TPS

I'm less worried about White, though he's so entertaining that I hope they keep him long term. The reason: I am very confident in McD's ability to find players for his secondary (see Josh Norman...). I think the more difficult long term piece will be replacing Jerry, especially since they will be picking at the back end of R1 for the next 10 years....

You have an issue with selective reading.... Let me try to simplify/abstract the discussion for you (another dissertation coming...). In essence, MMT is saying that government can spend by printing the money it controls. This is both an old and "modern" concept. Historically, governments printed money to fund wars, but they can spend the money they create and control on anything. You (and everyone else) will freak out and say "but that's inflationary!" It can be, but doesn't have to be. Most domestic inflation is caused by too much spending relative to the ability to produce and supply goods. Which is why available capital--physical capital, not financial capital (which you seem to think I mean) and labor are the REAL constraints on government spending. This is also ONE of the main characteristics that is important when talking about "all countries are different." Modern Advanced countries tend to have excess capital and labor, and rarely approach capacity. For example, currently the US is using 77.5% of its industrial capacity and the "official" unemployment rate is 3.7%. This suggests there is still room for Trump to "deficit spend" without causing an acceleration of inflation. However, since I'm generalizing at a macro level, it will be much more complicated based on capacity utilization of those goods that influence consumer inflation. This is why it's so difficult to generalize about all countries. Each country has specific attributes that influence its inflation rate. Given that, here is what MMT would state: if you have excess capacity of real resources, and inflation is currently low , then you can increase government spending (call it deficit spending or money printing) until inflation begins to rise beyond your target level. Government (deficit) spending puts "idle" resources to work, meaning more output will be produced by the private sector. And, the impact will depend on what you spend on or who gets the most benefit from tax cuts. You don't think government spending can influence "wealth creation." Lockheed-Martin's market cap is over $100 billion and they derive over 90% of their revenues from government sales. What would their market cap be if you took away government sales....hmmm.... The second reason countries differ is their trade and exchange rate policies. Many developing countries export low value-added goods and import high value-added goods--they import durable goods and industrial machinery, etc., and export raw materials and labor-intensive goods. Since advanced countries manufacture those goods, developing countries need hard currencies to pay for imports. So, to purchase those imports, many countries issue bonds in hard currencies (USD), NOT THEIR OWN (one of the requirements of MMT). Since they need USD to pay off the debt, it ADDS A FINANCIAL CONSTRAINT FROM FOREIGN EXCHANGE MARKETS. As you suggested, they could print their own currency to buy USD, but that would cause their currency to depreciate leading to a spike in the price of those important imported goods, leading to higher inflation (the ultimate constraint according to MMT). In addition, as I stated, in the FX markets they are at the mercy of investors--you should be happy here. The depreciation of the domestic currency could also spark a run from the currency, so their options are limited. Note, this also answers your question about Soros. At the time, the UK was going to join the European Exchange Rate Mechanism, so the BoE was targeting the pound to the DM. Guess what that does? It puts a financial constraint on the BoE. When investors sell (short) the pound, the BoE must buy with hard currency reserves. The BoE can only print pounds, not $s or DMs. When you run out of reserves, you can't maintain your peg any longer. They were forced to let it float. Moral of the story, if you have an exchange rate policy that targets or pegs your exchange rate to a particular hard currency, then you better have a boatload of that currency in reserve... Regarding the yen-yuan.... The yuan has been pegged to the USD because of China's export-led growth strategy. They accumulate USD from their trade surplus (our deficit) with US. If they sell those USD off, then the $ would weaken making their goods more expensive in USD, instead they invest those accumulated $s in US assets (mostly treasuries). This is the main issue underlying the China-US trade dispute--they ARE a currency manipulator. They are not holding $s because it's the reserve currency, they are holding them as an exchange rate management policy to sell goods into (what is still) the largest consumer market in the world. Japan usually lets its currency float, but they manage it quite often as well. They are threatening to intervene now, just as they did in 2011 when the yen strengthened against the $. As they showed in 2011, they have unlimited capacity to keep the yen from rising, since they can sell any amount of yen they want (they own the printing press) into the market to buy $s (why do you think the BoJ of is the second largest holder of treasuries?). Why do they do it? Because they are also dependent on exports for growth. I certainly respect your understanding of financial markets, but your inability to understand MMT is related to a limited understanding of what causes inflation, the causes of which can be very complex, which is why you can't make simple generalizations about MMT (which is really the ability to use fiscal policy--deficit spending--to stimulate the economy). Again, in essence, MMT simply says a government that controls its own currency does not have a financing constraint--it does not have to borrow the currency it controls in order to spend; it can simply create it and spend it. Three examples we've discussed: 1. The US. QE did not cause inflation because the majority of the assets (over $2 trillion in treasuries) it bought remained on bank balance sheets as dead reserves, with Fed now paying interest on those reserves, they are much like holding treasuries. I would not deny that being the largest economy in the world and the reserve currency is certainly a benefit to the US--characteristics specific to a country do matter, but that is not the reason QE did not lead to inflation. 2. Japan. The BoE has purchased 120% of Japan's government debt, which means they hold 20% more than the size of Japan's economy. Why no inflation? I can't talk to specifics about what the deficit spending is targeted at, but I do know that the Japanese have a very high propensity to save, so that attempts to bolster income of Japanese households tend to lead to higher domestic savings, and not fuel significantly higher consumption demand which would fuel inflation. Important point: causes of inflation are specific to each country's characteristics. Note, the yen is not the world's reserve currency, but the BoJ can carry more debt than the Fed without causing inflation. It doesn't matter what investors think here. 3. Argentina. Their central bank has funded large government deficits for years, fueling inflation. In this case, MMT would argue their deficits have been excessive. One also has to look at their specific characteristics for the causes of inflation. I mentioned the fact they issue bonds in USD, which puts an additional constraint on their central bank. They can't simply print pesos to buy USD because the depreciation of their currency would fuel inflation by raising the cost of imported goods. There are many other issues that influence domestic inflation. For example, given their current inflationary spiral, the current conservative regime is going to raise the minimum wage as a political ploy. Conclusion: Given Argentina's specific inflation characteristics, their ability to "use MMT" (print money) is very limited. To those following along, the key to understanding the nuances of the argument is to understand what causes inflation, which is much more complex than Milton Friedman's simple phrase, "Too much money chasing too few goods." I can't wait for the season to start....

