you mean the evil TBTF’ures are having to buy the people’s bad debt?
hahahaha….. that’s going to suck when China dumps theirs and their newly swapped Japanese U.S. treasuries onto the market ….for a grand total of at least $2.5 trillion U.S. fiat dollars.
according to Jim Willie …. the foundational destruction of U.S. treasuries has already occurred and the tipping point will be when the 10 year yield hits 1.5%
sorry Shalom Bernanke…..your cries for mercy will ring hollow in my ears….we’re coming for you.
antitrust
this is the way it’s always worked. Primary dealers must make a market for bonds. Max likes the Government is going broke mongering. But a country that has a non-convertible floating currency and it’s debt denominated in it’s own currency can’t go broke. No country with these parameters has ever gone bankrupt it is impossible. Every week old t-bills come do and new ones are issued. In the last 6 months alone the over 32 TRILLION in treasury redemptions . Since 2001 over 347 TRILLION OF treasury redemptions. The reality is that treasuries are issued electronically. Say china’s CB has 1 trillion it wants to put in treasuries. China’s dollars are held in a cash account at the FED ( just like all dollars at any CB. To buy 1 trillion worth of treasuries the fed moves the trillion from their cash account to their treasury account. Just like moving your money from checking to savings. How do we redemptions china’s t-bills as they come due? you guessed it we move the money back to their cash account at the FED. remember this is done every week for 100 of billions never a problem it is simple score keeping or data entry. The FED runs a spreadsheet debts and credits accounts that is all thee is too it.
antitrust
this is the way it’s always worked. Primary dealers must make a market for bonds. Max likes the Government is going broke mongering. But a country that has a non-convertible floating currency and it’s debt denominated in it’s own currency can’t go broke. No country with these parameters has ever gone bankrupt it is impossible. Every week old t-bills come do and new ones are issued. In the last 6 months alone the over 32 TRILLION in treasury redemptions . Since 2001 over 347 TRILLION OF treasury redemptions. The reality is that treasuries are issued electronically. Say china’s CB has 1 trillion it wants to put in treasuries. China’s dollars are held in a cash account at the FED ( just like all dollars at any CB). To buy 1 trillion worth of treasuries the fed moves the trillion from their cash account to their treasury account. Just like moving your money from checking to savings. How do we redeem china’s t-bills as they come due? you guessed it we move the money back to their cash account at the FED. remember this is done every week for 100s of billions never a problem it is simple score keeping or data entry. The FED runs a spreadsheet debts and credits accounts, that is all there is too it. 347 Trillion since 2001 look it up for yourselves.
Also keep in mind that when the government spends, it doesn’t ask china for money, it doesn’t even look to see if the IRS collected any taxes. Operationally the Government ALWAYS spends by crediting bank accounts (creating new money)this spending also adds reserves to the banking system. These new reserves are used (typically) to buy the later issued t-bills of the same amount. Remember Government liabilities are what circulate as money. When these liabilities are paid back to the issuer they are removed from the economy (destroyed). Just like if you issue a personal IOU when you get your own IOU back it has no value to you , because you can create these IOU’s at will. All financial assets (someone else’s financial liability) are technically money, but we just call the most liquid form (government issued) money. In fact net savings is the amount that the government spends into the economy (non-governemnt sector)and hasn’t taken away in taxes, again look it up it equals to the penny.
Japan has double the debt and near record interest rates why? Because they have the same system as described above. so called bond vigilantes can’t do anything to rates in this type of system. How can they. They can only kick around flawed currencies like the Euro. looks like max and a lot of others need to read warren mosler’s seven deadly innocent frauds.
here are the 7 myths or frauds that mosler debunks
Deadly Innocent Fraud #1:
The federal government must raise funds through taxation or borrowing in order to spend. In other words, government spending is limited by its ability to tax or borrow
Deadly Innocent Fraud #2:
With government deficits, we are leaving our debt burden to our children..
Deadly Innocent Fraud #3:
Federal Government budget deficits take away savings
Deadly Innocent Fraud #4:
Social Security is broken.
