231–240 of 241 posts
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The top comments seem pretty reasonable there. Did you have a specific one in mind?
Basically every comment trying to make a political statement and those that are implying that investment managers made decisions out of greed and avarice.
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Afaik the needed difference in interest payment from the fed comes from the treasury. So it’s indirectly connected to the budget. In theory though you can still raise more debt to pay the interest. But I’m not sure about the longterm consequences of this. Having inflation above the interest rate helps decreasing the debt/gdp ratio.
Why can't they just pay the interest with newly-created money? I mean, that might not be how things are set up right now, and it would make their position even more negative since newly-created cash is a liability on their balance sheet and they didn't get an asset for it. So maybe at the moment it's on the treasury to make up the difference. But I don't see a fundamental reason why that needs to be the case, it seem…
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No need to cover all the outstanding debt at once. The expectation of future debt monetization is already priced into the interest rate in much the same way as the risk of default would be. In fact, it is preferable that way. If you were a bond holder, would you prefer default over dilution?
I mean, maybe? If in default I get 75 cents on the dollar, or with inflation my bond loses 25% of it's value through inflation isn't it the same to me? I am skeptical of the infinite money thing though. Sure - theoretically people will buy up bonds at 1000% interest rates. But would they really though?
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Strange to recommend Mankiw, and Modern Monetary Theory (a discredited, non-mainstream economic concept that Mankiw wrote against) in the same sentence. MMT is practically pseudoscience, makes unclear claims, claims a foundation in mainstream economics but makes completely wild logical leaps when it comes to policy recommendations, and it's promoted by politicians more than real economists.
Ah yes, MMT, classic discredited concept, unlike classic synthesis theory that has been completely unable to predict modern economic responses and can't explain the 3rd largest economy in the world. You do know mainstream economics isn't science right? Because it's completely unable to prove anything it predicts
DSGE is bunk, so is the Phillips curve, so is the EMH (more finance than economics), so is a whole bunch of stuff. I subscribe to complexity economics, not the standard model. But MMT is even worse than the mainstream stuff. Even central bankers think it makes no sense (https://publications.banque-france.fr/en/meaning-mmt).
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Strange to recommend Mankiw, and Modern Monetary Theory (a discredited, non-mainstream economic concept that Mankiw wrote against) in the same sentence. MMT is practically pseudoscience, makes unclear claims, claims a foundation in mainstream economics but makes completely wild logical leaps when it comes to policy recommendations, and it's promoted by politicians more than real economists.
I didn’t mean MMT capitalised. I meant a modern book on monetary theory by opposition to anything not covering post-Keynesian economics. I’m not a native speaker. I didn’t even know MMT capitalised existed until your comment. I formally studied economics and the theory was never mentioned once so I guess it’s quite fringe.
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I thought currency and reserve assets were essentially the same because there is no basis (e.g. gold) for the currency. It's like your right hand printing currency to give to your left hand to distribute. The left isn't making anything, but it's irrelevant. If the currency was gold backed, the right hand would be tied until the treasury deposited gold; now they can do it whenever the left hand looks empty.
> I thought currency and reserve assets were essentially the same because there is no basis (e.g. gold) for the currency. Reserve assets always have a separate source of value. Usually this means other currencies. And often it can even be gold reserves!
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> regaining control of former colony This is an oversimplification... How many countries have built nuclear power plants and missile assembly lines in their colonies?
"It's not a colony if you build infrastructure in it" seems like the sort of oversimplification you're complaining about. The USSR certainly didn't plan to lose Ukraine.
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> regaining control of former colony This is an oversimplification... How many countries have built nuclear power plants and missile assembly lines in their colonies?
The British built a sizable chunk of the indian railways. In fact to this day there are plenty of British era bridges that survive whereas modern ones crumble within 20 years. Surely you don't imply that the British were not colonizers?
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> that central banks would use their money-conjuring tools whenever there was a shock to the system of course , that's why we have central banks and fiat currency. Without that, there'd be a currency crisis every other minute; as there was on gold. You can't "spin up the gold mines" during a pandemic.
What's the difference between inflating away the buying power of the people, versus taxing away the buying power of the people? Mathematically there should be no difference. But I guess the transparency of the latter and the unpopularity for the politicians involved is too scary, so that's why we print monopoly money instead.
There's not much way around this as long as you're dealing with a currency that can be expanded by credit, because with or without a central bank, fractional reserve banking increases the money supply -- if anything, a central bank allows you to TRY to bring some order to that process.
But yes, the difference is that direct taxation would be paid by the higher classes, while inflation is shouldered predominantly by the lower, and both have a way at eating into economic output in real terms.