tag:blogger.com,1999:blog-5908830827135060852.post3905045313027138223..comments2024-03-29T02:54:56.523-04:00Comments on Bond Economics: Japan And The Costs Of Bond Yield ControlBrian Romanchukhttp://www.blogger.com/profile/02699198289421951151noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-5908830827135060852.post-80860298993868688292022-07-21T15:59:55.129-04:002022-07-21T15:59:55.129-04:00This comment has been removed by a blog administrator.johny raohttps://www.blogger.com/profile/12946759625901806213noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-24840602473578288912021-01-05T07:52:08.702-05:002021-01-05T07:52:08.702-05:00This comment has been removed by a blog administrator.John smithhttps://www.blogger.com/profile/07455859438302091504noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-58753404622076383892018-09-09T11:04:25.492-04:002018-09-09T11:04:25.492-04:00I didn't see any exploration of the possible r...I didn't see any exploration of the possible role low-interest-rates played in the 40 year income shift illustrated here:<br /><br /> https://www.thisisinsider.com/income-inequality-us-economy-chart-thomas-piketty-2018-9<br /><br />Having lived through that period, I noticed the steady decline of interest rates over the period. That decline has been accompanied by a progressive shift away from individual savings into institutional investment (such as through pension funds). The government-big business nexus has tightened at a cost to smaller entities. Maybe we could apply a label of socialized capitalism.<br /><br />CB controlled interest rates would theoretically have a role here in suppressing the supply of financial capital by individuals.<br /><br />I think I would be driving toward a political-economic theory here.Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-60736687602419691162018-09-09T01:30:23.795-04:002018-09-09T01:30:23.795-04:00Jerry, Yes: clearly there has to be some sort of c...Jerry, Yes: clearly there has to be some sort of committee or central bank that issues enough cowrie shells to induce the population to spend at a rate that brings full employment, without excess inflation.<br /><br />Brian, A bank system where there is no lender of last resort is perfectly feasible. Indeed, the existing system does not offer “loans of last resort” where the central bank thinks a commercial bank is in a sufficiently bad state: e.g. Lehmans and Northern Rock. <br /><br />As for a system where there are no last resort loans under any circumstances, that’s easily arranged. All one needs to do is raise bank capital ratios by enough to ensure that bank failures are near impossible. Martin Wolf and Anat Admati claim that 25% would do the job. As for any banks which fail, despite having a 25% capital ratio, they can be given the “Lehman / Northern Rock” treatment.<br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-9691944058208796222018-09-07T11:06:23.221-04:002018-09-07T11:06:23.221-04:00In order for a banking system to function properly...In order for a banking system to function properly, it needs a lender-of-last-resort. The discount rate on those operations is an administrative decision. Private interest rates end up as being a markup over that interest rate.<br /><br />I understand that you have an ideological distaste for lender-of-last-resort operations, but that is how the real world functions.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-6871059451034063012018-09-07T09:36:29.815-04:002018-09-07T09:36:29.815-04:00The cowrie snails have a committee that decides ho...The cowrie snails have a committee that decides how many shells are issued?Jerry Brownnoreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-34453332528198497372018-09-07T05:30:10.561-04:002018-09-07T05:30:10.561-04:00The fact that central banks the world over try to ...The fact that central banks the world over try to "administer" a rate does not mean they can't abstain from that activity: sitting around doing nothing isn't all that difficult, is it? To illustrate with a simple economy which uses say cowrie shells as money (with the number of cowrie shells issued being enough to induce the population to spend at a rate that brings full employment), why would some sort of genuine free market rate of interest not establish itself, assuming the central bank or committee which issued cowrie shells made no attempt to influence interest rates?Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-2453884824972517542018-09-06T15:21:41.588-04:002018-09-06T15:21:41.588-04:00Well, that would require using introductory econ t...Well, that would require using introductory econ textbooks as anything other than punchlines to jokes...<br /><br />There is no “free market rate” for the risk free short rate in a free-floating fiat currency. (In a currency peg system, your domestic rate will typically be at a markup over the policy rate of thd senior central bank in the system.) It is always set as an administrative rate. The only question is determining the rules for setting that rate.Brian Romanchukhttps://www.blogger.com/profile/02699198289421951151noreply@blogger.comtag:blogger.com,1999:blog-5908830827135060852.post-36040053619168445222018-09-06T11:31:02.339-04:002018-09-06T11:31:02.339-04:00The basic reason for disapproval of "distorti...The basic reason for disapproval of "distorting free market interest rates" is surely the one set out in introductory economics text books, namely that GDP is maximised where prices (including the price of borrowed money) are at free market rates. GDP is maximised where the price of apples, steel and everything else are at free market prices, unless there is a clear social reason for taxing or subsidising something.Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com