Artikkeleita


"Just Use 'the Computer' at the Fed to Give People More Money" by Stephanie Kelton


Congress has all the firepower it needs. It just needs to send spending instructions to the Federal Reserve, as it always does.

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Still, an often muddled (even politically hidden) truth is that, when called upon, the same computer that works for large banks is there for Main Street as well. But the Federal Reserve needs specific instructions before typing up dollars for the rest of us.

Those instructions come in the form of legislation: When a bill becomes a law, the government is, in essence, telling the Fed how many dollars it is ordering up to cover health care expenses, child care costs or replace lost wages, and so on. And - this is crucial - all spending, whether or not it is offset by tax increases, is covered by the Federal Reserve.

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This is as good a moment as any for the American people to learn where money comes from and why the federal government, and only the federal government, has the means to step up and save the economy. Congress has all the firepower it needs. It just needs to send instructions to the Fed - and the money will go out.


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"How the Bank of Canada Creates Money for the Federal Government: Operational and Legal Aspects"


Since the Bank of Canada is a Crown corporation wholly owned by the federal government, the Bank's purchase of newly issued securities from the federal government can be considered an internal transaction. By recording new and equal amounts on the asset (valtionvelkakirjat) and liability (keskuspankkirahaa) sides of its balance sheet, the Bank of Canada creates money through a few keystrokes. The federal government can spend the newly created bank deposits in the Canadian economy if it wishes.

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There is no external limit to the total amount of money that the Bank of Canada may create for the federal government.

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The Bank of Canada's money creation for the Government of Canada is an internal government process. This means that external factors, such as financial markets dysfunction, cannot cause the federal government to run out of money.

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"The Use and Abuse of MMT" By Michael Hudson


After being attacked by monetarists and others for many decades, MMT and the idea that running government budget deficits is stabilizing instead of destabilizing is suddenly gaining applause from the parts of the political spectrum that long opposed MMT: the banking and financial sector, especially the Republicans. But what is applauded is in many ways something quite different than the leading MMT advocates have long supported. 

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"Debunking the myth of 'helicopter money'" by Randall Wray


NEW YORK - Modern Monetary Theory has received unprecedented attention now that policymakers are pursuing extraordinary economic policy measures to combat the COVID-19 pandemic.

Discussing the U.S. Federal Reserve's "whatever it takes approach," CNBC's Joe Kernen recently concluded that "we are all MMTers now." And in a recent commentary, Willem H. Buiter of Columbia University claimed that "much of the U.S. response (to the pandemic) will come in the form of 'helicopter money,' an application of (MMT) in which the central bank finances fiscal stimulus by purchasing government debt issued to finance tax cuts or public spending increases."

As these remarks show, many commentators seem to view MMT as merely a blueprint for turning on the printing press, whether to send cash to Americans through an appropriation by Congress, or to provide liquidity to financial markets through the Fed's actions. With the recent adoption in the United States of a $2.1 trillion rescue package, we are supposedly now engaged in what Buiter calls "a massive experiment with hitherto unorthodox" MMT.

These commentators have it all wrong. MMT does not support quantitative easing (QE), nor does it prescribe "helicopter drops," for the simple reason that there is no such thing as a "helicopter money" alternative to financing a fiscal stimulus package. Instead, what MMT does is describe how a government that issues its own currency actually spends, taxes and sells bonds as a matter of course. In doing so, the theory demonstrates that a government like that of the U.S. does not, in fact, face financial constraints.

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"Why This Isn't The MMT Moment" by Austin G Mackell


Modern Monetary Theory is right about the government's capacity to spend, but dead wrong about how to use this spending power. A Job Guarantee won't work. A Universal Basic Income will.

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"Rethinking the Perceived Perils of Sovereign Government Debt" by Marc-Andre Pigeon


We might approach fiscal policy matters as differently as Copernicus approached the movement of the planets, discarding the fiscal scolds just as Copernicus discounted those who insisted on the increasingly convoluted Ptolemaic model that put earth at its centre. And knowing this, we might shift some of our post COVID-19 energies away from fretting about accumulated accounting deficits (i.e., sovereign debt)-a disposition that is likely to worsen and lengthen our economic malaise-to more tangible and meaningful deficits like clean air and water, climate change, high quality child care, education and health care, reconciliation, sustainable infrastructure, and income inequality. We would play with real tradeoffs, not just their distributional manifestations. But to get there, we would also need to overcome a lot of mischaracterizations of this set of ideas that go by the name modern monetary theory (MMT). And to do all of that, we would have to start the story from the beginning, where it all began, with money.

