If chinese government provides stimulus to fuel domestic consumption, then why by 2026 the chinese government will stop the EV stimulus to buy an EV, making for now 2 well-known EV makers to still give this stimulus at the company expense, which might hurt its investors?
Also, could it be assumed, that Trump's tariffs, are somehow helping to fuel china's domestic consumption?
Un conto sono le singole decisioni di politica fiscale prese dal governo, altro conto è l’indirizzo generale di politica economica che da tempo è indirizzato anche al consumo interno. Certamente con i dazi di Trump volti a ridurre le importazioni, la soluzione del consumo interno è prevedibile
I would be weary about chinese investment in "greens" ... cause it is a good bussines investmend in the idiocy of the EU, but probably nothing else. Ending it might mean they have us already in the trap, or do enough BS money out of us to not waste it on them anymore. Simply said, we butchered our economy enough in the EU to not be a concern in this matter for china anymore. And you cant revive automotive in a deadlocked legislative environment, nor compete with aisian worforce costs and no more cheap energy from RF. They just need to wait a little and then flood our market with their products.
My understanding of the economics literature is that there is no debt threshold that distinguishes “too high” from “acceptable”. Rather, the concerns tend to be around sharp increases in debt over a short period of time. Gradual increases in debt are fine. But the bottom line is that the debt must be used productively. As long as the economy grows at a faster rate than the interest rate, the debt-to-GDP ratio eventually falls.
Il rapporto debito/pil è un indice che non ha base scientifica per ammissione anche del suo inventore (l’economista francese Abeille). Il limite al debito pubblico, che per sua natura non è un debito reale, quindi alla creazione di moneta, sono il pieno utilizzo delle risorse del paese (umane in primis), e l’impatto inflattivo della spesa che si mette in atto con quella spesa
Can you please explain why sustained fiat money printing by CN cannot be used to accumulate, say, Gold from international market without leading to depreciation of RMB interms of other currencies.
MMT states that fiat money will not lead to inflation if it is used to employ available resources within the sovereign country, like labour, land, factories, machines etc. in the pursuit of that countries goals.
Clearly, purchasing gold from other countries does not come under this proviso, and in such a situation the finance escapes the local economy.
But the point I am making is that what prevents actors - bad actors if you will - from using cheap low interest rates money released by the Govt printing fiat money from seeking arbitrage by acquiring , say gold. In principle wo limits tho in practice of course -and as per standard theory- such a scenario results in international currency markets depreciating the first currency that is being printed without restraint. As indeed happens to so many currencies. That seems to lead to runaway inflation Within the country as well. MMT prescriptions cannot behave as if any Fiat currency or market exists in a vacuum unrelated to the other currencies n markets.
Il livello dei prezzi (inflazione), è determinato dalla politica fiscale dei singoli governi. Non c’entra niente con la svalutazione rispetto alle altre valute che è determinato dall’import/export e dalla politica monetaria delle banche centrali
Ah, now I think I understand the point you are making. My understanding is that the government needs something like a job guarantee scheme in place so that the government funds the wages and associated costs and maintains control of how it is deployed, so that bad actors have no (or perhaps little) opportunity to divert funds outside the state.
But perhaps you still consider it a risk even under those conditions? If so I guess that is a more practical matter that the general policy issue doesn’t address.
Sì, un piano di lavoro garantito con un salario decente da permettere due vivere in modo dignitoso a chiunque voglia lavorare e’ garanzia di democrazia. Ed uno Stato che detiene il monopolio pubblico della sua valuta, e’ perfettamente in grado di realizzarlo ….. sempre!
Or disturbing, because it shows China is reaching its debt limits. Trying to go the MMT way will only end in tears. The 'real resources' argument is a red herring when one understands in the msm model, inflation occurs when real resources are already fully employed. MMT adds nothing to increase real resources, except an impractical and unenforceable so-called Job Guarantee.
La MMT infatti non aggiunge niente rispetto al pieno sfruttamento delle risorse reali (umane in primis) rispetto al fenomeno inflattivo classico.
Quale sarebbe il limite al debito pubblico cinese per TE??? ed al resto dei debiti pubblici del pianeta che crescono ininterrottamente da oltre 200 anni, senza che ancora siano stati invasi dalle cavallette??? -:))
Il problema per una eventuale inflazione da domanda oggi per la maggior parte dei paesi del mondo, è la mancanza di prodotti oppure la mancanza di denaro per acquistare i prodotti????
Thank you. I gotta admit, this time Dalio is on the side of the angels. The PBOC, by no stretch of imagination, can be operationally independent and it shows. But another point: is China's big advantage that as an autocracy, it can just repudiate domestic creditors-or at least give them a haircut? Unlike in a democracy, Xi cant be voted out.
Il tema che mettevi in dubbio era se realmente Xu Gao aveva o meno citato la MMT. E lo ha fatto!
Quello che interessa sono le tesi della MMT non la tua visione politica della Cina. La MMT spiega il corretto funzionamento della moneta moderna (chi la crea e come si crea)…. e questo avviene nello stesso modo in tutti i paesi del mondo, indipendentemente dall’essere una economia di tipo capitalista dove i mezzi di produzione sono in mano ai privati, che di tipo socialista dove i mezzi di produzione sono in mano dello Stato.
Ogni governo in quanto monopolista della valuta che emette può ripudiare creditori interni attraverso l’azione fiscale. Non solo, può ripudiare anche quelli esterni, indipendentemente dall’essere una democrazia o una dittatura…… l’ultimo esempio proviene da quelle che sono considerate le democrazie del mondo (USA e UE), che hanno ripudiato le riserve in dollari ed euro detenute dalla Russia e dai russi.
