. ... </i> Proverbs 8:33-<br /><br /><i>A scoffer seeks wisdom and finds none,<br />but knowledge is easy to one who has understanding.</i> Proverbs 14:6 New American Standard Bible (NASB)<br /><br />I.e. It's easier (once one get's past the initial disgust) for a Bible believer to understand banking than for a banker to understand the Bible.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-19654351195025256312018-07-27T11:59:47.311-04:002018-07-27T11:59:47.311-04:00LR = capital/(risk assets + nonrisk assets) = 0.1 ...<i> LR = capital/(risk assets + nonrisk assets) = 0.1</i> <br /><br />That is a policy statement. This policy becomes function when implemented.<br /><br />Macroeconomists work on the models consisting of equations and data that result in policy statements. This is what the Fed does to conduct monetary policy, relying on its staff of econometricians. This policy becomes function when implemented.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-10193275729305332152018-07-27T11:57:16.638-04:002018-07-27T11:57:16.638-04:00Andre us banks have been using it since before eve...Andre us banks have been using it since before even Basel 1 see here:<br /><br />https://www.federalreserve.gov/SECRS/2007/August/20070809/R-1238/R-1238_21_1.pdf<br /><br />“"For various reasons some of <br />these banks are not bound by the minimum capital requirements of Basel I, in the sense 2<br /><br />that they would not reduce their capital if the supervisors reduced the minimum capital<br />requirements. Other banks are bound by the leverage ratio, rather than the risk-based<br />capital requirements of Basel I. The leverage ratio is a minimum ratio of Tier 1 capital to a measure of total assets.”<br /><br />Checkmate.... again....Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-70992110025069371432018-07-27T11:44:27.989-04:002018-07-27T11:44:27.989-04:00AA,
Not even the US Treasury uses direct deposit...AA, <br /><br />Not even the US Treasury uses direct deposits at the Central Bank:<br /><br />“Under the Treasury Tax and Loan (TT&L) program, tax payments by individuals and businesses go into accounts at depository institutions, rather than directly to the Treasury's accounts at the Federal Reserve.”<br /><br />https://www.newyorkfed.org/aboutthefed/fedpoint/fed21.html<br /><br />Causes nonrisk assets to surge at depositories when govt runs fiscal surpluses and a resultant reduction in risk asset prices... BAD!Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-26208483026628629032018-07-27T11:30:33.541-04:002018-07-27T11:30:33.541-04:00They are not functional equations Tom...They are not functional equations Tom...Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-44253619238089207342018-07-27T11:08:13.867-04:002018-07-27T11:08:13.867-04:00People can directly invest in government bonds and...<i>People can directly invest in government bonds and earn the "risk free" rate.</i>André<br /><br />Treasury Direct® allows people to SAVE fiat but not to USE fiat, i.e. no debit or checking service. As for the Direct Express Card® debit card, it works through Comerica Bank®, so no direct use of fiat there either but only the use of Comerica Bank® liabilities for fiat. Plus not all US citizens may use it even if it did allow the direct use of fiat.<br /><br />So why can't citizens use their own Nation's fiat in convenient, inherently risk-free account form at the Central Bank, same as the banks do? Cui bono that they can't if not the banks and the rich, the most so-called creditworthy of what is then, in essence, the public's credit but for private profit?Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-12920025052443644952018-07-27T10:28:06.538-04:002018-07-27T10:28:06.538-04:00"It predates all the Basel accords... it’s al..."It predates all the Basel accords... it’s always been used... this is why we have periodic recessions..."<br /><br />Not, it doesn't predate all the Basel Accords, and no, it hasn't always been used.<br /><br />Also, there is the new Liquidity Coverage Ratio (LCR = High Quality Liquid Assets / Net Cash Outflows for 30 Days in a Stress Scenario). It must be kept at 100% or more. And banks did have some sort of LCR or minimum cash policy way before LCR was introduced.<br /><br />It differs from the basel ratio not only because it is a liquidity requirement (instead of capital requirement), but also because banks can get below the requirements in stress situations (while the Basel Ratio must be obeyed always, even in stress situations).<br /><br />Hence, banks cannot just create deposits randomly. The minimum liquidity level restrictics their abilities to do that.<br /><br />What I can't understand is this: doesn't treasury direct solve this kind of problem? People can directly invest in government bonds and earn the "risk free" rate. You don't need a bank to do thatAndréhttps://www.blogger.com/profile/10935332922520483975noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-43440683061349742882018-07-27T09:57:58.831-04:002018-07-27T09:57:58.831-04:00It’s understood via an equation, not a declarative...<i>It’s understood via an equation, not a declarative sentence of Literary Art..</i> <br /><br />Then why do you think econometrics, which uses formal models based on higher math, should be categorized as "art" rather than "science," enquiring mind want to know.Tom Hickeyhttps://www.blogger.com/profile/08454222098667643650noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-15989658458283392922018-07-27T09:47:09.780-04:002018-07-27T09:47:09.780-04:00Ok so then you’re gonna stop posting about it bein...<i>Ok so then you’re gonna stop posting about it being unfair now?</i> Franko<br /><br />Is a murder/suicide any less a murder because the murderer kills himself too?<br /><br />Is a parasite any less a parasite if, after killing its host, it dies too?Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-53487509570351542362018-07-27T09:39:32.990-04:002018-07-27T09:39:32.990-04:00Maybe you should look up the definition of "i...Maybe you should look up the definition of "introduce." But WIKI is WIKI so if you have a better source to indicate the leverage ratio predates Basel III, I'm all ears.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-17454400315513019782018-07-27T09:36:40.996-04:002018-07-27T09:36:40.996-04:00“Sounds fair to me”
Ok so then you’re gonna stop ...“Sounds fair to me”<br /><br />Ok so then you’re gonna stop posting about it being unfair now?Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-46263907673227243752018-07-27T09:32:54.283-04:002018-07-27T09:32:54.283-04:00Maybe you should study the US banking system inste...Maybe you should study the US banking system instead of the OT?Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-21492060069067258652018-07-27T09:32:07.190-04:002018-07-27T09:32:07.190-04:00Basel 3 kept it so what?Basel 3 kept it so what?Matt Frankohttps://www.blogger.com/profile/11978352335097260145noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-16790261378671312252018-07-27T09:29:13.916-04:002018-07-27T09:29:13.916-04:00It predates all the Basel accords... it’s always b...<i>It predates all the Basel accords... it’s always been used... this is why we have periodic recessions... </i> Franko<br /><br /><i><b>Leverage ratio<br /><br />Basel III introduced a minimum "leverage ratio". This is a non-risk-based leverage ratio and is calculated by dividing Tier 1 capital by the bank's average total consolidated assets (sum of the exposures of all assets and non-balance sheet items).</b>[5][6] The banks are expected to maintain a leverage ratio in excess of 3% under Basel III.</i> from https://en.wikipedia.org/wiki/Basel_IIIAndrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.comtag:blogger.com,1999:blog-2761684730989137546.post-60309934207466230442018-07-27T09:07:57.174-04:002018-07-27T09:07:57.174-04:00and risk assets are decreased in price... Franko
...<i>and risk assets are decreased in price...</i> Franko<br /><br />Well, those who live by government-privilege may die by government regulation. Sounds fair to me.<br /><br />Otoh, 100% private banks with 100% voluntary depositors should not have to be regulated any more than gambling casinos since they would no longer hold the economy hostage via a single payment system that must work through them.Andrew Andersonhttps://www.blogger.com/profile/14296407661618321637noreply@blogger.com