Deadly Innocent Fraud #5:
The trade deficit is an unsustainable imbalance that takes away jobs and output.
Deadly Innocent Fraud #6:
We need savings to provide the funds for investment.
Deadly Innocent Fraud #7:
It’s a bad thing that higher deficits today mean higher taxes tomorrow.
Robert Mockan
@ antitrust
Yep, no question about it. Mosler is a bright candle. Now everybody can read his article and become an even smarter debt slave.
gordo
Mosler is a lot smarter than those ass holes at cnbc or ZH that is for sure.
antitrust
@ Robert
with in depth analysis like that you should go on fox news with the Schiffiet. Then you can get paid fir making empty crackpot comments.
Robert Mockan
@ antitrust
do not get your underwear in a twist, bro. Are you seriously implying that you agree with Moslers’ basic premise? That the government does not have a clue what it is doing, or how the economy and money system really work? If that is the case, then who is minding the conspiracies? Or do you also believe there are none?
Interviewer misquoted Jim Rickards. What Jim actualy said was that the government is (or already is) printing money and give it to the banks under the condition they buy up government paper/US treasuries.
So , here you have it: Time Bomb? Banks Pressured to Buy Government Debt
Robert Mockan
@ Youri Carma
JW is singing to the choir saying low interest rates cause capital destruction and economic decline. That gets closer to the endgame of destroying the sovereign nations as a prelude to imposing the Hegelian solution of global currency to benefit the New World Order.
The question is who is the “new sheriff in town” really working for? My bet is the insane oligarchy.
antitrust
@ Robert
I’m saying you don’t understand how our monetary system works. It’s not Mosler’s basic premise it is the operation reality. There’s plenty of information from the fed and treasury to confirm this. I have no idea what you mean by conspiracies. Why would a nation that has the legal authority to create dollars have to borrow or tax to be able to spend. In fact logically it is the reverse. In order for you to pay taxes in dollars or buy bonds in dollars. Dollars first have to be put (created) in to the economy. How do dollars get into the economy. That is why government deficit spending equals private net savings to the penny.The Gov must spend first to put dollars there. How can it work any other way? Or do you believe there is a magic money fairy that comes at night who creates dollars.
Robert Mockan
@ antitrust
you are trolling. I have not made any comment that could conceivably be construed that I misunderstand the monetary system. I probably forgot more about it before you were born than you know about it now.
gordo
“Are you seriously implying that you agree with Moslers’ basic premise? That the government does not have a clue what it is doing, or how the economy and money system really work? ”
Those statements would indicate otherwise.
antitrust
@ Robert
i post a comment you reply to it and i reply to you and I’m the troll what an ego. Every thing you said is proof you don’t understand the monetary system. Can you name one country that had a non convertible floating currency that defaulted on debt in it’s own currency? here’s a hint there is none. Do you now what the difference is? you obviously don’t. You should probably forget all that you learned about the monetary system, it is wrong
Robert Mockan
@ gordo
Do you believe the GOVERNMENT believes the myths that Mosler debunks?
Robert Mockan
@ antitrust
prove it.
antitrust
The government can’t believe in any thing it can’t think it’s not a person .I’m assuming you mean people in the government. the government is made up of people and those people have different thoughts and ideas. Regan and dick cheney said “deficits don’t matter”. This is what they meant. Greenspan in 2011 said “the Government can meet any obligations denominated in it’s own currency”. It appears it’s only you who think’s that a non-convertable currency has to come from some mysterious place that can’t be explained.
prove what? That are money is simple score keeping, data entry on a spread sheet. That numbers can be added or subtracted at will by the entity that has legal power to do so? I think every mildly rational person understands this. Are you afraid that we will run out of numbers in the spreadsheet. It’s hard to follow your logic or lack of.
in the last 6 months 32 trillion in redemptions 32 trillion in 6 months. look it up. oh no what if china stops buying there measly 2 trillion they acquired over the 20 years. 32 trillion in 6 months. were did the treasure get tall that money. 32 trillion in 6 months.
F. Beard
@antitrust,
I’m impressed! Where else do you post/comment at?