Money is tangible.. you can touch it, measure it. Trust is intangible, fragile and secretive.
When the ego of the owners of the system throw their weight about, to hard, for too long and without thought to the welfare of the users of the system... then the trust in the owners duty of care comes into question.
Are we seeing the debasement of the US$ and the US system and into mediums that can hold a store of value independently. Like GOLD or digital currencies.
Are we seeing American exceptionalism being overshadowed by a different American trail? The next few years will be very interesting.
Maybe the proponents for MMT need to quantify the limits to which trust becomes a significant element in the theory.
Finché gli USA tasseranno in dollari, gli americani saranno sempre costretti a procurarsi i dollari…. anche per comprare Oro e crypto, che non sono valute di stato ma merce il primo e asset finanziari i secondi
However, and it is a massive "however" just thinking about Germany in the early 20th Century, what do the US citizens do with those dollars when they have them? What do the rest of the world do with those dollars when they have them?
With the US dollar about 10% lower this year, and with Donald T pushing for a lower currency, and some expecting the dollar to drift lower by a further 10% next year, how do people feel about that dollar.
If the government gave you $100 and you lost $10, you might just say to yourself well that is life. Life is good and I didn't need it anyway.
Now ask yourself, if the government gave you $100 and you need that $100 to live, but then it came and took $10 back from your bank account you might just feel slightly different. $90 is less than you need. Only now they are saying that they will come back and take $9 more dollars from you. You will end up with $81 without spending a cent.
You are in trouble and the trust in your government is inverting.
However, you do have a choice, once you have that $100 you can change it into something the government can't easily get access to and that you can sell at a later date. Maybe for more money.
Now, because the government is taking money from everyone's bank account everyone is starting to buy things that they can sell later.
From what I understand central banks haven't been the big drivers of the rise in Gold and crypto-currency prices. People have.
The US government has made it clear with tariffs and its growing deficit that it wants the $$$'s of the people holding the dollar. It has shown that it just needs to create new dollars and allow inflation to rise to collect those dollars and it is actively doing so.
Maybe foreign governments are forward looking and see beyond DT's presidency, maybe like Japan they require a promise of protection and will take a loss for that even thought that was never part of the initial deal. It can take time for government to catch up with the population or the smart thinkers and movers.
The truth though, is there is a change in the tolerance for the US. A change in the TRUST that we put in the US$.
Excellent piece! What’s missing is a CB buying existing bonds will mean all new money flows into the financial economy, and will lead to financial Asset appreciation, so FIRE sector price inflation. However, under the conditions outlined by the author, buying new bonds from Treasury allows the Gov to invest in the real economy and pull excess slack out of the system, a central tenant if MMT to deliver full employment, and unfortunately this is explicitly prevented in the U.S. and UK.
Just like MMT is right under specific conditions, Dalio is also right under specific conditions, and we should come together to stop the Fed from stopping maximum growth by yo-yo-ing interest rates, and instead maximize the real economy with 2% interest, deliver full employment and simply tax more from the larger economic pie and profits created. The Fed is CAUSING under-investment in the real economy and housing, and they are saying they can’t lower rates unless we tax more and get the deficit down.
Ti ringrazio per l’apprezzamento ma devo correggerti. La creazione monetaria avviene con la spesa in deficit dei governi e non con l’acquisto di titoli da parte della BC. In quel caso si cambia solo un conto di deposito con un conto di riserva. Oltre a questo la MMT è per una politica ZIRP sui tassi.
“Thank you for your appreciation, but I must correct you. Money creation occurs through government deficit spending,”
Incorrect. The only way to finance a deficit in the U.S. is by selling bonds to the private sector, so borrowing from the public or banks. In the UK, Treasury can borrow on the Ways and means facility, but hasn’t in 17 years. If they did, then due to the Full Funding rule, they would sell bonds to the public and retire the credit line, so they also finance deficit spending by selling bonds to the public either before spending or after.
Only the Central Bank can increase reserves, which they do by simply funding Gov spending, only by acquiring Assets or lending against assets. If you disagree, I’d love to hear how you believe Gov spending creates new Ressrves.
“not through the purchase of securities by the Central Bank.”
I agree, the CB never buys directly from Treasury, and that’s my point, it limits options for the U.S. and the U.K.
“In that case, you simply exchange a deposit account for a reserve account.”
Incorrect, the bank or Treasury swaps reserves for bonds, but the CB expands their Balance Sheet when acquiring Assets:
+Assets (bonds)
+Liabilities (+reserves)
Deposits are only decreased when the public buys bonds.
“ Furthermore, MMT advocates a ZIRP interest rate policy.”
Not everyone, and there is a strong argument that they are not much different but 2% is practically more likely, so I’ll accept 2%. The power they go, the more FIRE sector assets appreciate, so we have to stop that money flowing into mortgages and getting stuck, making homes unaffordable.
NO! E' la spesa pubblica che crea le riserve con le quali il settore privato poi acquista i titoli. Esempio: il governo paga uno stipendio di 1000 dollari accreditando il conto del dipendente pubblico, quei dollari non esistevano prima. Questo accredito ora risulta come un aumento delle riserve dentro il sistema bancario. Il sistema bancario con questi 1000 dollari poi compra i titoli di stato. Qui hai tutta la contabilità che prova quello che ti sto dicendo https://megasalexandros.it/litalia-ha-perso-la-capacita-di-emettere-monetaria-la-risposta-e-no/
La Banca Centrale non può immettere denaro al netto in aggregato nel settore privato. Lo fa solo da qualche anno solo in relazione al pagamento di un interesse sulle riserve che le banche detengono presso di essa. Può concedere credito alle banche tramite i rifinanziamenti (moneta-credito). Ed anche con la politica monetaria come il Qe ad esempio, non immette denaro in aggregato, ma cambia solo la forma dell'aggregato (cambia un conto di deposito con un conto di riserva).
