Shorting Treasuries :)

[2centsworth]

The video explains an important concept about our "national debt" and interest rates.


http://www.youtube.com/watch?v=ClCC3cHqDzA&feature=player_embedded

[RandomGuy]

The video explains an important concept about our "national debt" and interest rates.


http://www.youtube.com/watch?v=ClCC3cHqDzA&feature=player_embedded

Seven Deadly Innocent Frauds... I would not have figured you for an MMTer. I am a little floored.

[RandomGuy]

and by " a little floored" I mean "welcome to the club".

The smartest person I ever met on the internets sort of pushed me in that direction a while back.

[CosmicCowboy]

I agree that short term rates will stay low.

I disagree that long term when the they start printing trillions of dollars to pay off debt that it won't cause inflation and interest rate increases.

[boutons_deux]

"cause inflation and interest rate increases."

the Fed will control inflation with interest rate hikes, whereas now they have no traction with interest rates near 0%. fear-mongering hyper-inflation to intimidate money printing/stimulus in the Banksters' Great Depression is bullshit.

[RandomGuy]

I agree that short term rates will stay low.

I disagree that long term when the they start printing trillions of dollars to pay off debt that it won't cause inflation and interest rate increases.

Feel free to support that thesis.

There is a reason such sentiments are labeled "Fraud" in the .pdf and "myths" elsewhere.

Seriously, give the read through of the pdf linked in 2cents' siggy.

You might find it interesting reading, if only to see new concepts that you may not have considered before.

[2centsworth]

and by " a little floored" I mean "welcome to the club".

The smartest person I ever met on the internets sort of pushed me in that direction a while back.

i've been an mmter for a while now. For those who don't understand it, think it's a liberal philosophy, but in actuality it just explains how money works. Politically I've been consistent, though you and the others fight me on this, what this economy needs is massive tax cuts. We are taxed way too much. Warren Mosler happens to believe the same thing, but other MMTers are liberal and believe in central control.

[Nbadan]

The smartest person I ever met on the internets sort of pushed me in that direction a while back.

Thank you very much. And I am right about 9/11 too....just watch...

[redzero]

Thank you very much. And I am right about 9/11 too....just watch...

What happened on 9/11?

[Nbadan]

What happened on 9/11?

The government fucked up....no other possible explanation...what we need to find out is was it intentional or negligent...

[redzero]

Randomguy disputes that the government fucked up?

[boutons_deux]

"was it intentional or negligent.."

it was intentionally negligent, or as Maddow said "a (Repug/oilco) motive looking for an opportunity" (to blame it on Saddam).

[Winehole23]

Maddow said what, now?

[TeyshaBlue]

Maddow said what, now?


"a (Repug/oilco) motive looking for an opportunity" (to blame it on Saddam).

lol. 6 of the 13 words are Maddow's. 'bout right.

[RandomGuy]

i've been an mmter for a while now. For those who don't understand it, think it's a liberal philosophy, but in actuality it just explains how money works. Politically I've been consistent, though you and the others fight me on this, what this economy needs is massive tax cuts. We are taxed way too much. Warren Mosler happens to believe the same thing, but other MMTers are liberal and believe in central control.

"We are taxed way too much"

I have been just scratching the surface of MMT and its implications.

My understanding is that even with MMT, printing money involves its own trasnsfers of wealth. Tax policy... is mostly moot, if you can print and tax savings indirectly. Taxing is not a problem if you are spending enough. Given our low inflation, we obviously aren't.

[RandomGuy]

Randomguy disputes that the government fucked up?

No, I do not.

Dans thesis is that it was deliberate. Mine is that it was systemic failure. Not negligence specifically, but a failure in the way our intelligence system was designed.

[2centsworth]

"We are taxed way too much"

I have been just scratching the surface of MMT and its implications.

Warren Mosler Interview (http://www.georgejarkesy.com/2013/02/14/warren-mosler-economist-jerry-robinson-author-and-economist-andrew-sachais-join-the-show/)

top link 30min mark


My understanding is that even with MMT, printing money involves its own trasnsfers of wealth.

doesn't involve printing money. MMT is about spreadsheet entries at the Fed.[/quote]



Tax policy... is mostly moot, if you can print and tax savings indirectly. Taxing is not a problem if you are spending enough. Given our low inflation, we obviously aren't. MMTers believe tax cuts and spending increases are two sides of the same coin. Your preference will be rooted in your politics.