Thanks.
Robert Mockan
@ antitrust
you still seem to be doing the straw man dance.
Let us go at it again.
Do you hold to the strict financial definition of default?
The financial definition is when a debtor is unable or unwilling to fully honor the
borrowing contract.
Does that mean you do not consider currency devaluation, inflation, pretending and extending obligations, rolling over debt, or any other financial gimmick to avoid paying the piper (that is, honor at least the intent, if not the letter, of the contract), as a default?
Again, my question do you agree with Mosler that the government does not know how the economy and money system really work? Mosler seems to think the government (or at least the people working in government?) actually believe the myths he debunks.
If that were the case, and assuming as an institution it does not understand how the economy and money system really work, how is it able to go to such great length to break debt contracts without being called out on the carpet? I suggest that government is fully aware that the myths are exactly that… myths… and serve as a social and economic control mechanism, but only when the average person believes them.
Can I make this more clear? NO ONE HERE BELIEVES THE MYTHS!
gordo
@Robert Mockan
It is obvious that they do otherwise they would not all be on the austerity kick.
gordo
“Does that mean you do not consider currency devaluation, inflation, pretending and extending obligations, rolling over debt, or any other financial gimmick to avoid paying the piper (that is, honor at least the intent, if not the letter, of the contract), as a default?”
Currency devaluation, inflation are not defaults because there is interest and inflation risk that go with the territory. I you go long treasures that there is interest risk.
If you invest in foreign assets there is currency risk these are not figments of imagination.
In both cases you can win or lose.
Rolling over debt is an option for anyone and can be a risk for highly leveraged organizations except for currency issuers.
EZ nations are NOT currency issuers. That is why they are in trouble.
The US, UK and Japan are currency issuers.
So despite the high debt levels in US, UK, Japan there are no BV’s for their bonds.
antitrust
@ robert
well now you’re imposing your definitions on everyone else. When someone owes dollars delivering dollars completes the contract. Ive never seen a clause demanding dollars come from a certain place or created at a certain time have you?. That has no legal bearing in reality it’s just the Austrian schools way of weaseling out of their false predictions and assumptions. A bunch of ideological junk. If I have a contrast to deliver wheat is the grain buyer going to say, you violated your contract because you created the wheat yourself. Only crackpot Austrians try to impose this ideological definitions which have no legal bearing in the real world. Besides if the government didn’t create the dollars to begin with ,where are they going to get them. Now were going back to your magical money fairy theory.
What contract has it broke and who? , hard time understanding your ramblings
“LET ME MAKE THIS CLEAR”
as said before Greensapan Ronald Reagan, Cheney, Bernanke along with those mentioned in my f beard post. Along with most Japanese bankers plenty other academics. know this. It’s called Functional Finance and has been around for a long time. Wynne Godley taught this at Cambridge and also worked at the treasury. Predicted the British economy with stunning accuracy. Economists at the Levy institute also are practitioners.
By the way a system that would keep some one in debt and have to work for the rest of their lives to earn their way out of debt ( what you describe) is slavery. Paying someone by crediting their acct with keystrokes is the opposite of slavery. Again with that lack of logic.
by the way if your gold dealer delvers gold to you that was dug out of the ground instead of bought in the open market from someone else do you scream breach of contract like a crackpot?
You may not like the way the monetary system works, but that is how it works. Remember 32 TRIllION in the last 6 months ( actually it’s more now).
the contract fine print probably should include some statement like to be honored with equivalent purchasing power, plus interest. Otherwise money becomes … wait for it… a commodity fetishism. When borrowing one does not say repayment depends on the gambling, and the perceived value at the time of contract execution, although it certainly appears implied as a risk. Bad contracts. What can one say?
The thing about austerity measures hankers back to commodity fetishism. The game plan being played does require that the average person believe the myths that Mosler debunks. But there is a bottom line. Fiat money can not be increased indefinitely, without destroying the labor exchange function. There is a limit to how much counterfeiting can be absorbed in an economy. Typically it is when the users lose confidence that the fiat has an acceptable labor exchange function.
