Yes, let’s clarify.
Starting at the end.
I think you are saying that the Powers That Be, want to, need to deny MMT because if we understand MMT their crimes will be revealed. I agree but it would only expose what is already obvious to almost everyone, even the ignorant understand we are being screwed by the rich.
Okay- what I meant is that it is operationally possible for the Fed to allow the Treasury an overdraft on the TGA. This was obviously my meaning in the context of the rest of the article.
You still don’t get it. Congress and federal law prevents the Treasury from over drafting the TGA not the Fed. The Treasury does not take instructions from the Fed. They have to follow rules set by congress and directed by the Executive. The Fed is independent. The Fed does manipulate the bond market (and interest rates) but only after the Treasury auctions and issues the bonds it needs to finance the general fund within limits set by congress. If the Fed bought every Treasury Bond out there they would still count against the debt limit.
Except the poor will still net a greater buying power in this market even accounting for the price increases. We both know this.
Yes, I was not saying we should not give more to the poor even if it causes prices to rise. It goes back to my point that federal spending mostly ends up in the hands of the rich. It trickles down but it rushes, even geysers up.
The Fed can set the overnight rate wherever it wants regardless of the Treasury’s bond issuance. The central bank actually has the ability to fine tune interest rates on longer term government bills if it chooses to, as the BOJ has demonstrated.
Well, maybe but they don’t control the spread between bond rates and mortgage and auto loan rates. The Fed can’t even get a handle on the liquidity crisis even with $2 trillion in new money. If people continue to hoard cash, it will get ugly. I am guilt too. I am almost half cash and gold, one third real estate, the real kind not a fund an just a small amount of stocks and bonds right now. Have been leaning this way for two years. Annual interest on the national debt eats up half a trillion dollars in cash each year. Funny though is the Fed collects a fair chunk of that and give it back to the Treasury.
These Treasuries are purchased with reserves, not deposits.
Where do these reserves come from if not deposits. Aren’t reserves the portion of deposits the banks are not allowed to lend out.
Bond issuance does not fight inflation by ‘removing’ dollars from the economy.
That is right, taxes fight inflation by removing dollars from the economy.
TEK