Se una banca vende 1 mld di bond alla BC, cambia un deposito con un conto di riserva, in aggregato abbiamo sempre 1 mld non 2mld. Quindi l'aggregato non aumenta, cambia forma.
Friend, I have read the link you provided. Thank you for your thoughtful reply.
There is no way to say this with respect, the idea that the state creates new money to credit the bank account $1,000 of a government employee is simply false. And I suspect deep down, part of you realizes this is false.
I can explain the process in detail, but there are legal and fiscal constraints that do not allow the system to work as the website says, but if these constraints were removed then it ‘could’ work that way.
If we look at the U.S. and UK, it is simpler than understanding the Euro, but I think you know that Euro members cannot issue new money to pay Gov bills. Common sense tells you if that were true, there would never be debt! And the idea that Treasury issues bonds to help the Central Bank is nonsense. It’s a beautiful dream…
Here is reality: The only way new Reserve account credits are issued is by the Central Bank either acquiring/buying High Quality Liquid Assets HQLA, or lending against secured loans. This is done when the CB expands their Balance Sheet BS, acquiring new Assets while issuing new Liabilities (reserves), which has no change in CB equity.
CB Equity = CB Assets - CB Liabilities
CB
+Assets (+HQLA)
+Liabilities (+reserves)
No change in equity.
What you described is the CB spending their equity by issuing new reserves without acquiring any new Assets:
CB Assets = 0
CB Equity = 0 - CB Liabilities
New CB Liabilities = - CB Equity
$1,000 new reserves = - CB Equity.
If these CB issued to pst Gov bills, they would be insolvent and bankrupt within a week. It’s nonsense that anyone argues this my friend, although it certainly is a nice website thoughtfully constructed.
In the U.S., by law the Treasury can never borrow from the CB, so the Treasury General Account MUST have funds in deposit prior to spending. The only money this account receives is from tax receipts and bond sales, and the Fed cannot by law buy bonds directly from the Treasury, it can only buy bonds that have already been issued in the secondary market.
Therefore, 100% of deficit spending is financed by bond sales to the public, no way around it.
In the UK, the Treasury could borrow from the BoE in the Ways and Means facility/credit line, which it hasn’t done in 17 years, and because of the full funding rule any amounts borrowed will be repaid by bond sales to the public, so deficit spending always is paid by borrowing existing reserves from banks or non-banks,never by issuing new reserves.
Therefore EU is the same but more complicated. If EU countries could issue new money, what would be the point if using the Euro. In fact, wanting to issue new currency is a reason why countries should leave the Euro!. I wrote about that here:
Here is my book on the forensic accounting of how the Dual Ledger Circuit Monetary Operating System actually works. I am sorry it has not been translated to Italian, but maybe I can figure out how to do that:
Mi dispiace per te, il non capire la semplice contabilità non ti permette di abbandonare la narrativa che il mainstream ti racconta sulla creazione monetaria. Ed infatti non sei in grado di smentire la contabilità che ti ho mostrato.
Lo Stato spende 1000 in deficit creando numeri dal nulla (nuove riserve), poi copre il conto presso la BC con altri numeri creati dal nulla (bond 1000).
La spesa in deficit (spesa > delle tasse) ha aggiunto moneta in aggregato.
E TU non sei in grado di smentire questa contabilità.
Oh friend, don’t feel sorry for me, I am going great!
“but not understanding simple accounting”
I only follow the accounting, not philosophy, but forensic accounting. Do you understand double entry accounting in financial transactions?
“doesn't allow you to abandon the narrative the mainstream tells you about money creation.”
Oh, I understand, I abandoned long ago! everything they think is ridiculous, no fractional reserve nor Loanable funds theory, only credit creation theory by Dr. Werner and confirmed by Bank of England.
“in fact, you're incapable of disproving the accounting I showed you.”
Oh no, I certainly can disprove it quite simply. It’s an error in your thinking.
The government spends 1,000 in deficit, creating numbers out of thin air (new reserves),
This is your first mistake. But if that was true, don’t you think everyone would print so much money it would be worthless? If you really think about it, I am sure you can realize this is untrue.
First, the Treasury cannot spend unless it has reserve account credits at the Central Bank. No Tressury in the world creates money, only the Central Banks create reserve account credits, which they do when they expand their Balance Sheet by buying Assets:
CB BS expansion:
+Assets (High Quality Liquid Assets HQLA)
+Liabilities (+reserves)
But none of his goes to Treasury. The Tressury does not create money, but it could!
“then covers the account at the Central Bank with other numbers created out of thin air (bond 1,000).”
Second mistake, the CB credits the reserve account of banks who swap their private sector assets for reserve account credits. That means all Ressrves are 100% asset backed, which you can easily confirm by looking at the CB Balance sheet. The Fed has $3T in Reserves but the Fed has $7T in Assets.
“Deficit spending (spending > taxes) has added money in aggregate.”
