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U.S. Treasury Data Lab

datalab.usaspending.gov

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Re: U.S. Treasury Data Lab

#71

Post by mariojv »

lumost wrote: post #68
Gabriel_Martin wrote: post #27

Earlier quoted context omitted.

These are the exact sentiments I believe personal/household finance analogies evoke, and basically why I oppose their use. It evokes comparisons to some kind of possibility of something happening analogous to bankruptcy when in fact: "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default." Alan Greenspan So yeah, it's just my opinion but to me…

This assumes that the us has an unlimited ability to monetize its debt. If this is not true than there could be a hard landing for federal borrowing. This was briefly tested in the 1970s when the carter administration issued debt in foreign currency. The fed could find itself in the position of fighting a structural imbalance such that for every dollar lent to the government the deficit increases by 1.X dollars. This…

More history on the Carter administration's actions if anyone's curious. I'd never heard of this before:

https://en.wikipedia.org/wiki/Carter_bonds https://www.treasury.gov/resource-center/international/ESF/P...

Re: U.S. Treasury Data Lab

#72

Post by xxpor »

darawk wrote: post #41
xxpor wrote: post #35

Earlier quoted context omitted.

Point 2 is extremely debatable, especially if you're a reserve currency. The balance of payments also matters.

It's really not debatable at all. What is debatable is how much printing it takes. It is not debatable that there exists an amount of printing that will cause inflation.

It very much depends where the money ends up and what it's doing. See the past 13 years in the US and western world generally.

Re: U.S. Treasury Data Lab

#73

Post by SubiculumCode »

dragonwriter wrote: post #46
jkhdigital wrote: post #45

Earlier quoted context omitted.

This makes no sense. The government doesn’t issue debt and then just sit on the cash. The debt ceiling is constantly being raised here in the US because every cent is spent. The two events (1) Congress deciding to spend money (in excess of receipts), and (2) the Treasury issuing debt, are directly causally related. If event (1) doesn’t happen, then event (2) won’t happen. In theory it could, but in reality it does no…

The US Congress chooses to behave (approximately) as if it had a commodity rather than self-issued fiat currency, but this is a choice , not some kind of necessity.

Exactly. Just because we have a debt-guided mechanism does not make the currency not fiat. Those self-constraints can be changed or removed at any time.

Re: U.S. Treasury Data Lab

#74

Post by Gabriel_Martin »

phkahler wrote: post #69
Gabriel_Martin wrote: post #27

Earlier quoted context omitted.

These are the exact sentiments I believe personal/household finance analogies evoke, and basically why I oppose their use. It evokes comparisons to some kind of possibility of something happening analogous to bankruptcy when in fact: "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default." Alan Greenspan So yeah, it's just my opinion but to me…

>> "The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default." Alan Greenspan That has negative consequences that are papered over by making simplistic statements like that. The debt is still bad and going to result in bad things happening, and no platitudes from the Fed are going to change that.

I mean no platitude necessary, by your logic if debt is bad then no debt is good. But last time that was the case it caused the longest depression in American history. How does that add up?

Re: U.S. Treasury Data Lab

#75

Post by lumost »

BobbyJo wrote: post #16
lumost wrote: post #14

Earlier quoted context omitted.

That 7x that is lent will be deposited by the people it is spent on. The bank can then lend 7x that and keep fabricating money as long as there are people to profitably lend too. The rate of currency growth is then correlated to velocity for how fast it’s turned over from debt to deposit to debt minus the counter flow of debts being retired.

Yes, but doesn't that strictly invalidate: > The total amount of money, the sum of all credits and debits, is the exact same ?

As the sibling noted, the order of borrowing and deposits does not matter. The summation will always be zero.

This gets to the heart of why there can be negative dynamics in a credit cycle. If I’ve lent 1 real dollar 100 or 1000x then there is a real risk of everyone needs that dollar back today. Similarly if creditors become risk averse and stop redepositing the money into the banking system, the velocity of money will tank and the number of dollars available to lend/spend will collapse. Growing the money supply only through fractional reserve dynamics also poses risks if a systemic imbalance emerges between creditors and debtors requiring some individuals/corps to be permanent borrowers e.x the Great Depression, and Recession.

In many ways the US is using treasuries to counterbalance the above by having the federal reserve purchase treasuries which will never be paid back in real dollars. However until the pandemic the government had limited ability to place those trillions of dollars in the hands of people who needed the surplus.

