-----
bop problems and/or
no ability to adequately tax
the two headed cobra of hyper inflation
-------------------
if he lets exchange rates adjust the trade gap will close in time and with suffering
btw none of this
looks like fun eh ??
but one has to flesh out initial conditions to get there and they seem to HAVE to be headed for
a state that is even worse then this "cure"
unfortunately we're talking about
theoretical surgery
where the patient and her condition
aren't fully known
earlier pk:
the point where monetizing starts to cause inflation
is when the economy has ".. returned to more or less full employment without needing deficit spending to keep it there."
so why the 6% of gdp deficit ???
yup
"At that point, money that the government prints won’t just sit there, it will feed inflation,"
again must be a structural budget gap
too much health cost or warfare and or too little tax yield
"we don't need no stinking taxes "
if "..that’s why " u pk "..don’t accept the idea that deficits are never a problem"
is that really what the MMTs are claiming ??
i don't think so
i think they say
they use taxes precisely to address this point
their state would use taxes to control inflation
"and the government will indeed need to persuade the private sector to make resources available for government use."
persuade ie
voluntary submission
you are removing the legal
taxing requistioning and drafting power
of "the state"pk
are you saying MMTers claim the state
doesn't need these powers
it only has to print money to fund itself ??
again i think not
if "..that’s why I don’t accept the idea that deficits are never a problem"
---------------------
no ability to adequately tax
the two headed cobra of hyper inflation
-------------------
obviously
pk is thinking about a gap
that the congress won't close
with tax increases
one might as well assume no taxing powers then
i don't think MMTers believe uncle can spend away
with new money
but i do think
pk hasn't yet worked out the vague potential crisis ahead
where health costs etc explode
and taxes stay at present % of gdp yields
or the trade hole continues
to gush
demand out of the system
pk is thinking about a gap
that the congress won't close
with tax increases
one might as well assume no taxing powers then
i don't think MMTers believe uncle can spend away
with new money
but i do think
pk hasn't yet worked out the vague potential crisis ahead
where health costs etc explode
and taxes stay at present % of gdp yields
or the trade hole continues
to gush
demand out of the system
what would a wall street guided fed do anyway
under the regime of paying uncle's bills
with new treasury notes ?
well
they'd sell treausry bonds till they had none left
soak up as much as they could and then what ???
under the regime of paying uncle's bills
with new treasury notes ?
well
they'd sell treausry bonds till they had none left
soak up as much as they could and then what ???
up required reserves
sterilize this stuff
at the point where reserves equal outstanding loans
then what ??
pay what ever rate of interest on reserves that made banks indifferent at the margin between
holding loans and reserves
reserves keep going up
oh i'm sure this has many conflicts
with any serious set of assumptions i'd start with
going to extremes like this is jestor stuff eh ??
sterilize this stuff
at the point where reserves equal outstanding loans
then what ??
pay what ever rate of interest on reserves that made banks indifferent at the margin between
holding loans and reserves
reserves keep going up
oh i'm sure this has many conflicts
with any serious set of assumptions i'd start with
going to extremes like this is jestor stuff eh ??
--------------
the up shot
you can use the fed to control price level movements
but you'll get shortages
ala the soviet system
demand is always exceeding supply
so the system
rations by waiting line not price
---------------------------
you can use the fed to control price level movements
but you'll get shortages
ala the soviet system
demand is always exceeding supply
so the system
rations by waiting line not price
---------------------------
"Who's waiting in line, the workers demanded or the consumers supplied?"
not sure i follow that construction johnny
i'm simply talking about
chronic excess final demand without
adequate price rationing
--- the soviets locked prices ..all the better for secondary illicit arrangements
here the banking system would drain off
money equivalent to
the stream of new gubmint cash as it entered
the system--
what breaks down the price rationing mechanism ??
not relative price adjustments they'd continue
as simply a lid on total non state purchasing power
this to keep money scarece
ie preserving
the value of gub printings of new money
households would absorb
the cost of gubmint purchases
by delays in desired purchases of their own
"the quality "
of labor services might decay though eh ???
ration books as the new source of entitlement would be introduced
only uncle with an open ration book
could get to the front of every line
not sure i follow that construction johnny
i'm simply talking about
chronic excess final demand without
adequate price rationing
--- the soviets locked prices ..all the better for secondary illicit arrangements
here the banking system would drain off
money equivalent to
the stream of new gubmint cash as it entered
the system--
what breaks down the price rationing mechanism ??
not relative price adjustments they'd continue
as simply a lid on total non state purchasing power
this to keep money scarece
ie preserving
the value of gub printings of new money
households would absorb
the cost of gubmint purchases
by delays in desired purchases of their own
"the quality "
of labor services might decay though eh ???
ration books as the new source of entitlement would be introduced
only uncle with an open ration book
could get to the front of every line
.
