Here is why printing money is little different from selling Gov. Bonds to deficit spend. - Page 2 - Politics Forum.org | PoFo

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#14984066
Steve_American wrote:@Crantag,
I respect your opinion and will not argue against it. But, it is just an opinion.
Also, you gave no reason or evidence to back it up so I can't argue against your reasons.

Would it solve your bookkeeping problem if the Fed. bought some bonds and never redeemed them or just rolled them over forever? It seems like it might.

I'm not sure you know how much of this I'm advocating. I'm not even sure I know how much I'm advocating. As much as necessary, I guess.

BTW, I have seen reports that during WWII the Fed. bought about half of the war bonds that were sold. This is an example of massive "dollar printing" and it didn't seem to cause any problems during or after the war. But, we must remember that during the war there was rationing in place for food, fuel, and tires, etc.

PS --- Did you mean 'real world negative consequences' or "real big negative consequences"? I assumed real world.

This is a place for kicking around ideas.

I raised that as a consideration.

I didn't resort to evidence, because I instead resorted to logic, and accounting technique.

As a practical matter, dollars are probably printed all the time, because they can be, and because people want dollars.

A more prescient case is probably that of Euro Dollars. The dollars that are received to purchase oil in the Middle East don't return to the US, at least as a matter of design. Instead they go to Europe, and are used in the dollar trade, or something like that. This was set up at least by the 1970s (perhaps as an aspect of Kissenger's deal in Saudi Arabia, to end the oil crisis, if I'm not mistaken).

That's not tangential to this topic; what it amounts to is a huge pool of dollars, which also is able to be tapped into; at the same time, the intended function of it is to prevent the resultant proceeds in dollars of the oil trade from effecting the US domestic 'money supply'.

Sorry if my posts are too vague for you, but my considerations are also vague. Paradoxically money is a matter which is rarely dealt with in economics, and so we are sort of left to feel our way through the wilderness.

I've been thinking deeply about money, and reading a bit about it, for years, but still don't really understand it.

My intuition is still that printing dollars willy nilly is a very bad idea, mostly for the reasons usually mentioned (currency depreciation). I would in fact point to the Euro Dollar institution as an example of the powers which be making the same judgement, because the result of the dollars which purchased oil flowing back to the US directly would be somewhat analogous to the excessive printing of dollars.
#15095699
@Crantag,
Sir, you wrote above,
My intuition is still that printing dollars willy nilly is a very bad idea, mostly for the reasons usually mentioned (currency depreciation). I would in fact point to the Euro Dollar institution as an example of the powers which be making the same judgement, because the result of the dollars which purchased oil flowing back to the US directly would be somewhat analogous to the excessive printing of dollars.

I tried to google Euro Dollar and then added "in economics" and every post on the 1st page of both was about the exchange rate of $$ & euros.

Can you suggest some search terms to get to your idea.

While I'm waiting my current off the top of my head understanding of this.
1] If it is what you said and was set up in the 70s as you said then, of course, it was done to keep the oil $$ out of the American economy. {So what?}
2] That was about 45 years ago. So, 45 years later it really doesn't matter how it was set up, unless it was set in concrete. By now it surely has changed.
3] I kind of doubt that it was set in concrete, so I think it really doesn't matter any more. People all over the world want dollars, and US $$ bonds. Contrary to what some people here think, right now the dollars is up. There is no sign that I can see that investors are fleeing the US$. During the GFC/2008 IIRC, the Fed. had to bail the EU banks and the ECB out when they ran out of $$; to the turn of like $2T (my estimate or guess).

There is no MMTer who proposes "printing" dollars without any constraint. So, why do you even say "willy nilly"?
This is only partly because they all object to the use of the phrase "printing dollars" as just a scare phrase used by MS economists to scare the masses. Mainly, it is because MMTers all go on and on about how it is real labor and resources that are the actual limits on deficit spending. That is, that there is no financial constraint.
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I can't post twice so I add this to my OP thread.
There was a famous episode of original Star Trek titled, "A Piece of the Action". In it Cptn. Kirk has straighten out an alien culture contaminate by a book about gangsters in 1920s Chicago. On this planet even the kids ask for "a pieces of the action."
As I see it, part of the goal of Neo-liberal businessmen and economists is to make sure that no Gov. function is done that does not let businessmen get their "a piece of the action" (APOTA).
A list of such Gov. actions is ---
1] Restructure Soc. Sec. so they get APOTA.
2] Avoid single payer to they keep getting their APOTA.
3] Sell off roads, bridges, water works, railroads, etc. so they get their APOTA.
4] Have private prisons so they get their APOTA.
5] Block any and all new programs which don't include a way for them the get their APOTA.
They don't care if this costs more money, is inefficient, and hurts the mass of citizens; they demand their APOTA or it will not be allowed.

