David Andolfatto

@dandolfa

Construction worker turned academic turned central banker. Opinions expressed here are my own, not St. Louis Fed nor U.S. Fed Reserve System.

Vrijeme pridruživanja: travanj 2013.

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  1. proslijedio/la je Tweet

    Some people consider this a policy failure ¯\_(ツ)_/¯

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  2. 4. velj

    Alternate headline: Fed Removes $59.85 Billion from Financial Markets via

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  3. proslijedio/la je Tweet
    3. velj

    Given the limits on monetary policy, it is high time to revisit automatic stabilizers. A piece by Larry Summers and I.

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    3. velj

    Great show today with Marc Lavoie who joins us to discuss the Bank of Canada's amazing operating system based off of this paper: We also discuss Post-Keynesian econ & how it differs from mainstream macro. Something for everyone!

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  5. 3. velj
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  6. 1. velj

    Doubt very much that $ printing press responsible for reducing months of recession in U.S. economy over time. 🤔

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    What's the 280 character explanation of why the UK left the EU? I have followed it closely, but still don't think I understand

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  8. 1. velj

    It's amazing how the economy just keeps on growing too. 🙂

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  9. 31. sij

    Committees not the byproduct of evolutionary pressure, evidently. Interesting theory.

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  10. proslijedio/la je Tweet
    31. sij
    Odgovor korisniku/ci

    What Tsy calls debt (boo!) banks call deposits (yay!). Only legal barrier to this Utopia is removing certificates of indebtedness (Tsy equivalent of checking acct deposits) from public debt limit. This piece I've cited before is on-point.

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  11. 31. sij

    P.S. I do not even like referring to the national debt as "debt." In what sense is it "debt," e.g., when it yields negative interest? A better term is "outside assets" (assets created outside the private sector). See, e.g.,

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  12. 31. sij

    ... but it's not likely to have a big effect on the price-level or inflation. The price-level is more likely to be influenced by the supply and demand for government debt (broadly defined to include reserves) rather than the composition of this debt.

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  13. 31. sij

    The point here is that "monetizing" interest-bearing debt with interest-bearing reserves is, to a first approximation, simply altering the composition of the debt, not its total quantity. Altering this composition can have real effects...

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  14. 31. sij

    True, it's a bit easier now to spend the money in your TD account, but is that what was really holding you back before? OK, if you think everyone will suddenly want to spend their TD money, then price-level will rise. But do you really think that people would behave this way?

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  15. 31. sij

    Question: what effect would this have on the economy? If the Treasury continues to pay the same interest rate on its accounts, I have a hard time seeing why people would suddenly be motivated to spend their newly monetized treasury debt.

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  16. 31. sij

    Second experiment. Suppose instead that the U.S. Treasury decides to link TD to a payment platform, permitting TD account holders to use their TD accounts as regular checking accounts. This turns TD accounts into money. Once again, the entire national debt is now monetized.

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  17. 31. sij

    Voila! The entire U.S. debt has been "monetized." That is, the debt is now converted into Federal Reserve money. The Fed's balance sheet explodes, but the national debt goes to zero. Question: what effect would this have on the economy? Probably not much. Yes/no?

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  18. 31. sij

    Now, consider a couple of thought experiments. First, imagine the Fed announces that everyone can open an account with the Fed with the same properties as the TD account. Then imagine the Fed taking over TD, replacing all TD accounts with interest-bearing reserve accounts.

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  19. 31. sij

    Suppose you want to spend some of the money in your TD account. Sorry, you can't do that. Not because it's not possible, but because TD is not set up to make payments. Instead, you have to transfer your TD money to your regular bank account first. Then you can spend it.

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  20. 31. sij

    Imagine that people log on to their accounts every morning to check their balances. What people see are interest-bearing accounts, just like their bank accounts, except that these accounts are with the Treasury.

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