[CosmicCowboy]

Feel free to support that thesis.

There is a reason such sentiments are labeled "Fraud" in the .pdf and "myths" elsewhere.

Seriously, give the read through of the pdf linked in 2cents' siggy.

You might find it interesting reading, if only to see new concepts that you may not have considered before.

I really appreciated the link and read it cover to cover. He simply validated my feeling that we are gonna have an inflationary "recovery" in a medium term time frame .He even highlighted that part in CAPS. I'm literally betting my whole lifes work that I am right as I am about to go 7 figures into debt betting on it.

[ElNono]

Mosler's document is interesting, and something I've read a long time ago (thanks 2centsworth), but after letting it simmer for a while, I realized there are scenarios where neither tax cuts or spending increases necessarily can improve the economy as a whole, and in a way we're in that boat right now.

We literally have a federal tax rate of zero for almost half the population, but that still doesn't get the economy going. And the reason that specific people doesn't have enough money "to buy stuff in the big department store" (as Mosler would put it), is varied and complex. There's state taxation, there's wage considerations, there's private debt burden, etc. On the other hand, other part of the population is doing great (like banks, military contractors where government spends directly, etc).

So, there's an aspect of income distribution that undoes the basic principles outlined there. And it's difficult for the small group doing well to actually invest and produce when there's such a multitude of those not doing well, and not having enough to purchase.

So we see a cycle where certain people get richer and richer, but sit on the cash, and those who don't have enough, remain that way. And looking at wealth movement and concentration the last few years, there's certainly some of that going on.

[Winehole23]

Ritholz on the the deficit and bonds:


It is usually several months later in the year that I begin my annual lament over the state of the U.S. federal budget. Not so much the deficit -- which is too high, but manageable -- but rather the foolhardy method we have for funding it. (See recent discussions here (http://www.bloombergview.com/articles/2014-05-05/do-the-math-on-funding-the-u-s), here (http://www.bloombergview.com/articles/2015-03-17/world-has-a-deficit-of-high-quality-debt), and here (http://www.bloombergview.com/articles/2015-03-19/the-bonds-than-might-help-cure-what-ails-america)).

I am not going to spend too much time on the issue of a long bond, other than to reiterate (http://www.bloombergview.com/articles/2014-05-05/do-the-math-on-funding-the-u-s) this simple formulation: Demand for Treasuries + ultralow rates + big, persistent U.S. funding needs = need for a long bond, preferably one that matures in as much as 50 years. However, there is an enormous difference between the abstract debate over how big our deficit is or should be and the more pragmatic discussion of how best to fund it.


The latter is our subject matter for today. Despite near-record low interest rates -- the 10-year Treasury bond yields less than 1.9 percent -- we finance our deficits with lots of short-term debt, rolling it over constantly. There are any number of problems with this approach: Funding could be subject to disruptions if we have another financial crisis; the administrative costs are more expensive than they need be; and it misses the opportunity to match duration of long-term, persistent obligations with long-term, stable funding.

http://www.bloombergview.com/articles/2016-02-04/this-is-no-way-to-fund-the-federal-deficit

[Winehole23]

dovetailing with the OP:


If that sounds a bit familiar, it's because it is a variation on what the Federal Reserve did with Operation Twist, one of the tools it tried in its program of quantitative easing. In Operation Twist, the Fed sold (http://www.federalreserve.gov/faqs/money_15070.htm) short-term government bonds and bought longer-dated Treasuries. Here, Treasury is issuing more shorter debt and doing the closest thing to buying long-dated debt by issuing less of it. Hence, as an issuer, its total duration balance is being “twisted” away from the longer term.
The net result of this is to drive long-term rates, QE style, even lower. Some have even wondered (http://www.wsj.com/articles/u-s-to-cut-back-issuance-of-longer-term-debt-1454546842) if the goal is a short squeeze on Treasury bond bears, who have been betting on higher rates.

