Author Topic: Government Day-to-Day  (Read 13300 times)

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Offline wilber

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Re: Government Day-to-Day
« Reply #480 on: June 24, 2020, 08:50:15 pm »
http://www.igmchicago.org/surveys/modern-monetary-theory/

So what happens first, we print so much money it becomes worthless or we get crushed under the interest?
« Last Edit: June 24, 2020, 08:54:11 pm by wilber »
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Offline JMT

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Offline JMT

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Re: Government Day-to-Day
« Reply #482 on: June 25, 2020, 12:31:43 am »
So what happens first, we print so much money it becomes worthless or we get crushed under the interest?

The government doesn’t actually have to sell bonds, and can in fact have the Bank of Canada buy it’s own bonds to control yield curves - both Australia and Japan are doing this.

Offline JMT

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Re: Government Day-to-Day
« Reply #483 on: June 25, 2020, 12:32:18 am »
What market? The stock market took a big hit today for the same reasons.

Bond market - Canada’s borrowing costs decreased today.

Offline JMT

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Re: Government Day-to-Day
« Reply #484 on: June 25, 2020, 12:37:07 am »
Anyway - today’s downgrade wasn’t about federal debt -

https://twitter.com/trevortombe/status/1275925917601153024?s=21

Unlike Canada, the provinces don’t have the option to eliminate their debt with a keystroke.

Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #485 on: June 25, 2020, 09:49:05 am »
Anyway - today’s downgrade wasn’t about federal debt -

https://twitter.com/trevortombe/status/1275925917601153024?s=21

Unlike Canada, the provinces don’t have the option to eliminate their debt with a keystroke.

The massive federal deficit did obviously contribute to the downgrade though.
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Offline Gorgeous Graham

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Re: Government Day-to-Day
« Reply #486 on: June 25, 2020, 09:52:10 am »
Those questions are misrepresentations of MMT.

You just said that debt, deficits, and ratings are meaningless, because Canada can print money.
I can tell how good of a person you are by how you treat the people you disagree with.

Offline JMT

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Re: Government Day-to-Day
« Reply #487 on: June 25, 2020, 10:07:25 am »
The massive federal deficit did obviously contribute to the downgrade though.

Only in that it contributed to the global debt number for Canada - on it's own, it's 0 concern.

Offline JMT

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Re: Government Day-to-Day
« Reply #488 on: June 25, 2020, 10:07:54 am »
You just said that debt, deficits, and ratings are meaningless, because Canada can print money.

Well, then, I misrepresented it. 

Offline wilber

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Re: Government Day-to-Day
« Reply #489 on: June 25, 2020, 11:11:38 am »
Bond market - Canada’s borrowing costs decreased today.

Maybe but only fools are buying long term debt.
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Offline JMT

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Re: Government Day-to-Day
« Reply #490 on: June 25, 2020, 12:26:01 pm »
Maybe but only fools are buying long term debt.

And yet they’re buying it.

Offline wilber

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Re: Government Day-to-Day
« Reply #491 on: June 25, 2020, 12:46:39 pm »
And yet they’re buying it.

You know they are buying long term debt for a fact?
 
A one year bond is paying .27%. A 30 year bond is paying 1.02%

If you buy a 30 year bond at 1.02% and in ten years rates are at 3%, you are stuck with your money invested at 1.02% for the next 20 years and a bond you would have to sell at a big discount if you wanted to get rid of it. If you keep buying one year bonds, all you stand to lose is .27%. That 30 year bond is one hell of a gamble.

I have several bonds and GIC's coming due this year and it isn't looking good. I'm not locking money in for a long term at next to no interest. Right now I wouldn't go longer than three years and there would need to be a good reason to go that long. I stand to lose little by going short term and hoping rates improve. I stand to lose a lot by going long term at a very low rate.

You may think these rates are good for government but they are very hard on pension plans, RRSP's, RRIF's, TFSA's and any other personal investments people may have for retirement.
« Last Edit: June 25, 2020, 01:42:51 pm by wilber »
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Offline wilber

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Re: Government Day-to-Day
« Reply #492 on: June 25, 2020, 04:11:47 pm »
The government doesn’t actually have to sell bonds, and can in fact have the Bank of Canada buy it’s own bonds to control yield curves - both Australia and Japan are doing this.

That  is just printing money.
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Offline JMT

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Re: Government Day-to-Day
« Reply #493 on: June 25, 2020, 06:41:41 pm »
That  is just printing money.

Yes, and as long as inflation is under control, there's really no disincentive to do that.

Offline JMT

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Re: Government Day-to-Day
« Reply #494 on: June 25, 2020, 06:42:14 pm »
You know they are buying long term debt for a fact?

Do you know how bond markets work?