But does the government believe the Mosler myths? Saying it does is a superficial explanation for the austerity measures. Saying it does not gets deep into conspiracy theory. The conspiracy is that the austerity measures are designed to destroy national sovereignty of the countries affected, and are imposed for that reason. But what whould you rather have? A government so stupid it should not exist, or… a government so stupid it should not exist?
Robert Mockan
@ antitrust
The next time you loan money (say a million USD), and get paid back with worthless paper, I hope you remember saying “.. it just doesn’t matter”, because… a lot of smart people said so.
Robert Mockan
@ F. Beard
You and antitrust should get along great. Fiat for government, and equities for the masses.
How about flying that past him and seeing what he says?
antitrust
I see my f- beard post didn’t get posted. I will try again.
antitrust
“The next time you loan money (say a million USD), and get paid back with worthless paper, I hope you remember saying “.. it just doesn’t matter”, because… a lot of smart people said so”
nice hyperbole
try buying gas or groceries with something other than dollars at your local store (in the USA). I guess since they wont except shiny metals or foreign convertible currency they are worthless In fact the only thing you can do with them here is convert them into that worthless paper the dollar. So in essence they are as worthless as the dollar
antitrust
@ f beard
had to delete most of my links to post sorry
Thanks for the kind words. I hang around most MMT related sites The school of economic thought is called Modern Monetary Theory (MMT). The name was given to them by neo-clasical economics. Which is funny because it’s neither modern or theory. MMT simply describes the way the monetary system works from an accounting perspective or what happens operationally at the FED/treasury. The University of Kansas city Missouri is the leading school of MMT. Their blog is here the primer on MMT is a good place to start.
gordo
“But does the government believe the Mosler myths? Saying it does is a superficial explanation for the austerity measures. Saying it does not gets deep into conspiracy theory. The conspiracy is that the austerity measures are designed to destroy national sovereignty of the countries affected”
I can sort agree with some of this. They certainly do not like sovereignty or democracy.
The like the neo-liberal agenda driven town everyone’s throats. And they say there is no alternative when clearly there is.
bit chin
@ gordo/Robert Mockan/antitrust
Cool it will you? Can’t we all agree to disagree on this issue? To make it clear (I find myself under incredible brain-strain following the pedantic train-of-thought of your arguments) we are debating the number of apples falling from the apple cart. One thing is clear – that these apples are falling and rolling down the hill. Are we all agreed?
You all made good points. No one has the answers. We can continue disagreeing on every single aspect of ‘Monetary theory’ because it’s just that – theory. I may have some of the answers but I found these in unconventional places.
“The men who are cursed with the gift of the literal mind are the unfortunate ones who are always busy with their nets and neglect the fishing”
Rabindranath Tagore
“The confusion of money (in any form what-so-ever) with wealth is one of the major problems from which civilisation is suffering. Because way back in our development, when we first began to use symbols to represent the events of the physical world, we found this such an ingenious device that we became completely fascinated with it. And in ever-so-many different dimensions in life we are living in a state of total confusion between symbol and reality.”
Alan Watts (http://tthurts.wordpress.com/2012/04/26/the-confusion-of-money/)
F. Beard
How about flying that past him and seeing what he says? Robert Mockan
You think he’d be against it?
In theory, the MMT folks should have no problem with private currencies since only fiat would be good for government debts, taxes and fees.
Torquemada “Allowed” his customers to confess their sins, and, if after inquisition they were not penitant, other methods of persuasion were available. It was Torquemada who invented the gentle art of ‘Waterboarding’, but more subtle methods required more sophisticated instruments requiring highly trained operatives.
Torquemada always gave five weeks grace, for rich merchant bankers to examine their conscience, and for noble informants to come forward and assist Torquemada with his interrogation a sinner, in the beatific hope of saving the sinner’s soul. Confessions given during this five week period of grace, were awarded the blessing of a light to moderate pennance. After the period of grace, fires were lit in the market square, and the smell of roasting flesh permeated the air.