[Winehole23]

Good article on MMT:

https://medium.com/@Britonomist/whats-wrong-with-mmt-a41e10c7203b

[Winehole23]

Modern monetary theorists (MMTists) are right that for really important measures it’s often better to simply spend and invest the money now and figure out how to get funding later — they will point out for instance that nobody asked how we were meant to pay for a very costly and wasteful war in Iraq and yet that didn’t result in a budget crisis, so why should we obsess over it for important policies like tackling climate change? This resonates with me, things like government debt and interest rates are just numbers on a spreadsheet — in times of crisis we shouldn’t worry about spreadsheets holding us back, it’s the real resources we have available that matters.

[Winehole23]

MMTists often like to position themselves as the only ones to properly understand the ‘operational realities’ of modern monetary systems. Ironically, many of the claims made by MMTists on this topic are misleading at best. One common rhetorical tactic that I’ve noticed they employ, which often catches their critics out, is to use the term ‘government’ in a way that’s different typically from how it is used in mainstream economics. When they say ‘government’, they tend to include basically any institution that is an agent of the state, including the central bank — hence the ‘government’ here includes consolidating the treasury and the central bank into one entity, effectively ignoring or assuming away any independence the central bank may have.


This allows them to make assertions such as that money is created by government spending, or for instance, as Kelton claims (https://twitter.com/stephaniekelton/status/1086695315552563206?lang=en), that government spending is “self-financing”. What’s even more confusing is that some supporters will often use the ‘treasury’ and ‘government’ interchangeably, despite the terms meaning very different things, and then essentially claim that even the treasury creates money when spending, which is definitely false, which I’ll get to later.

[Winehole23]

From these premise they are able to make further dubious semantic claims, such as that taxes and borrowing don’t actually “fund” government spending at all, and that the true purpose of taxation is to remove excess high powered money from the economy — in other words, taxes and borrowing are monetary policy operations. What’s interesting about this claim, I argue, is that it’s doubly wrong: it’s wrong both in a nominal operational sense and it’s wrong in a ‘real’ resource sense.

[Winehole23]

Doug Henwood's leftist take down in Jacobin is a bit more fine grained and takes on specific proponents:

https://www.jacobinmag.com/2019/02/modern-monetary-theory-isnt-helping

[RandomGuy]

Mosler's document is interesting, and something I've read a long time ago (thanks 2centsworth), but after letting it simmer for a while, I realized there are scenarios where neither tax cuts or spending increases necessarily can improve the economy as a whole, and in a way we're in that boat right now.

We literally have a federal tax rate of zero for almost half the population, but that still doesn't get the economy going. And the reason that specific people doesn't have enough money "to buy stuff in the big department store" (as Mosler would put it), is varied and complex. There's state taxation, there's wage considerations, there's private debt burden, etc. On the other hand, other part of the population is doing great (like banks, military contractors where government spends directly, etc).

So, there's an aspect of income distribution that undoes the basic principles outlined there. And it's difficult for the small group doing well to actually invest and produce when there's such a multitude of those not doing well, and not having enough to purchase.

So we see a cycle where certain people get richer and richer, but sit on the cash, and those who don't have enough, remain that way. And looking at wealth movement and concentration the last few years, there's certainly some of that going on.

From 2013.

Looks like we are still going that way.

[RandomGuy]

Doug Henwood's leftist take down in Jacobin is a bit more fine grained and takes on specific proponents:

https://www.jacobinmag.com/2019/02/modern-monetary-theory-isnt-helping

Long. have to bookmark and read later. good, reasoned commentary from my skimming so far.

[Winehole23]

Matt Breunig reveals a darker side of MMT:

1101370113851183104

[Winehole23]

Bruce Bartlett puts an even finer point on it:

1101504828004618240

[Winehole23]

First Henson, now Matt Bruenig.

Left wing continues to drag MMTers.

CosmicCowboy, you might find their views on inflation and the UBI amenable.

https://www.peoplespolicyproject.org/2019/03/02/what-do-modern-monetary-theorists-think-about-inflation/