Nope, third mistake. 100% of deficit spending is financed by selling bonds to the public in exchange for existing funds. So Depodits are reduced when the public. It’s bonds, and then when the Gov spends those funds deposits increase bs into where they were, so no net change in deposits, and no change in Ressrves.
Do you understand reserves? If nut, I recommend my book, because it’s impossible to understand the dual
Ledger Circuit Monetary operating system without understanding Ressrve creation through CB BS expansion.
And YOU are incapable of disproving this accounting.”
Sorry, just did. But you are smart enough to know the Gov is not printing money anytime it wants to spend, so deep inside, you already knew that.
Wake up, Friend!!!
Friend, I wish we could meet and discuss face to face, build trust, break bread. But alas, I only can provide you facts and reason.
In the US, it’s not legal for the Treasury to spend unless it has funds on deposit, and the only funds it can receive besides tax revenue and fees is bond sales. So legally, no borrowing from the Fed, no printing.
In the UK, the Treasury could borrow from the BoE if they were short, but the publicly available data says they haven’t borrowed since 2008 when they borrowed $20b.
Facts are facts my friend, regardless of personal philosophy.
“No, you haven't proven anything about the fact that if the government spends $100”
In the real world, if the Gov spends$100, doesn’t that mean in your model that either:
1. The Cb issued $100 in new currency? Which would increase reserves and CB reserve account Liabilities, correct?
2. Or the Treasury issued $100 in new currency? Which would increase Treasury currency Liabilities, correct?
So all we have to do is Che k your story!
if we check reserves balances for England or the U.S. over the past 4 years, you would agree if what you are saying is true, then reserves must be increasing, correct?
Or AT LEAST increased temporarily, when all those reserves hit banks, and created all those new deposits, and eventually Gilts were sold to reduce the outstanding supply of Reserves, agreed?
So if reserves increased, you win my friend!
The UK spent roughly $2.4T, so we should see $2.4T in new reserves, and increase in BoE reserves or Liabilities of $2.4T, agreed?
So let’s check, and if reserves went up even temporarily, you can argue bond sales reduced them later
Uh oh! Checking the BoE database, total reserves went DOWN from 1T to 700T. There was no temporary or permanent increase. The facts just blew a hole through your fantasy my friend.
In the U.S., they went down by more!
A rational person would stop and say, huh, the data and facts are showing without a doubt, maybe it doesn’t work the way I imagine it!
Is there any way for the Gov to issue new fiat to find revisit spending without increase their Liabilities?
Spoiler alert: no.
The maths prove your ideas are not reflected in reality.
No poems needed, you are just proving to the world, you don’t count so good! 😂
Il governo versa sul tuo conto 1000 questi 1000 sono riserve nuove che prima non esistevano nel sistema bancario. Punto. Fine delle trasmissioni. E TU non sei in grado di dimostrare un canale ulteriore di creazione monetaria rispetto ai 2 che ti ho citato: 1) spesa in deficit del governo 2) prestiti delle banche commerciali; Altrimenti, in due righe scrivimi quale altro canale di creazione monetaria esiste per TE. In 2 righe non con un poema. Chi scrive un poema in un commento vuol dire che non ha capito nulla. Se vuoi scrivere un poema con la contabilità scrivi un articolo, come quello che ti ho scritto e ti ho inviato.
“The government deposits $1,000 into your account. These $1,000 are new reserves that didn't previously exist in the banking system. Period. End of broadcast.”
Ok, you are demonstrating the source of your confusion.
1. Can the Government create “new reserves that didn’t previously exist” WITHOUT increasing Gov Liabilities? Y/N
2. Or, does every increase in “new reserves that didn’t previously exist” increase Government Liabilities? Y/N?
I am reading the website, it’s now very clear, you don’t understand how new money is created. I can help you understand if you wish, but everything you have built is on a faulty foundation, which is why you don’t see easy mistakes.
vai a leggerti il paper che ti ho inviato sulla mail. E cerca di capire che la moneta è un monopolio pubblico.... altrimenti questa discussione non finisce più
If you believe the government can issue new currency without increasing their liabilities, you don’t understand bookkeeping.
If you agree that any increase in the supply of reserves, or that anytime the government creates new money, they also have an increase in liabilities on their balance sheet..
If your example of the Gov issuing 100 of new money was true, the CB or Treasury would have to show an increase in total Liabilities if 100, agreed?
…then all we have is check the central bank or the treasury to show if they actually did have an increase in total Liabilities because of issuing new money.
When you check the publicly available data in the Bank of England database, you can clearly see that the Bank of England did not increase reserves, in fact, they decreased reserves over the last four years by 300 billion.
And you can also see that the treasury has not borrowed from the Bank of England in 17 years.
Lastly, you can see the treasury does not have any new liabilities for issuing new money, they only have new liabilities for selling new bonds to the public, as they borrowed the public money to cover deficit spending.
So unfortunately, there are no increases in Gov Liabilities to support your story, and instead there are reductions in Gov Liabilities, which completely disproves your story.
Will reason, logic and math prevail upon you?
Or will you stick with your beautiful dream that’s a complete fantasy?
If chinese government provides stimulus to fuel domestic consumption, then why by 2026 the chinese government will stop the EV stimulus to buy an EV, making for now 2 well-known EV makers to still give this stimulus at the company expense, which might hurt its investors?
Also, could it be assumed, that Trump's tariffs, are somehow helping to fuel china's domestic consumption?