@Max, Stacy
you mean the evil TBTF’ures are having to buy the people’s bad debt?
hahahaha….. that’s going to suck when China dumps theirs and their newly swapped Japanese U.S. treasuries onto the market ….for a grand total of at least $2.5 trillion U.S. fiat dollars.
according to Jim Willie …. the foundational destruction of U.S. treasuries has already occurred and the tipping point will be when the 10 year yield hits 1.5%
sorry Shalom Bernanke…..your cries for mercy will ring hollow in my ears….we’re coming for you.
this is the way it’s always worked. Primary dealers must make a market for bonds. Max likes the Government is going broke mongering. But a country that has a non-convertible floating currency and it’s debt denominated in it’s own currency can’t go broke. No country with these parameters has ever gone bankrupt it is impossible. Every week old t-bills come do and new ones are issued. In the last 6 months alone the over 32 TRILLION in treasury redemptions . Since 2001 over 347 TRILLION OF treasury redemptions. The reality is that treasuries are issued electronically. Say china’s CB has 1 trillion it wants to put in treasuries. China’s dollars are held in a cash account at the FED ( just like all dollars at any CB. To buy 1 trillion worth of treasuries the fed moves the trillion from their cash account to their treasury account. Just like moving your money from checking to savings. How do we redemptions china’s t-bills as they come due? you guessed it we move the money back to their cash account at the FED. remember this is done every week for 100 of billions never a problem it is simple score keeping or data entry. The FED runs a spreadsheet debts and credits accounts that is all thee is too it.
this is the way it’s always worked. Primary dealers must make a market for bonds. Max likes the Government is going broke mongering. But a country that has a non-convertible floating currency and it’s debt denominated in it’s own currency can’t go broke. No country with these parameters has ever gone bankrupt it is impossible. Every week old t-bills come do and new ones are issued. In the last 6 months alone the over 32 TRILLION in treasury redemptions . Since 2001 over 347 TRILLION OF treasury redemptions. The reality is that treasuries are issued electronically. Say china’s CB has 1 trillion it wants to put in treasuries. China’s dollars are held in a cash account at the FED ( just like all dollars at any CB). To buy 1 trillion worth of treasuries the fed moves the trillion from their cash account to their treasury account. Just like moving your money from checking to savings. How do we redeem china’s t-bills as they come due? you guessed it we move the money back to their cash account at the FED. remember this is done every week for 100s of billions never a problem it is simple score keeping or data entry. The FED runs a spreadsheet debts and credits accounts, that is all there is too it. 347 Trillion since 2001 look it up for yourselves.
Also keep in mind that when the government spends, it doesn’t ask china for money, it doesn’t even look to see if the IRS collected any taxes. Operationally the Government ALWAYS spends by crediting bank accounts (creating new money)this spending also adds reserves to the banking system. These new reserves are used (typically) to buy the later issued t-bills of the same amount. Remember Government liabilities are what circulate as money. When these liabilities are paid back to the issuer they are removed from the economy (destroyed). Just like if you issue a personal IOU when you get your own IOU back it has no value to you , because you can create these IOU’s at will. All financial assets (someone else’s financial liability) are technically money, but we just call the most liquid form (government issued) money. In fact net savings is the amount that the government spends into the economy (non-governemnt sector)and hasn’t taken away in taxes, again look it up it equals to the penny.
Japan has double the debt and near record interest rates why? Because they have the same system as described above. so called bond vigilantes can’t do anything to rates in this type of system. How can they. They can only kick around flawed currencies like the Euro. looks like max and a lot of others need to read warren mosler’s seven deadly innocent frauds.
http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf
here are the 7 myths or frauds that mosler debunks
Deadly Innocent Fraud #1:
The federal government must raise funds through taxation or borrowing in order to spend. In other words, government spending is limited by its ability to tax or borrow
Deadly Innocent Fraud #2:
With government deficits, we are leaving our debt burden to our children..
Deadly Innocent Fraud #3:
Federal Government budget deficits take away savings
Deadly Innocent Fraud #4:
Social Security is broken.
Deadly Innocent Fraud #5:
The trade deficit is an unsustainable imbalance that takes away jobs and output.