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#15095953
Victoribus Spolia wrote:I say that about any currency that is not a reserve currency for oil like the dollar and still trades in the dollar in order to buy oil. This in essence is no different than the Bretton-Woods agreement, only instead of Gold as the unspoken foundation to the dollar and why other nations needed the dollar, now oil serves in the place of gold.


I don't understand how oil is serving in place of gold in your argument, nor how this relates to "reserve currency". People think that being a reserve currency confers some kind of magical power, but they can't specify where it comes from or what it actually does.

The dollar is mostly used for international oil transactions because it is liquid as hell and is trusted as being safe. If oil is purchased in some other currency it doesn't matter internally to US consumers - all these units are free-floating and fungible.

I can buy gold or silver at market price. I can buy oil at market price. I can buy other currencies at market price. That's it. That's the entire point. That's how free-floating international currencies and commodities work. If your unit of currency is not pegged to a specific amount of gold, silver, oil, or some other commodity then it is free floating. It is not "based" on oil, or any other individual commodity.

Being the "reserve currency" for oil purchase doesn't give the US consumer any benefit whatsoever, nor does it benefit the US economy as a whole. It does not have any effect on US inflation, because oil is fungible and so are currencies. The price you pay is the price you pay. Of course, if the price of oil is high that can effect inflation, but this has nothing to do with "reserve currency."

It's ridiculous to argue that oil is the basis of the US currency. The underlying economy of the US is the basis of US currency, and every other country's currency. This underlying economy does include oil, but it includes a hell of a lot of other stuff as well.

Hyperinflation is another topic altogether, and is different in kind from ordinary inflation. It occurs in the wake of political collapse, severe production constriction, civil breakdown, or forced external debt (like German reparations after WWI).

MMT takes Keynesian macro and syncretically adds chartalist views on money. It has very specific things to say about how a money system based on a sovereign non-pegged currency works. I don't find your critique actually addresses these claims.
#15096116
Crantag wrote,
A more prescient case is probably that of Euro Dollars. The dollars that are received to purchase oil in the Middle East don't return to the US, at least as a matter of design. Instead they go to Europe, and are used in the dollar trade, or something like that. This was set up at least by the 1970s (perhaps as an aspect of Kissenger's deal in Saudi Arabia, to end the oil crisis, if I'm not mistaken).

I had trouble googling Euro Dollars to find out more info on this. He gave me the clue to try eurodollars, one word.

So, I read the Wikipedia article and remember I'm no economic expert.

It seems that eurodollars are just dollars that are not deposited in a bank that is not part of the US Fed. Res. system.
1] It said there are over $13T of them now.
2] Can someone tell me if this $13T is included in the US Gov. or Fed. total of the US money supply, U6 or whatever?
3] As I see it these dollars are not in the Fed. system so that they are not regulated by US laws. But, they could be in the US system at any time if their holder wanted them there.
4] It said that they are commonly used to make loans to foreign** people or gov. that need to be in dollars. . ** . Here foreign means from the POV of the lender.

Crantag as said I should leave him alone. OK.

But, I think the lurkers might want to know what I found out.
And, I really want to know if they are in the total US money supply figures published. I think they are, but I'm no expert.
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quetzalcoatl and others who agree that MMT is right,
why don't you-all give thumbs or normally reply to say so?
You are giving the lurkers the impression that I'm all alone in my 'crazy' ideas here.
Apparently, I'm not, but most people don't post about it for some reason.
Right now, in the corona crisis, is the time to post if there ever will be a time to make yourself heard.
The world's Govs are deficit spending like crazy and their central bank is buying the resulting bonds; however, we are also hearing that "someday we are going to have to pay this all back". WTF, why in hell would a Gov. tax its people to pay off bonds that it owes to itself? {I know the Fed. is sort of 'independent', but all its profits (97% of its receipts) are paid into the US Treasury.}
As I have said, this looks a lot like a person buying stuff by making loans. That is don't give them money but just lend them money, while saying you will want the money back some day. Is such a contract even legal?
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#15096453
@Steve_American

Ah! Looking back on it, I tend to engage more with people I disagree with. An old habit of mine - the friction of argument is perfect for honing one's ideas and burning off whatever chaff might be present. Since I don't find much to object to in your posts I've let them speak for themselves. But you're right, I should value positive engagement as well. And I will make more of an effort to do so.

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