Un conto sono le singole decisioni di politica fiscale prese dal governo, altro conto è l’indirizzo generale di politica economica che da tempo è indirizzato anche al consumo interno. Certamente con i dazi di Trump volti a ridurre le importazioni, la soluzione del consumo interno è prevedibile
I would be weary about chinese investment in "greens" ... cause it is a good bussines investmend in the idiocy of the EU, but probably nothing else. Ending it might mean they have us already in the trap, or do enough BS money out of us to not waste it on them anymore. Simply said, we butchered our economy enough in the EU to not be a concern in this matter for china anymore. And you cant revive automotive in a deadlocked legislative environment, nor compete with aisian worforce costs and no more cheap energy from RF. They just need to wait a little and then flood our market with their products.
My understanding of the economics literature is that there is no debt threshold that distinguishes “too high” from “acceptable”. Rather, the concerns tend to be around sharp increases in debt over a short period of time. Gradual increases in debt are fine. But the bottom line is that the debt must be used productively. As long as the economy grows at a faster rate than the interest rate, the debt-to-GDP ratio eventually falls.
Just my understanding of the literature
Il rapporto debito/pil è un indice che non ha base scientifica per ammissione anche del suo inventore (l’economista francese Abeille). Il limite al debito pubblico, che per sua natura non è un debito reale, quindi alla creazione di moneta, sono il pieno utilizzo delle risorse del paese (umane in primis), e l’impatto inflattivo della spesa che si mette in atto con quella spesa
Can you please explain why sustained fiat money printing by CN cannot be used to accumulate, say, Gold from international market without leading to depreciation of RMB interms of other currencies.
Acquistare oro e’ una misura inflattiva, non ha a che fare con la svalutazione del RMB
MMT states that fiat money will not lead to inflation if it is used to employ available resources within the sovereign country, like labour, land, factories, machines etc. in the pursuit of that countries goals.
Clearly, purchasing gold from other countries does not come under this proviso, and in such a situation the finance escapes the local economy.
Infatti… ho risposto che l’acquisto di oro è una misura di spesa inflattiva
But the point I am making is that what prevents actors - bad actors if you will - from using cheap low interest rates money released by the Govt printing fiat money from seeking arbitrage by acquiring , say gold. In principle wo limits tho in practice of course -and as per standard theory- such a scenario results in international currency markets depreciating the first currency that is being printed without restraint. As indeed happens to so many currencies. That seems to lead to runaway inflation Within the country as well. MMT prescriptions cannot behave as if any Fiat currency or market exists in a vacuum unrelated to the other currencies n markets.
Il livello dei prezzi (inflazione), è determinato dalla politica fiscale dei singoli governi. Non c’entra niente con la svalutazione rispetto alle altre valute che è determinato dall’import/export e dalla politica monetaria delle banche centrali
Ah, now I think I understand the point you are making. My understanding is that the government needs something like a job guarantee scheme in place so that the government funds the wages and associated costs and maintains control of how it is deployed, so that bad actors have no (or perhaps little) opportunity to divert funds outside the state.
But perhaps you still consider it a risk even under those conditions? If so I guess that is a more practical matter that the general policy issue doesn’t address.
Sì, un piano di lavoro garantito con un salario decente da permettere due vivere in modo dignitoso a chiunque voglia lavorare e’ garanzia di democrazia. Ed uno Stato che detiene il monopolio pubblico della sua valuta, e’ perfettamente in grado di realizzarlo ….. sempre!
Exciting to see MMT being embraced by China
Or disturbing, because it shows China is reaching its debt limits. Trying to go the MMT way will only end in tears. The 'real resources' argument is a red herring when one understands in the msm model, inflation occurs when real resources are already fully employed. MMT adds nothing to increase real resources, except an impractical and unenforceable so-called Job Guarantee.
La MMT infatti non aggiunge niente rispetto al pieno sfruttamento delle risorse reali (umane in primis) rispetto al fenomeno inflattivo classico.
Quale sarebbe il limite al debito pubblico cinese per TE??? ed al resto dei debiti pubblici del pianeta che crescono ininterrottamente da oltre 200 anni, senza che ancora siano stati invasi dalle cavallette??? -:))
Il problema per una eventuale inflazione da domanda oggi per la maggior parte dei paesi del mondo, è la mancanza di prodotti oppure la mancanza di denaro per acquistare i prodotti????
I'd like a direct link to the China bank's economist comments. I am skeptical of MMTers interpretation in such circumstances.
https://www.chinabankingnews.com/p/chinese-economists-recruit-ray-dalio
Thank you. I gotta admit, this time Dalio is on the side of the angels. The PBOC, by no stretch of imagination, can be operationally independent and it shows. But another point: is China's big advantage that as an autocracy, it can just repudiate domestic creditors-or at least give them a haircut? Unlike in a democracy, Xi cant be voted out.
Il tema che mettevi in dubbio era se realmente Xu Gao aveva o meno citato la MMT. E lo ha fatto!
Quello che interessa sono le tesi della MMT non la tua visione politica della Cina. La MMT spiega il corretto funzionamento della moneta moderna (chi la crea e come si crea)…. e questo avviene nello stesso modo in tutti i paesi del mondo, indipendentemente dall’essere una economia di tipo capitalista dove i mezzi di produzione sono in mano ai privati, che di tipo socialista dove i mezzi di produzione sono in mano dello Stato.
Ogni governo in quanto monopolista della valuta che emette può ripudiare creditori interni attraverso l’azione fiscale. Non solo, può ripudiare anche quelli esterni, indipendentemente dall’essere una democrazia o una dittatura…… l’ultimo esempio proviene da quelle che sono considerate le democrazie del mondo (USA e UE), che hanno ripudiato le riserve in dollari ed euro detenute dalla Russia e dai russi.