Deadly Innocent Fraud #6:
We need savings to provide the funds for investment.
Deadly Innocent Fraud #7:
It’s a bad thing that higher deficits today mean higher taxes tomorrow.
@ antitrust
Yep, no question about it. Mosler is a bright candle. Now everybody can read his article and become an even smarter debt slave.
Mosler is a lot smarter than those ass holes at cnbc or ZH that is for sure.
@ Robert
with in depth analysis like that you should go on fox news with the Schiffiet. Then you can get paid fir making empty crackpot comments.
@ antitrust
do not get your underwear in a twist, bro. Are you seriously implying that you agree with Moslers’ basic premise? That the government does not have a clue what it is doing, or how the economy and money system really work? If that is the case, then who is minding the conspiracies? Or do you also believe there are none?
“Regul-ahahahaahahahahahahahahahahaa-tors”
http://en.wikipedia.org/wiki/Regulator_(economics)
http://en.wikipedia.org/wiki/Facilitator
http://en.wikipedia.org/wiki/Political_corruption
…Now what is it we don’t understand here!
To get back at Willie’s interview from May 25, 2012, TFMR Podcast #21 – Jim Willie Returns http://www.tfmetalsreport.com/podcast/3834/tfmr-podcast-21-jim-willie-returns
Interviewer misquoted Jim Rickards. What Jim actualy said was that the government is (or already is) printing money and give it to the banks under the condition they buy up government paper/US treasuries.
So , here you have it: Time Bomb? Banks Pressured to Buy Government Debt
@ Youri Carma
JW is singing to the choir saying low interest rates cause capital destruction and economic decline. That gets closer to the endgame of destroying the sovereign nations as a prelude to imposing the Hegelian solution of global currency to benefit the New World Order.
The question is who is the “new sheriff in town” really working for? My bet is the insane oligarchy.
@ Robert
I’m saying you don’t understand how our monetary system works. It’s not Mosler’s basic premise it is the operation reality. There’s plenty of information from the fed and treasury to confirm this. I have no idea what you mean by conspiracies. Why would a nation that has the legal authority to create dollars have to borrow or tax to be able to spend. In fact logically it is the reverse. In order for you to pay taxes in dollars or buy bonds in dollars. Dollars first have to be put (created) in to the economy. How do dollars get into the economy. That is why government deficit spending equals private net savings to the penny.The Gov must spend first to put dollars there. How can it work any other way? Or do you believe there is a magic money fairy that comes at night who creates dollars.
@ antitrust
you are trolling. I have not made any comment that could conceivably be construed that I misunderstand the monetary system. I probably forgot more about it before you were born than you know about it now.
“Are you seriously implying that you agree with Moslers’ basic premise? That the government does not have a clue what it is doing, or how the economy and money system really work? ”
Those statements would indicate otherwise.
@ Robert
i post a comment you reply to it and i reply to you and I’m the troll what an ego. Every thing you said is proof you don’t understand the monetary system. Can you name one country that had a non convertible floating currency that defaulted on debt in it’s own currency? here’s a hint there is none. Do you now what the difference is? you obviously don’t. You should probably forget all that you learned about the monetary system, it is wrong
@ gordo
Do you believe the GOVERNMENT believes the myths that Mosler debunks?
@ antitrust
prove it.
The government can’t believe in any thing it can’t think it’s not a person .I’m assuming you mean people in the government. the government is made up of people and those people have different thoughts and ideas. Regan and dick cheney said “deficits don’t matter”. This is what they meant. Greenspan in 2011 said “the Government can meet any obligations denominated in it’s own currency”. It appears it’s only you who think’s that a non-convertable currency has to come from some mysterious place that can’t be explained.
prove what? That are money is simple score keeping, data entry on a spread sheet. That numbers can be added or subtracted at will by the entity that has legal power to do so? I think every mildly rational person understands this. Are you afraid that we will run out of numbers in the spreadsheet. It’s hard to follow your logic or lack of.
in the last 6 months 32 trillion in redemptions 32 trillion in 6 months. look it up. oh no what if china stops buying there measly 2 trillion they acquired over the 20 years. 32 trillion in 6 months. were did the treasure get tall that money. 32 trillion in 6 months.