this run out of consequences
by me is pure horse feathers of course
totally faulty i'm sure
and no doubt
as i mentioned above
full of self contradictions
reminds me of nick rowe
the point is to sit down take a model off the shelf and
"run the numbers " thru it
i'm too old and too lazy for that
get that egghead kiid from iceland
-------------------------------
if he lets exchange rates adjust the trade gap will close in time and with suffering
btw none of this
looks like fun eh ??
but one has to flesh out initial conditions to get there and they seem to HAVE to be headed for
a state that is even worse then this "cure"
unfortunately we're talking about
theoretical surgery
where the patient and her condition
aren't fully known
by me is pure horse feathers of course
totally faulty i'm sure
and no doubt
as i mentioned above
full of self contradictions
reminds me of nick rowe
the point is to sit down take a model off the shelf and
"run the numbers " thru it
i'm too old and too lazy for that
get that egghead kiid from iceland
-------------------------------
if he lets exchange rates adjust the trade gap will close in time and with suffering
btw none of this
looks like fun eh ??
but one has to flesh out initial conditions to get there and they seem to HAVE to be headed for
a state that is even worse then this "cure"
unfortunately we're talking about
theoretical surgery
where the patient and her condition
aren't fully known
if he lets exchange rates adjust the trade gap will close in time and with suffering
btw none of this
looks like fun eh ??
but one has to flesh out initial conditions to get there and they seem to HAVE to be headed for
a state that is even worse then this "cure"
unfortunately we're talking about
theoretical surgery
where the patient and her condition
aren't fully known
earlier pk:
the point where monetizing starts to cause inflation
is when the economy has ".. returned to more or less full employment without needing deficit spending to keep it there."
so why the 6% of gdp deficit ???
yup
"At that point, money that the government prints won’t just sit there, it will feed inflation,"
again must be a structural budget gap
too much health cost or warfare and or too little tax yield
"we don't need no stinking taxes "
if "..that’s why " u pk "..don’t accept the idea that deficits are never a problem"
is that really what the MMTs are claiming ??
i don't think so
i think they say
they use taxes precisely to address this point
their state would use taxes to control inflation
"and the government will indeed need to persuade the private sector to make resources available for government use."
persuade ie
voluntary submission
you are removing the legal
taxing requistioning and drafting power
of "the state"pk
are you saying MMTers claim the state
doesn't need these powers
it only has to print money to fund itself ??
again i think not
if "..that’s why I don’t accept the idea that deficits are never a problem"
---------------------
"followup on my printing press post: I think one way to clarify my difference with, say, Jamie Galbraith is this: "
"imagine that at some future date, say in 2017, we’re more or less at full employment and have a federal deficit equal to 6 percent of GDP. Does it matter whether the United States can still sell bonds on international markets?"
but pk what in heavens name is the link left out here that could join your FE economy a 6% of gdp deficit
and an unhinged bond market ??
you gotta get there from here or at least from somewhere
give us a whole story ...please
"..the MMT position... the only thing we need to consider is whether the deficit creates excess demand to such an extent as to be inflationary. "
now the MMTers account for demand pull inflation
but i guess the missing links have other ways to send price levels soaring at full employment
but first why are we running this 6 % deficit at full employment
---trillion dollar plus ---
a health cost blow out ??
a nice war ???
a massive huckabee tax cut ???
a gigantic trade gap ??
"The perceived future solvency of the government is not an issue. I disagree. A 6 percent deficit would, under normal conditions, be very expansionary;"
"normal conditions" err other then an unhinged bond market
no no no
pk you gotta fill in the functions here
all the functions and nothing but the functions
of some damn model or other
(6% deficit )".. could be offset with tight monetary policy, so that it need not be inflationary."
" But if the U.S. government has lost access to the bond market, the Fed can’t pursue a tight-money policy "
checkmate !!!!
only this pk is an illegal move i think
U.S. government has lost access to the bond market,
its as if you took your queeen and say a rook
and placed it anywhere you needed to
once you have a 6 % deficit but no t bill or bond market
yup
you have either to print money or collect taxes
to fund spending
"a deficit that would be manageable with capital-market access becomes disastrous without"
we get that
but i repeat
how did you get us here pk ??
i ask you to get us here
piece movement by piece movement
starting from an intial condition
that we can evaluate for plausibility
i suggest you start with us today
since its what is always the point of departure for real policy
but that might be too restrictive
since "this has NOTHING TO DO WITH OUR CURRENT SITUATION"
i note your comnfidence in gentle ben
"the rapid growth in monetary base since 2007 has taken place because the Fed is trying to rescue the economy, not because it’s trying to finance the government — and that base growth can and will be reversed as soon as the economy gets anywhere close to full employment. "
i guess we might suggest the fed goes loco and refuses to reverse the process
the credit explodes and the price level along with it
and soon enough the t market nearly evaporates
along with the "real value" of all of uncle's outstanding debt
de facto default
i guess then we start all over like the weimar republic did
if the only way we can get from here to there is by way of a loco fed
i submit we need to start with other initital conditions
and try to figure out how we get to there from here
and then from there to our own weimar summer-fall of '23
renten-dollars !!!!!
hint:
weimar had a huge BOP problem
get us to that