For currency-issuing governments, bonds are a policy choice, not an economic imperative. You can prune the debt tree by leaving reserve balances in the system (as central bank liabilities) instead of forcing them to convert to government bonds (liabilities of Treasury). 1/2 on.ft.com/3UaSCEa
For currency-issuing governments, bonds are a policy choice, not an economic imperative. You can prune the debt tree by leaving reserve balances in the system (as central bank liabilities) instead of forcing them to convert to government bonds (liabilities of Treasury). 1/2 on.ft.com/3UaSCEa
Either way, inflation—not vigilante investors—is the relevant risk. As we’ve long argued. 2/2 neweconomicperspectives.org/2013/01/functi…
@StephanieKelton At present governments leave this choice (i.e. QE or QT) to central banks. However as central banks will always create reserves to buy debt if markets stopped buying debt, its not clear why governments making QE or QT decisions has any influence on debt sustainability issues.
@StephanieKelton I think Wolf is acknowledging this, he just believes that bond issuance is a useful political construct to put part of the State's policy space beyond democratic accountability.
@StephanieKelton I have a solution for #MMT inflation: Just fudge the inflation index some more so the poors don't notice that they are homeless and cannot afford groceries.
@StephanieKelton "....government bonds (liabilities of Treasury)..." WRONG. Government bonds are liabilities of Congress (not the Treasury). Congress and only Congress has the authority to borrow per the US Constitution. The Treasury / Executive Branch has no authority of it's own to borrow.
@StephanieKelton "..bonds are a policy choice.." Among a variety of choices including: 1. Fiat money 2. Tax revenue financing 3. Equity financing
@StephanieKelton Why didn't you do that? Because of the deficit and spending more than production. The issue stops here. Spending is done with debts and debt interest appears. The debt ceiling appears to increase every period, and the citizen is in the same circle, the circle of debts and bonds,
@StephanieKelton not the political choice. I believe that it is a solid political doctrine