Money is tangible.. you can touch it, measure it. Trust is intangible, fragile and secretive.
When the ego of the owners of the system throw their weight about, to hard, for too long and without thought to the welfare of the users of the system... then the trust in the owners duty of care comes into question.
Are we seeing the debasement of the US$ and the US system and into mediums that can hold a store of value independently. Like GOLD or digital currencies.
Are we seeing American exceptionalism being overshadowed by a different American trail? The next few years will be very interesting.
Maybe the proponents for MMT need to quantify the limits to which trust becomes a significant element in the theory.
Finché gli USA tasseranno in dollari, gli americani saranno sempre costretti a procurarsi i dollari…. anche per comprare Oro e crypto, che non sono valute di stato ma merce il primo e asset finanziari i secondi
Absolutely. Think on from that.
However, and it is a massive "however" just thinking about Germany in the early 20th Century, what do the US citizens do with those dollars when they have them? What do the rest of the world do with those dollars when they have them?
With the US dollar about 10% lower this year, and with Donald T pushing for a lower currency, and some expecting the dollar to drift lower by a further 10% next year, how do people feel about that dollar.
If the government gave you $100 and you lost $10, you might just say to yourself well that is life. Life is good and I didn't need it anyway.
Now ask yourself, if the government gave you $100 and you need that $100 to live, but then it came and took $10 back from your bank account you might just feel slightly different. $90 is less than you need. Only now they are saying that they will come back and take $9 more dollars from you. You will end up with $81 without spending a cent.
You are in trouble and the trust in your government is inverting.
However, you do have a choice, once you have that $100 you can change it into something the government can't easily get access to and that you can sell at a later date. Maybe for more money.
Now, because the government is taking money from everyone's bank account everyone is starting to buy things that they can sell later.
From what I understand central banks haven't been the big drivers of the rise in Gold and crypto-currency prices. People have.
The US government has made it clear with tariffs and its growing deficit that it wants the $$$'s of the people holding the dollar. It has shown that it just needs to create new dollars and allow inflation to rise to collect those dollars and it is actively doing so.
Maybe foreign governments are forward looking and see beyond DT's presidency, maybe like Japan they require a promise of protection and will take a loss for that even thought that was never part of the initial deal. It can take time for government to catch up with the population or the smart thinkers and movers.
The truth though, is there is a change in the tolerance for the US. A change in the TRUST that we put in the US$.
Excellent piece! What’s missing is a CB buying existing bonds will mean all new money flows into the financial economy, and will lead to financial Asset appreciation, so FIRE sector price inflation. However, under the conditions outlined by the author, buying new bonds from Treasury allows the Gov to invest in the real economy and pull excess slack out of the system, a central tenant if MMT to deliver full employment, and unfortunately this is explicitly prevented in the U.S. and UK.
Just like MMT is right under specific conditions, Dalio is also right under specific conditions, and we should come together to stop the Fed from stopping maximum growth by yo-yo-ing interest rates, and instead maximize the real economy with 2% interest, deliver full employment and simply tax more from the larger economic pie and profits created. The Fed is CAUSING under-investment in the real economy and housing, and they are saying they can’t lower rates unless we tax more and get the deficit down.
Time for change….
Ti ringrazio per l’apprezzamento ma devo correggerti. La creazione monetaria avviene con la spesa in deficit dei governi e non con l’acquisto di titoli da parte della BC. In quel caso si cambia solo un conto di deposito con un conto di riserva. Oltre a questo la MMT è per una politica ZIRP sui tassi.
“Thank you for your appreciation, but I must correct you. Money creation occurs through government deficit spending,”
Incorrect. The only way to finance a deficit in the U.S. is by selling bonds to the private sector, so borrowing from the public or banks. In the UK, Treasury can borrow on the Ways and means facility, but hasn’t in 17 years. If they did, then due to the Full Funding rule, they would sell bonds to the public and retire the credit line, so they also finance deficit spending by selling bonds to the public either before spending or after.
Only the Central Bank can increase reserves, which they do by simply funding Gov spending, only by acquiring Assets or lending against assets. If you disagree, I’d love to hear how you believe Gov spending creates new Ressrves.
“not through the purchase of securities by the Central Bank.”
I agree, the CB never buys directly from Treasury, and that’s my point, it limits options for the U.S. and the U.K.
“In that case, you simply exchange a deposit account for a reserve account.”
Incorrect, the bank or Treasury swaps reserves for bonds, but the CB expands their Balance Sheet when acquiring Assets:
+Assets (bonds)
+Liabilities (+reserves)
Deposits are only decreased when the public buys bonds.
“ Furthermore, MMT advocates a ZIRP interest rate policy.”
Not everyone, and there is a strong argument that they are not much different but 2% is practically more likely, so I’ll accept 2%. The power they go, the more FIRE sector assets appreciate, so we have to stop that money flowing into mortgages and getting stuck, making homes unaffordable.
NO! E' la spesa pubblica che crea le riserve con le quali il settore privato poi acquista i titoli. Esempio: il governo paga uno stipendio di 1000 dollari accreditando il conto del dipendente pubblico, quei dollari non esistevano prima. Questo accredito ora risulta come un aumento delle riserve dentro il sistema bancario. Il sistema bancario con questi 1000 dollari poi compra i titoli di stato. Qui hai tutta la contabilità che prova quello che ti sto dicendo https://megasalexandros.it/litalia-ha-perso-la-capacita-di-emettere-monetaria-la-risposta-e-no/
La Banca Centrale non può immettere denaro al netto in aggregato nel settore privato. Lo fa solo da qualche anno solo in relazione al pagamento di un interesse sulle riserve che le banche detengono presso di essa. Può concedere credito alle banche tramite i rifinanziamenti (moneta-credito). Ed anche con la politica monetaria come il Qe ad esempio, non immette denaro in aggregato, ma cambia solo la forma dell'aggregato (cambia un conto di deposito con un conto di riserva).
