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Old 06-04-2020, 03:09 PM
 
Location: Centennial, CO
2,002 posts, read 2,325,440 times
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It's pretty clear that the current administration and Fed are subscribers to Modern Monetary Theory (MMT). If you understand that then this all makes sense. Whether you think it's a good idea or not is a whole other matter.

https://www.investopedia.com/modern-...ry-mmt-4588060
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Old 06-04-2020, 07:29 PM
 
Location: Midwest
4,845 posts, read 7,626,839 times
Reputation: 8860
Quote:
Originally Posted by g500 View Post
Can the Federal Reserve, at any time, just click a button and digitally add say $1 trillion to their account, and use it to purchase Treasuries, bonds, ETFs, etc.? Basically, can the Fed conjure-up any sum of money at their own whim?

Seems pretty crazy if they actually have that authority. Shouldn't (Is?) Congress be involved in controlling the nation's money supply? I guess as long as they avoid inflation I am fine with the arrangement we have, as most people probably would be.
Yes they can. But so can Santa Claus, the Easter Bunny, and Godzilla.
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Old 06-04-2020, 08:22 PM
 
10,547 posts, read 4,580,802 times
Reputation: 2153
Quote:
Originally Posted by Dwatted Wabbit View Post
Yes they can. But so can Santa Claus, the Easter Bunny, and Godzilla.
No, no they cannot! Miracles don't happen, and that would be counterfeiting if it did.
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Old 06-05-2020, 07:27 AM
 
2,600 posts, read 990,345 times
Reputation: 6538
Quote:
Originally Posted by Hoonose View Post
And then it will taper off. IMO of course.
That’s what all heroin addicts say when they get started on their journeys of enlightenment. These recent actions by the Fed have fundamentally shifted the frameworks of American financial markets. Our future will resemble Japan IMO, and some might see that as a good thing.
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Old 06-05-2020, 08:15 AM
 
10,547 posts, read 4,580,802 times
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Quote:
Originally Posted by TimAZ View Post
That’s what all heroin addicts say when they get started on their journeys of enlightenment. These recent actions by the Fed have fundamentally shifted the frameworks of American financial markets. Our future will resemble Japan IMO, and some might see that as a good thing.
Since the 2008 crash things have been different, more resistant and responsive to recession. If the virus behaves, this time we may kick back up faster and the risk of some inflation IMO is higher.
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Old 06-05-2020, 08:31 AM
 
10,547 posts, read 4,580,802 times
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The more naturally weak EU is strengthening:

'Governments save economies. Never let a mainstream economist tell you that government intervention is undesirable and that the ‘market’ will sort things out. Never let them tell you that large-scale government bond purchases by central banks lead to inflation. Never let them tell you that the government, when properly run, can run out of money. There is unlimited amounts of public purchasing capacity. The art is when to apply it and how much to release. That can only be determined by the behaviour of the non-government spending and saving and the state of idle capacity. It can never be determined by some arbitrary public debt threshold or deficit size. And the central bank can always buy however much debt they choose. At present the ECB is buying heaps and keeping the Member States solvent. That is not its state role but given there is no other institution in the Eurozone that can serve the fiscal function effectively and ‘safely’, it has to do that. Otherwise, the monetary union would quickly dissolve. I would take their bond buying programs further and write off all the debt they purchase. Immediately. Go on. Just type some zeros where they have recorded large positive Member State debt holdings. That would be something good to do in a terrible situation....'

Eurozone inflation heading negative as the PEPP buys up big – don’t ask the mainstream to explain – Bill Mitchell – Modern Monetary Theory
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Old 06-05-2020, 08:39 AM
 
Location: Oregon, formerly Texas
6,383 posts, read 4,326,658 times
Reputation: 11068
Quote:
Originally Posted by Hoonose View Post
The more naturally weak EU is strengthening:

'Governments save economies. Never let a mainstream economist tell you that government intervention is undesirable and that the ‘market’ will sort things out. Never let them tell you that large-scale government bond purchases by central banks lead to inflation. Never let them tell you that the government, when properly run, can run out of money. There is unlimited amounts of public purchasing capacity. The art is when to apply it and how much to release. That can only be determined by the behaviour of the non-government spending and saving and the state of idle capacity. It can never be determined by some arbitrary public debt threshold or deficit size. And the central bank can always buy however much debt they choose. At present the ECB is buying heaps and keeping the Member States solvent. That is not its state role but given there is no other institution in the Eurozone that can serve the fiscal function effectively and ‘safely’, it has to do that. Otherwise, the monetary union would quickly dissolve. I would take their bond buying programs further and write off all the debt they purchase. Immediately. Go on. Just type some zeros where they have recorded large positive Member State debt holdings. That would be something good to do in a terrible situation....'

Eurozone inflation heading negative as the PEPP buys up big – don’t ask the mainstream to explain – Bill Mitchell – Modern Monetary Theory
I think there's sonething to this. It does seem that central banks are the economy now. Debt no longer matters.
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Old 06-05-2020, 08:44 AM
 
Location: State of Transition
84,417 posts, read 77,596,360 times
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Quote:
Originally Posted by Hoonose View Post
The Fed has and will continue to intervene with massive new moneys, and our USD will continue to stand strong. Federal taxes will not go up, but more local taxes are another thing. Mostly based on how much the Fed does.
I'll believe it when I see it. There is no Santa Claus, btw.
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Old 06-05-2020, 08:50 AM
 
10,547 posts, read 4,580,802 times
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Quote:
Originally Posted by redguard57 View Post
I think there's sonething to this. It does seem that central banks are the economy now. Debt no longer matters.
China, Japan, the USA and now the EU have central banks that are using more fire power in affecting their respective economies. They have all learned that debt at the national level matters less than conventional.
Any modern and successful sovereign nation should not be strapped by a lack of fiat money.

That debt still matters by a long shot. But now there are more options. Theoretically much of that debt can be absorbed by the central bank and even extinguished. Inflation still remains as the enemy everywhere, so there has to be limits. Another limitation may be the potential for moral hazard, business and financial entities knowing that they have better insurance coverage.
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Old 06-05-2020, 08:55 AM
 
10,547 posts, read 4,580,802 times
Reputation: 2153
Quote:
Originally Posted by Ruth4Truth View Post
I'll believe it when I see it. There is no Santa Claus, btw.
You didn't see it with the 2008 crash, when the whole world moved to the safety and security of the USD?
You didn't see it with the 2008 recovery, where many new $T's were created and we saw little inflation or weakening of the USD?

https://www.americanexpress.com/us/f...ancial-crisis/
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