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"Taxes for revenue are obsolete" by B.Ruml, New York Fed (1946)

The necessity for a government to tax in order to maintain both its independence and its solvency is true for state and local governments, but it is not true for a national government. Two changes of the greatest consequence have occurred in the last twenty-five years which have substantially altered the position of the national state with respect to the financing of its current requirements.

The first of these changes is the gaining of vast new experience in the management of central banks.

The second change is the elimination, for domestic purposes, of the convertibility of the currency into gold.

Final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity.

The United States is a national state which has a central banking system, the Federal Reserve System, and whose currency, for domestic purposes, is not convertible into any commodity. It follows that our Federal Government has final freedom from the money market in meeting its financial requirements. Accordingly, the inevitable social and economic consequences of any and all taxes have now become the prime consideration in the imposition of taxes. In general, it may be said that since all taxes have consequences of a social and economic character, the government should look to these consequences in formulating its tax policy. All federal taxes must meet the test of public policy and practical effect. The public purpose which is served should never be obscured in a tax program under the mask of raising revenue.

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"The Bond Market Doesn't Control Anything; the Currency-Issuing National Government Does" by Ellis Winningham


Stated plainly for the benefit of the public, without the national government issuing bonds and without the national government also giving investors the money to purchase the bonds through deficit spending, the bond market would not exist. The bond market exists only because the national government causes it to exist. As the national government is the monopoly supplier of currency for the nation, and as that currency is inconvertible and floats freely on an exchange, if the national government chooses to issue treasury bonds, then it alone controls the interest that it pays on its bonds, not the bond market. However, as we now understand, treasury bonds in the modern era are an anachronism and currency-issuing national governments should cease issuing them.

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"Does the National Debt Matter?" by David Andolfatto, StLouis Fed, 12/2020 

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Most people have a very personal view of the nature of debt. We know that high levels of debt and deficit spending at the household level are not sustainable. At some point, household debt has to be paid back. If a household is unable to do so, its debt will have to be renegotiated. It is natural to think that the same must hold true for governments. But this "government as a household" analogy is imperfect, at best. The analogy breaks down for several reasons.

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Ultimately, the federal government has control over the supply of the nation's legal tender. Both of the notes above (kuvassa:  5$ valtionvelkakirja (Treasury Note) ja 5€ seteli (Fed Note)) have been legal tender since the gold recall of 1933. Now, consider the fact that the national debt consists of U.S. Treasury securities payable in legal tender. That is, imagine the national debt consisting of interest-bearing versions of the U.S. (Treasury) Note shown above.

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To the extent that the national debt is held domestically, it constitutes domestic private sector wealth. The extent to which it constitutes net wealth can be debated, but there's not much doubt that at least some of it is viewed in this manner.4 The implication of this is that increasing the national debt makes individuals feel wealthier.

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Together, these considerations suggest that we might want to look at the national debt from a different perspective. In particular, it seems more accurate to view the national debt less as form of debt and more as a form of money in circulation.

Investors value the securities making up the national debt in the same way individuals value money-as a medium of exchange and a safe store of wealth. The idea of having to pay back money already in circulation makes little sense, in this context. Of course, not having to worry about paying back the national debt does not mean there is nothing to be concerned about. But if the national debt is a form of money, wherein lies the concern?

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The average interest expense of the federal debt is influenced by the composition of the debt between currency, reserves, bills, notes and bonds. The composition of the debt is determined in part by monetary policy. In particular, when the Federal Reserve purchases Treasury securities (QE), it is in effect swapping lower-yielding reserves for higher-yielding Treasury securities (sometimes called "monetizing the debt"). The composition of Federal Reserve liabilities between reserves and currency in circulation is determined by the demand for currency, which can be thought of as a zero-interest government security.


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