Re: U.S. Treasury Data Lab

#76

Post by spiralx »

tick_tock_tick wrote: post #5
aazaa wrote: post #3

> While the Department of the Treasury prints actual dollars, “printing money” is also a term that is sometimes used to describe a means of monetary policy, which is conducted by the Federal Reserve. Monetary policy involves controlling the supply of money and the cost of borrowing. The Federal Reserve uses monetary policy to promote maximum employment, stable prices, and moderate long-term interest rates on the beha…

> Private banks create a good chunk of the new money that goes into circulation by issuing loans. Even this is misleading private banks do not "create" money. They add to the supply but do not create. For every loan credit there is an equal loan debit. The total amount of money, the sum of all credits and debits, is the exact same.

The Bank of England disagrees with you, when a bank loans money it adds a figure to the creditors account (a liability) and adds an equivalent loan to its books (an asset). There's no transfer of funds from somewhere to somewhere else, that's a "common sense" concept that doesn't apply to fiat money, the same as "fractional reserve banking".

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Re: U.S. Treasury Data Lab

#77

Post by spiralx »

lend000 wrote: post #8
tick_tock_tick wrote: post #5

Earlier quoted context omitted.

> Private banks create a good chunk of the new money that goes into circulation by issuing loans. Even this is misleading private banks do not "create" money. They add to the supply but do not create. For every loan credit there is an equal loan debit. The total amount of money, the sum of all credits and debits, is the exact same.

As the other commenter implied, in a fractional reserve banking system (where banks lend any amount > 0, and are not just acting as vaults), banks do indeed create money [0]. Printed dollars are necessary in an amount proportional to economic activity, and the sum of printed dollars is only loosely related to the total money supply as it affects the macroeconomy (and is becoming less relevant every year). [0] https:/…

There is no fractional reserve system or money multiplier in the modern economy though, those concepts only really apply to commodity money, not fiat money. You even say banks create money by lending, which is not how a fractional reserve system works :) A bank with zero deposits can still lend money, although they might have a problem if people want to withdraw physical currency...

https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Re: U.S. Treasury Data Lab

#78

Post by lend000 »

spiralx wrote: post #77
lend000 wrote: post #8

Earlier quoted context omitted.

As the other commenter implied, in a fractional reserve banking system (where banks lend any amount > 0, and are not just acting as vaults), banks do indeed create money [0]. Printed dollars are necessary in an amount proportional to economic activity, and the sum of printed dollars is only loosely related to the total money supply as it affects the macroeconomy (and is becoming less relevant every year). [0] https:/…

There is no fractional reserve system or money multiplier in the modern economy though, those concepts only really apply to commodity money, not fiat money. You even say banks create money by lending, which is not how a fractional reserve system works :) A bank with zero deposits can still lend money, although they might have a problem if people want to withdraw physical currency... https://www.bankofengland.co.uk/-/…

No, the concept still applies. Your link is attempting to describe nuance, but comes across as misleading.

The multiplier is an upper bound on money creation by banks, and it does not specify a timeline. That's a fact. Obviously, not every bank loans all the way to the minimum reserve ratio (for example, currently, the reserve ratio is zero in the US, which makes for a poor denominator). Nor does every recipient of proceeds from a loan put all of that money into a lending bank. However, the money supply is still increased via lending. The increase from the issuance of a loan is immediately reflected in total deposits.

What your link is stating is that central banks respond dynamically to the total number of bank deposits, and apply other policies (such as influencing interest rates) against that number directly, which can overpower the effect of the multiplier, if the central bank chooses. However, it does not nullify it, and it very much depends on a central bank taking that action. Your link also mentions regulations which may be specific to the UK about how banks lend, but the underlying principle of money creation remains unchanged.

Re: U.S. Treasury Data Lab

#79

Post by BobbyJo »

DSMan195276 wrote: post #42
BobbyJo wrote: post #6

Earlier quoted context omitted.

> The total amount of money, the sum of all credits and debits, is the exact same. Can't banks lend something like 7X more money than they have in deposits?

Only as a proportion of the total amount of money deposited in the bank. That 7x means that if $100 is deposited, the bank can loan out up to $87.5 and would have to keep $12.5, which equates to loaning out x7 the amount kept as reserve. In that scenario there still was only ever $100 dollars, but depending upon how you count the money supply the bank has now 'created' an extra $87.5 and the total supply is $187.5. I…

If that 87.50 is deposited at the bank, then they can now loan out against that as well, no? Then, on a 100$ initial deposit, they have lended out over 100$.
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