Yes, once you get past #7, that may have been the worst R1 draft in history....

Was just scanning the thread to see if this had been posted...

It was effectively zero for the 7 years after Lehman collapsed and inflation remained below the Fed's target. Unless low (or zero or negative!) interest rates stimulate borrowing to purchase real things, the answer will be NO. Hell, there are negative interest rates in more and more European countries now!

Btw, if the route continues, I can see the FED dropping rates by 50 basis points very, very soon. The 30-year rate is approaching the 3-month rate....

If Trump reacts to anything, it's the stock markets. I'm sure he will hurl more disparaging tweets at Powell about lowering interest rates (and the Fed most likely will), but this is all on Trump. It will be interesting to see how he responds to today's "signal".....

Speaking of bull####, you stated in a previous post, "My entire point is that not all countries are the SAME." Yet, you now claim that a theory that says "the US and Argentina are NOT the same" is bull####. Interesting....

Says someone who probably hasn't bothered to read the theory...otherwise you would know what they say about different institutional structures related to monetary and fiscal policies, and exchange rate regimes.

When you read it, you'll see that much of my argument with GG is based on an understanding of MMT. There is no debate about the technical details of the argument, but there are disagreements about their policy suggestions, especially the job guarantee. I'll let you decide who the moron is....

No pleasure in that post, rather an expression of frustration (even depressed about this). I was hoping this case would help expose the beast. I hope to God I am wrong. (Sorry @TtownBillsFan, I did not read your post before posting this. I truly hope so too.)

It seems pretty clear, it's not going to see the light of day. As I told you @Deranged Rhino, the Deep State will win. Trump has acquiesced--he's no fool when it comes to protecting himself. In the end, I won't be surprised to find that Q is just a bull ***** con used to keep people holding on, not much different than Rachel stringing my wife along for 2+ years with Russia, russia, russia...

Vlad, it was only a matter of time...

Bills, in the hunt, win 4 out of last 5 to get in, starting with a big win on thanksgiving day.

Go back about 10 pages and start reading the posts related to your 2 cents.