Se una banca vende 1 mld di bond alla BC, cambia un deposito con un conto di riserva, in aggregato abbiamo sempre 1 mld non 2mld. Quindi l'aggregato non aumenta, cambia forma.
Mosler sostiene una politica ZIRP sui tassi.
Friend, I have read the link you provided. Thank you for your thoughtful reply.
There is no way to say this with respect, the idea that the state creates new money to credit the bank account $1,000 of a government employee is simply false. And I suspect deep down, part of you realizes this is false.
I can explain the process in detail, but there are legal and fiscal constraints that do not allow the system to work as the website says, but if these constraints were removed then it ‘could’ work that way.
If we look at the U.S. and UK, it is simpler than understanding the Euro, but I think you know that Euro members cannot issue new money to pay Gov bills. Common sense tells you if that were true, there would never be debt! And the idea that Treasury issues bonds to help the Central Bank is nonsense. It’s a beautiful dream…
Here is reality: The only way new Reserve account credits are issued is by the Central Bank either acquiring/buying High Quality Liquid Assets HQLA, or lending against secured loans. This is done when the CB expands their Balance Sheet BS, acquiring new Assets while issuing new Liabilities (reserves), which has no change in CB equity.
CB Equity = CB Assets - CB Liabilities
CB
+Assets (+HQLA)
+Liabilities (+reserves)
No change in equity.
What you described is the CB spending their equity by issuing new reserves without acquiring any new Assets:
CB Assets = 0
CB Equity = 0 - CB Liabilities
New CB Liabilities = - CB Equity
$1,000 new reserves = - CB Equity.
If these CB issued to pst Gov bills, they would be insolvent and bankrupt within a week. It’s nonsense that anyone argues this my friend, although it certainly is a nice website thoughtfully constructed.
In the U.S., by law the Treasury can never borrow from the CB, so the Treasury General Account MUST have funds in deposit prior to spending. The only money this account receives is from tax receipts and bond sales, and the Fed cannot by law buy bonds directly from the Treasury, it can only buy bonds that have already been issued in the secondary market.
Therefore, 100% of deficit spending is financed by bond sales to the public, no way around it.
In the UK, the Treasury could borrow from the BoE in the Ways and Means facility/credit line, which it hasn’t done in 17 years, and because of the full funding rule any amounts borrowed will be repaid by bond sales to the public, so deficit spending always is paid by borrowing existing reserves from banks or non-banks,never by issuing new reserves.
Therefore EU is the same but more complicated. If EU countries could issue new money, what would be the point if using the Euro. In fact, wanting to issue new currency is a reason why countries should leave the Euro!. I wrote about that here:
https://www.linkedin.com/pulse/germany-euros-inconvenient-truth-w-jon-underwood?utm_source=share&utm_medium=guest_mobile_web&utm_campaign=copy
Here is my book on the forensic accounting of how the Dual Ledger Circuit Monetary Operating System actually works. I am sorry it has not been translated to Italian, but maybe I can figure out how to do that:
https://www.amazon.com/Everything-think-about-money-wrong/dp/B0FS7P2CJ9
Mi dispiace per te, il non capire la semplice contabilità non ti permette di abbandonare la narrativa che il mainstream ti racconta sulla creazione monetaria. Ed infatti non sei in grado di smentire la contabilità che ti ho mostrato.
Lo Stato spende 1000 in deficit creando numeri dal nulla (nuove riserve), poi copre il conto presso la BC con altri numeri creati dal nulla (bond 1000).
La spesa in deficit (spesa > delle tasse) ha aggiunto moneta in aggregato.
E TU non sei in grado di smentire questa contabilità.
Svegliati Amico!!!
“I feel sorry for you,”
Oh friend, don’t feel sorry for me, I am going great!
“but not understanding simple accounting”
I only follow the accounting, not philosophy, but forensic accounting. Do you understand double entry accounting in financial transactions?
“doesn't allow you to abandon the narrative the mainstream tells you about money creation.”
Oh, I understand, I abandoned long ago! everything they think is ridiculous, no fractional reserve nor Loanable funds theory, only credit creation theory by Dr. Werner and confirmed by Bank of England.
“in fact, you're incapable of disproving the accounting I showed you.”
Oh no, I certainly can disprove it quite simply. It’s an error in your thinking.
The government spends 1,000 in deficit, creating numbers out of thin air (new reserves),
This is your first mistake. But if that was true, don’t you think everyone would print so much money it would be worthless? If you really think about it, I am sure you can realize this is untrue.
First, the Treasury cannot spend unless it has reserve account credits at the Central Bank. No Tressury in the world creates money, only the Central Banks create reserve account credits, which they do when they expand their Balance Sheet by buying Assets:
CB BS expansion:
+Assets (High Quality Liquid Assets HQLA)
+Liabilities (+reserves)
But none of his goes to Treasury. The Tressury does not create money, but it could!
“then covers the account at the Central Bank with other numbers created out of thin air (bond 1,000).”