@antitrust,
I’m impressed! Where else do you post/comment at?
Thanks.
@ antitrust
you still seem to be doing the straw man dance.
Let us go at it again.
Do you hold to the strict financial definition of default?
The financial definition is when a debtor is unable or unwilling to fully honor the
borrowing contract.
Does that mean you do not consider currency devaluation, inflation, pretending and extending obligations, rolling over debt, or any other financial gimmick to avoid paying the piper (that is, honor at least the intent, if not the letter, of the contract), as a default?
Again, my question do you agree with Mosler that the government does not know how the economy and money system really work? Mosler seems to think the government (or at least the people working in government?) actually believe the myths he debunks.
If that were the case, and assuming as an institution it does not understand how the economy and money system really work, how is it able to go to such great length to break debt contracts without being called out on the carpet? I suggest that government is fully aware that the myths are exactly that… myths… and serve as a social and economic control mechanism, but only when the average person believes them.
Can I make this more clear? NO ONE HERE BELIEVES THE MYTHS!
@Robert Mockan
It is obvious that they do otherwise they would not all be on the austerity kick.
“Does that mean you do not consider currency devaluation, inflation, pretending and extending obligations, rolling over debt, or any other financial gimmick to avoid paying the piper (that is, honor at least the intent, if not the letter, of the contract), as a default?”
Currency devaluation, inflation are not defaults because there is interest and inflation risk that go with the territory. I you go long treasures that there is interest risk.
If you invest in foreign assets there is currency risk these are not figments of imagination.
In both cases you can win or lose.
Rolling over debt is an option for anyone and can be a risk for highly leveraged organizations except for currency issuers.
EZ nations are NOT currency issuers. That is why they are in trouble.
The US, UK and Japan are currency issuers.
So despite the high debt levels in US, UK, Japan there are no BV’s for their bonds.
@ robert
well now you’re imposing your definitions on everyone else. When someone owes dollars delivering dollars completes the contract. Ive never seen a clause demanding dollars come from a certain place or created at a certain time have you?. That has no legal bearing in reality it’s just the Austrian schools way of weaseling out of their false predictions and assumptions. A bunch of ideological junk. If I have a contrast to deliver wheat is the grain buyer going to say, you violated your contract because you created the wheat yourself. Only crackpot Austrians try to impose this ideological definitions which have no legal bearing in the real world. Besides if the government didn’t create the dollars to begin with ,where are they going to get them. Now were going back to your magical money fairy theory.
What contract has it broke and who? , hard time understanding your ramblings
“LET ME MAKE THIS CLEAR”
as said before Greensapan Ronald Reagan, Cheney, Bernanke along with those mentioned in my f beard post. Along with most Japanese bankers plenty other academics. know this. It’s called Functional Finance and has been around for a long time. Wynne Godley taught this at Cambridge and also worked at the treasury. Predicted the British economy with stunning accuracy. Economists at the Levy institute also are practitioners.
By the way a system that would keep some one in debt and have to work for the rest of their lives to earn their way out of debt ( what you describe) is slavery. Paying someone by crediting their acct with keystrokes is the opposite of slavery. Again with that lack of logic.
by the way if your gold dealer delvers gold to you that was dug out of the ground instead of bought in the open market from someone else do you scream breach of contract like a crackpot?
You may not like the way the monetary system works, but that is how it works. Remember 32 TRIllION in the last 6 months ( actually it’s more now).
you need this
http://pragcap.com/understand-the-modern-monetary-system/understanding-modern-monetary-system
@gordo
the contract fine print probably should include some statement like to be honored with equivalent purchasing power, plus interest. Otherwise money becomes … wait for it… a commodity fetishism. When borrowing one does not say repayment depends on the gambling, and the perceived value at the time of contract execution, although it certainly appears implied as a risk. Bad contracts. What can one say?