What's astounding is you don't understand what causes inflation. About 75% of what the Fed bought was from banks and stayed on bank balance sheets as an interest earning asset--deposits held with a Fed bank. Bank managers decide this, not investors. So let's look at the amount bought from investors. The initial impact is a decrease in treasuries or mbs in their portfolios and an increase in demand deposits. When QE2 was announced in late 2010, many investors believed it would cause inflation and moved funds into gold and commodities (I made the argument here that a spike in oil prices was driven by investors piling into oil futures). This is also when many of the conservatives on PPP said it would cause hyperinflation. I said it would not. bill Gross famously stated he was dumping his fixed rate treasuries for the same reason. These action did have an initial impact on commodity prices (including gold) and the 10-year treasury yield. However, 6 months later the bubble burst, as oil future prices dropped the maximum allowable that May, and treasury yields fell back below 2%. QE did not lead to a significant increase in inflation because 1) most of the funds sat as dead assets on bank balance sheets; 2) investor decisions do not cause a rise in the general level of prices. Inflation is influenced by Generalized excess demand for products, factors that influence production costs, and the degree of market competition. Btw, since you brought up, care to comment on how Japan can get away with a public debt to GDP ratio of 240% with the BoJ holding half of that AND why there's no inflation?

If you consider the Bank of Japan an alien.... Japan's debt/gdp ratio is 240%, and the BoJ holds about half of that debt. To compare, if the FED held that much debt relative to the size of the US economy it would hold $26 trillion in treasuries....

Apparently you just aren't reading my posts very carefully, because I said it (all countries are NOT the same) long ago... The reserve accounting EXPLAINS WHY QE DID NOT LEAD TO INFLATION. A deficit occurs when spending exceeds tax revenue. Here's where we differ: I believe It's the size of the deficit that matters (and of course the state of the economy when they occur); you believe it's more important whether they are caused by spending increases or tax cuts. You believe that larger deficits caused by tax cuts lead to stronger growth than deficits caused by spending increases, but this supply side religion has never worked in practice--the evidence does not support it. Haha! Thanks for bringing Japan into this...who do you think holds the majority of their government's debt?

To answer you and Faith, there is no doubt that the supply chains of the US companies that are producing in China have been changing and will change even more because of this. The cost differences between manufacturing in China and the US aren't so great any more, and companies have gradually shifted. It is US Multinationals that caused most of the shift to China and other countries, so they do need a push by politicians. I doubt very much the next president will be as belligerent on this as Trump, which is why I predicted China would stall on this a couple months back. Maybe it started with Clinton, but US interests have pushed globalization and outsourcing for a long time. When companies move, it's Wall STreet and shareholders that win, and workers lose.

If you've read my recent stuff, then you know I don't disagree. I am in the business of predicting what I think will happen... The Chinese State can wait longer than Trump can, and it certainly seems in their best interest for Trump to lose 2020. As a prediction, I don't think this is controversial.

Once again, the statement made was "countries that issue debt in their own currency can never default." If you issue debt in another currency, then you are subject to constraints in the FX market. For example, If the US issued debt in yuan, I certainly would not make the same claim, nor would anyone else. Any country can certainly try and purchase those hard currencies with the currency they control, but you DO face a constraint on the other side of that exchange. You're being disingenuous and creating a straw man argument trying to treat all countries the same. Why do you think Argentina HAS TO issue bonds in USD in the first place? As I posted for you a second time, not all countries are alike, and the ultimate constraint they face in using "deficit spending" is inflation. Advanced countries with excess labor and capital, and developed financial markets, have much more flexibility than others. I don't disagree, but it takes time to develop new supply chains. Trump has until next year--the election. Hell, the markets are yelling at him now to stop this shiz. Soybeans grow in Brazil too....

Argentina is subject to the market for USD to pay its bonds that are issued in USD. The US issues its bonds in USD and pays in USD. You can't see the difference? On inflation, you don't seem to understand what bank reserves are. Solely done for your benefit....? By injecting more spending than it takes out in taxes, government spurs greater wealth creation by the private sector--every debt is someone else's asset.... Longer than Trump can wait.

China can play the long game, Trump can't. It will be interesting to see how the ego will back down without looking like he lost....

I agree with you here. There are no perfect measures of employment or unemployment, and the nature of the economy is always changing. One way to help those at the bottom is to push the economy faster via stimulus and, at the same time, berate the Fed so they don't put an end to it with higher rates. Trump has done both.