tag:blogger.com,1999:blog-5908830827135060852.post3569543640728223434..comments2024-03-01T02:40:14.946-05:00Comments on Bond Economics: Book Excerpt: Financial Assets Matter, Not MoneyBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-5908830827135060852.post-65536464032419986392019-02-07T15:30:20.494-05:002019-02-07T15:30:20.494-05:00Sorry, I should have been more clear. The IOUs are...Sorry, I should have been more clear. The IOUs aren’t issued as such. They are my characterization of what the government money represents, what it betokens.Johnnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-76633250012763354622018-10-08T00:54:40.275-04:002018-10-08T00:54:40.275-04:00This comment has been removed by a blog administrator.Anonymoushttps://www.blogger.com/profile/01445465385010767720noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-18057539057495851712018-09-28T11:10:42.377-04:002018-09-28T11:10:42.377-04:00In the model, there are no IOUs issued by the hous...In the model, there are no IOUs issued by the household sector - it is using government money to pay.<br /><br />The business sector could hoard IOUs issued by the household sector, but we then have to model private debt sustainability.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-65659904909086493942018-09-28T10:12:46.856-04:002018-09-28T10:12:46.856-04:00This is the bit I struggle with:
“The financial a...This is the bit I struggle with:<br /><br />“The financial assets being hoarded by the business sector have to come from somewhere; and that somewhere is the government.”<br /><br />The business sector already has an asset, the effective IOU from people it has traded with. A call on goods/services from the in the future. <br /><br />Buying financial assets isn’t gaining an asset it is a swap of assets as the government then holds and uses those IOUs. <br /><br />I don’t get why this swap must take place, why must the government take the hoards of IOUs? What is the imperative?Johnnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-34709597036500944942018-09-26T10:29:01.237-04:002018-09-26T10:29:01.237-04:00I'm somewhat tied up, so I've got to respo...I'm somewhat tied up, so I've got to respond quickly. Not sure I follow. <br /><br />The linked article explains the logic; the issue in the example is that it's not what the government wants to do, rather it is just how markets clear. The only way for supply and demand to be balanced (in a highly simplified model!) with the business sector saving is that the government has to run a deficit. This is possible because spending is fixed, and taxes depend on private sector income; income shrinks enough to lower taxes to create a large enough deficit to balance supply/demand.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-41269205569624436912018-09-26T07:42:28.923-04:002018-09-26T07:42:28.923-04:00Brian, I have a question on your 'silly exampl...Brian, I have a question on your 'silly example'. It's not so much a counterpoint as a request to translate my naive view into MMT terms. In that naive view I see the business as exchanging it's goods/services for the future right to receive goods/services from those it has sold to. Some of these rights are passed on to it's employees, the rest retained as profit. If they decide to buy government assets this is just a temporary transfer of the rights to goods/services. The government may decide to not to take them all, so they would just be retained by the business.<br /><br />How should interpret this under your model?Johnnoreply@blogger.com