The thing about austerity measures hankers back to commodity fetishism. The game plan being played does require that the average person believe the myths that Mosler debunks. But there is a bottom line. Fiat money can not be increased indefinitely, without destroying the labor exchange function. There is a limit to how much counterfeiting can be absorbed in an economy. Typically it is when the users lose confidence that the fiat has an acceptable labor exchange function.
But does the government believe the Mosler myths? Saying it does is a superficial explanation for the austerity measures. Saying it does not gets deep into conspiracy theory. The conspiracy is that the austerity measures are designed to destroy national sovereignty of the countries affected, and are imposed for that reason. But what whould you rather have? A government so stupid it should not exist, or… a government so stupid it should not exist?
@ antitrust
The next time you loan money (say a million USD), and get paid back with worthless paper, I hope you remember saying “.. it just doesn’t matter”, because… a lot of smart people said so.
@ F. Beard
You and antitrust should get along great. Fiat for government, and equities for the masses.
How about flying that past him and seeing what he says?
I see my f- beard post didn’t get posted. I will try again.
“The next time you loan money (say a million USD), and get paid back with worthless paper, I hope you remember saying “.. it just doesn’t matter”, because… a lot of smart people said so”
nice hyperbole
try buying gas or groceries with something other than dollars at your local store (in the USA). I guess since they wont except shiny metals or foreign convertible currency they are worthless In fact the only thing you can do with them here is convert them into that worthless paper the dollar. So in essence they are as worthless as the dollar
@ f beard
had to delete most of my links to post sorry
Thanks for the kind words. I hang around most MMT related sites The school of economic thought is called Modern Monetary Theory (MMT). The name was given to them by neo-clasical economics. Which is funny because it’s neither modern or theory. MMT simply describes the way the monetary system works from an accounting perspective or what happens operationally at the FED/treasury. The University of Kansas city Missouri is the leading school of MMT. Their blog is here the primer on MMT is a good place to start.
“But does the government believe the Mosler myths? Saying it does is a superficial explanation for the austerity measures. Saying it does not gets deep into conspiracy theory. The conspiracy is that the austerity measures are designed to destroy national sovereignty of the countries affected”
I can sort agree with some of this. They certainly do not like sovereignty or democracy.
The like the neo-liberal agenda driven town everyone’s throats. And they say there is no alternative when clearly there is.
@ gordo/Robert Mockan/antitrust
Cool it will you? Can’t we all agree to disagree on this issue? To make it clear (I find myself under incredible brain-strain following the pedantic train-of-thought of your arguments) we are debating the number of apples falling from the apple cart. One thing is clear – that these apples are falling and rolling down the hill. Are we all agreed?
You all made good points. No one has the answers. We can continue disagreeing on every single aspect of ‘Monetary theory’ because it’s just that – theory. I may have some of the answers but I found these in unconventional places.
“The men who are cursed with the gift of the literal mind are the unfortunate ones who are always busy with their nets and neglect the fishing”
Rabindranath Tagore
“The confusion of money (in any form what-so-ever) with wealth is one of the major problems from which civilisation is suffering. Because way back in our development, when we first began to use symbols to represent the events of the physical world, we found this such an ingenious device that we became completely fascinated with it. And in ever-so-many different dimensions in life we are living in a state of total confusion between symbol and reality.”
Alan Watts (http://tthurts.wordpress.com/2012/04/26/the-confusion-of-money/)
How about flying that past him and seeing what he says? Robert Mockan
You think he’d be against it?
In theory, the MMT folks should have no problem with private currencies since only fiat would be good for government debts, taxes and fees.
Torquemada “Allowed” his customers to confess their sins, and, if after inquisition they were not penitant, other methods of persuasion were available. It was Torquemada who invented the gentle art of ‘Waterboarding’, but more subtle methods required more sophisticated instruments requiring highly trained operatives.
Torquemada always gave five weeks grace, for rich merchant bankers to examine their conscience, and for noble informants to come forward and assist Torquemada with his interrogation a sinner, in the beatific hope of saving the sinner’s soul. Confessions given during this five week period of grace, were awarded the blessing of a light to moderate pennance. After the period of grace, fires were lit in the market square, and the smell of roasting flesh permeated the air.