Author Topic: Government Day-to-Day  (Read 13996 times)

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Offline wilber

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Re: Government Day-to-Day
« Reply #495 on: June 25, 2020, 06:49:07 pm »
Yes, and as long as inflation is under control, there's really no disincentive to do that.

You are poring new money into an economy that doesn't have the GDP to justify it. That is a recipe for inflation at some point.
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Offline wilber

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Re: Government Day-to-Day
« Reply #496 on: June 25, 2020, 06:52:06 pm »
Do you know how bond markets work?

Do you? Do you really think there are enough lenders out there to support the trillions of government borrowing that is going on?

The bank buys back government debt, To do so it has to produce the money to buy it. All it is doing is printing money and using government as the middle man to get it into the economy.
"Never trust a man without a single redeeming vice" WSC

Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #497 on: June 25, 2020, 06:55:42 pm »
Yes, and as long as inflation is under control, there's really no disincentive to do that.

Yes, but printing money creates inflation, which is why Canada and the US keep it to a minimum.  There's no free lunch.
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Offline JMT

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Re: Government Day-to-Day
« Reply #498 on: June 25, 2020, 07:01:20 pm »
You are poring new money into an economy that doesn't have the GDP to justify it. That is a recipe for inflation at some point.

If need be, you control that by raising taxes, later, to calm inflation.

Offline JMT

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Re: Government Day-to-Day
« Reply #499 on: June 25, 2020, 07:01:49 pm »
Yes, but printing money creates inflation, which is why Canada and the US keep it to a minimum.  There's no free lunch.

The US has been printing money for a decade or so.

Offline JMT

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Re: Government Day-to-Day
« Reply #500 on: June 25, 2020, 07:02:15 pm »
Do you? Do you really think there are enough lenders out there to support the trillions of government borrowing that is going on?

If not, our own central bank can 'buy' the debt.

Offline wilber

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Re: Government Day-to-Day
« Reply #501 on: June 25, 2020, 07:18:10 pm »
If not, our own central bank can 'buy' the debt.

It doesn't buy it with air, it has to print the money.
"Never trust a man without a single redeeming vice" WSC

Offline JMT

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Re: Government Day-to-Day
« Reply #502 on: June 25, 2020, 07:23:06 pm »
It doesn't buy it with air, it has to print the money.

But that money is only virtual and doesn't have to enter the economy - especially when we're talking about rolling over old debt. It can all be done with a keyboard entry, avoiding inflationary pressures.

Offline wilber

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Re: Government Day-to-Day
« Reply #503 on: June 25, 2020, 07:39:44 pm »
But that money is only virtual and doesn't have to enter the economy - especially when we're talking about rolling over old debt. It can all be done with a keyboard entry, avoiding inflationary pressures.

If it doesn't enter the economy, why the hell are they borrowing it? Where do you think things like CERB are coming from and don't you think that money is going into the economy? CERB alone is putting over 2 billion a week into the economy.
"Never trust a man without a single redeeming vice" WSC

Offline JMT

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Re: Government Day-to-Day
« Reply #504 on: June 25, 2020, 08:01:13 pm »
If it doesn't enter the economy, why the hell are they borrowing it? Where do you think things like CERB are coming from and don't you think that money is going into the economy? CERB alone is putting over 2 billion a week into the economy.

The money is already in the economy. The 'borrowing' of the money created new money, and that money created economic activity. Paying it off simply involves exchanging interest bearing dollars for standard dollars.

Offline wilber

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Re: Government Day-to-Day
« Reply #505 on: June 25, 2020, 08:54:59 pm »
The money is already in the economy. The 'borrowing' of the money created new money, and that money created economic activity. Paying it off simply involves exchanging interest bearing dollars for standard dollars.


Thats means printing more and more money. Jeez, why haven't we been doing this for decades cause deficits and debt don't matter. Debt to GDP doesn't matter. Nothing matters, just print more money and dump it into the economy. Wow, just Wow!
"Never trust a man without a single redeeming vice" WSC

Offline wilber

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Re: Government Day-to-Day
« Reply #506 on: June 25, 2020, 09:08:19 pm »
We can have all the infrastructure, social programs and as big a military as we want, we will just print it and buy it because it doesn't matter.

No more complaints about buying pipelines please.
"Never trust a man without a single redeeming vice" WSC

Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #507 on: June 25, 2020, 09:16:39 pm »
If need be, you control that by raising taxes, later, to calm inflation.

In theory.
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Offline wilber

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Re: Government Day-to-Day
« Reply #508 on: June 25, 2020, 09:34:26 pm »
In theory.

Raising taxes is inflationary because it raises the cost of living.
"Never trust a man without a single redeeming vice" WSC

Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #509 on: June 25, 2020, 09:36:46 pm »
The US has been printing money for a decade or so.

Yes but the US feds haven't done so to pay off all of its 20+ trillion in debt.  Because they want to limit inflation.  Raising taxes by any significant amount to calm inflation would reduce economic activity.  So they print money when required when it makes sense, like right now because they have a ton of debt and are in an emergency situation due to COVID when they have to spend a ton of money.

MMT has its points.  It says countries with their own currency can't default on their debts, which seems true.  They also say countries can print money as long as inflation is controlled, which may be true. I just don't think it's a wise idea to take the theory to the extreme like some people want, or at least be the first country to try it.  Japan could be a guinea pig.

There's no telling how sustainable this strategy is, because introducing a lot of money into the economy and keeping interest rates low etc. can create economic bubbles.  The role of the fed is to inject money into the economy when it's on a downturn and slow down the economy when things are heating up too much too fast to avoid bubbles.

https://www.usatoday.com/in-depth/money/2020/05/12/coronavirushow-u-s-printing-dollars-save-economy-during-crisis-fed/3038117001/
I can tell how good of a person you are by how you treat the people you disagree with.