Second mistake, the CB credits the reserve account of banks who swap their private sector assets for reserve account credits. That means all Ressrves are 100% asset backed, which you can easily confirm by looking at the CB Balance sheet. The Fed has $3T in Reserves but the Fed has $7T in Assets.
“Deficit spending (spending > taxes) has added money in aggregate.”
Nope, third mistake. 100% of deficit spending is financed by selling bonds to the public in exchange for existing funds. So Depodits are reduced when the public. It’s bonds, and then when the Gov spends those funds deposits increase bs into where they were, so no net change in deposits, and no change in Ressrves.
Do you understand reserves? If nut, I recommend my book, because it’s impossible to understand the dual
Ledger Circuit Monetary operating system without understanding Ressrve creation through CB BS expansion.
And YOU are incapable of disproving this accounting.”
Sorry, just did. But you are smart enough to know the Gov is not printing money anytime it wants to spend, so deep inside, you already knew that.
Wake up, Friend!!!
Friend, I wish we could meet and discuss face to face, build trust, break bread. But alas, I only can provide you facts and reason.
In the US, it’s not legal for the Treasury to spend unless it has funds on deposit, and the only funds it can receive besides tax revenue and fees is bond sales. So legally, no borrowing from the Fed, no printing.
In the UK, the Treasury could borrow from the BoE if they were short, but the publicly available data says they haven’t borrowed since 2008 when they borrowed $20b.
Facts are facts my friend, regardless of personal philosophy.
“No, you haven't proven anything about the fact that if the government spends $100”
In the real world, if the Gov spends$100, doesn’t that mean in your model that either:
1. The Cb issued $100 in new currency? Which would increase reserves and CB reserve account Liabilities, correct?
2. Or the Treasury issued $100 in new currency? Which would increase Treasury currency Liabilities, correct?
So all we have to do is Che k your story!
if we check reserves balances for England or the U.S. over the past 4 years, you would agree if what you are saying is true, then reserves must be increasing, correct?
Or AT LEAST increased temporarily, when all those reserves hit banks, and created all those new deposits, and eventually Gilts were sold to reduce the outstanding supply of Reserves, agreed?
So if reserves increased, you win my friend!
The UK spent roughly $2.4T, so we should see $2.4T in new reserves, and increase in BoE reserves or Liabilities of $2.4T, agreed?
So let’s check, and if reserves went up even temporarily, you can argue bond sales reduced them later
Uh oh! Checking the BoE database, total reserves went DOWN from 1T to 700T. There was no temporary or permanent increase. The facts just blew a hole through your fantasy my friend.
In the U.S., they went down by more!
A rational person would stop and say, huh, the data and facts are showing without a doubt, maybe it doesn’t work the way I imagine it!
Is there any way for the Gov to issue new fiat to find revisit spending without increase their Liabilities?
Spoiler alert: no.
The maths prove your ideas are not reflected in reality.
No poems needed, you are just proving to the world, you don’t count so good! 😂
Il governo versa sul tuo conto 1000 questi 1000 sono riserve nuove che prima non esistevano nel sistema bancario. Punto. Fine delle trasmissioni. E TU non sei in grado di dimostrare un canale ulteriore di creazione monetaria rispetto ai 2 che ti ho citato: 1) spesa in deficit del governo 2) prestiti delle banche commerciali; Altrimenti, in due righe scrivimi quale altro canale di creazione monetaria esiste per TE. In 2 righe non con un poema. Chi scrive un poema in un commento vuol dire che non ha capito nulla. Se vuoi scrivere un poema con la contabilità scrivi un articolo, come quello che ti ho scritto e ti ho inviato.
“The government deposits $1,000 into your account. These $1,000 are new reserves that didn't previously exist in the banking system. Period. End of broadcast.”
Ok, you are demonstrating the source of your confusion.
1. Can the Government create “new reserves that didn’t previously exist” WITHOUT increasing Gov Liabilities? Y/N
2. Or, does every increase in “new reserves that didn’t previously exist” increase Government Liabilities? Y/N?
Please answer this question.
Period. End of broadcast. 😎
dammi la tua mail.... ti mando un paper
I am reading the website, it’s now very clear, you don’t understand how new money is created. I can help you understand if you wish, but everything you have built is on a faulty foundation, which is why you don’t see easy mistakes.
My email is wunderwood11 at gmail.
vai a leggerti il paper che ti ho inviato sulla mail. E cerca di capire che la moneta è un monopolio pubblico.... altrimenti questa discussione non finisce più
Here is why I ask.
If you believe the government can issue new currency without increasing their liabilities, you don’t understand bookkeeping.
If you agree that any increase in the supply of reserves, or that anytime the government creates new money, they also have an increase in liabilities on their balance sheet..
If your example of the Gov issuing 100 of new money was true, the CB or Treasury would have to show an increase in total Liabilities if 100, agreed?
…then all we have is check the central bank or the treasury to show if they actually did have an increase in total Liabilities because of issuing new money.
When you check the publicly available data in the Bank of England database, you can clearly see that the Bank of England did not increase reserves, in fact, they decreased reserves over the last four years by 300 billion.
And you can also see that the treasury has not borrowed from the Bank of England in 17 years.
Lastly, you can see the treasury does not have any new liabilities for issuing new money, they only have new liabilities for selling new bonds to the public, as they borrowed the public money to cover deficit spending.
So unfortunately, there are no increases in Gov Liabilities to support your story, and instead there are reductions in Gov Liabilities, which completely disproves your story.
Will reason, logic and math prevail upon you?
Or will you stick with your beautiful dream that’s a complete fantasy?
Only time will tell…