Who is not printing money?
- Thread starter ValeryN
- Start date
The buyers for those mortgages are the funds that package them into securities knowing that the FED will buy them.
At the heart of this investment is the mortgages. If the FED isn't buying mortgages, what are they buying when they purchase billions of dollar of MBS? Why don't you tell me what an MBS is. What does the FED think is inside this security?
Read! Study! Pay Attention!
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USa printing money \2022\helped the bears. Sorry Canada stopped stamping pennies; even though the coin dealers seemed to enjoy that
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3rd FRI in JAN tends to close down for USa stocks.[[Markets closed ML King day,mon]
USa has so many opportunities/ businesses, its real hard for small groups to goof it up to bad.
USa also has used\ buckskins[ aka bucks], beaver pelts, postage stamps, copper, silver, gold, silver + gold blends silver notes, as money.
I heard on the news today/ about aTEXAS kid that grew 7 pound cabbage= big LOL\ then they gave her $1,000 as a bonus prize
,Like the mufkn Federal Reserve baby! 30%+ a year baby!!!
We know that's got to be true, as proven by Russia recent bond default, when paid creditors in Rubles (more correctly called "rubbles"
) using their own "Trumped-up" valuation, although they were obligated to pay in dollars! Their U.S. dollar reserve account had been frozen. As a matter of reality the nations with the lowest external debt (= zero) are those nations who have no bond liabilities denominated in another nations currency (Japan, U.S., Canada, Norway etc.)
Unfortunately there is a mistake in the third sentence of my post above: replace "inside" with "outside". Outside money is the money printed by Congress via the Fed as their agent. Inside money is the temporary money created by fractional reserve banking, i.e., "credit". Credit is by far the largest contributor to the money supply as measured by M2.
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Makes perfect sense since those with denominated currency will print themselves out of debt, thereby exporting their inflation to their debtors. All in all, it works out just fine.
That's exactly right! Those nations that only issue so-called "debt" instruments denominated only in their own currencies have no real debt because, as you correctly point out, they can print their way out of debt. You could do this, had you a money printing machine in your basement. Sadly you don't. I would add that there is one aspect you have not got quite right. Nations "exporting their inflation to their debtors," as you put it, would help those in debt. Inflation harms savers and those without sufficient debt to take advantage of the inflation. Deflation, does the opposite.Makes perfect sense since those with denominated currency will print themselves out of debt, thereby exporting their inflation to their debtors. All in all, it works out just fine.
Having said this, I don't want to mislead anyone into thinking that there is no practical limit to the rate at which sovereign nations can print new money. There are limits! Exceeding these may result in undesirable outcomes such as interest payments on Treasury securities impinging severely on the discretionary budget, severe currency devaluation, severe limits on spending and required drastic increases in tax rates.
The main controlling metric is a nations GDP. New Sovereign Money must not appear in the private sector economy in its transactional form (~M2, or what Bankers call the "Money Stock") at an aggregate rate substantially greater than growth in GDP. This is moderated by central banks when they "sidetrack" excess money in the form of bonds. In this sense sovereign bonds can be understood as just an interest paying, non-transactional form of money, i.e., they are a form of money but not a part of M2.
Nevertheless, there are ultimately real practical limits on the amount of total Treasury liabilities a Sovereign nation can take on. All money issued, in all forms including bonds, are liabilities of the Treasury. There is a very real, albeit poorly understood and difficult to accurately predict, maximum practical value for total Treasury liability that any nation can take on.
One factor that adds complexity is a sovereign nations capacity to tax. This is the tool nations will turn to if forced to reduce their aggregate Treasury liability.
In the special case of the U.S., an additional complexity arises because of the reserve status of the dollar. In practice this means that the U.S. has obligated itself to supplying sufficient dollar reserve to carry on global commerce. This in turn obligates the Treasury to issue bonds sufficient to meet demand from other sovereign nations. No nation wants their unused foreign currency reserves sitting idle, not earning interest; thus not hedged against inflation. This factor has created a substantial additional demand for Treasury bonds.
Still another complexity arises because of the United States obligation to protect other nations' dollar reserve accounts from political pressures. Thus Janet Yellen's great concern voiced when the U.S. wanted Russian Dollar reserves frozen. Yellen had to be convinced that there was at least a plausible legal argument behind such a move, and I have to think she is likely still very much bothered by the impounding of Russian Dollar reserves. I'm not sure Powell knows enough to be properly concerned.
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