No, what about government debt, really?

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The previous video showed that the Treasury could sell bonds directly to the Central Bank, and thus ensure that its deposit account(s) at the Central Bank remained positive. But laws instead force the Treasury to sell bonds to the private banks, and the Central Bank can then buy bonds from them in the secondary market.

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11 май 2023

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Комментарии : 8

@Achrononmaster Год назад

@7:30 dubious advice. If the banks are running a public service operating the payments system in the state currency they can be paid salaries. Paying interest has utterly different semantics. The semantics and psychology matter, the idea is to remove all the gimmickry. MMT'ers are right about ZIRP. Get rid of interest-income creates a boatload of fiscal space for currency injection at the base of the economy where people need it, for non-bullsh1t jobs and social security.

@webfreakz Год назад

thank you for the videos this week

@Loanshark753 2 месяца назад

In Norway the metaphor AS Norge is often used, which in English Norway Ltd. thus comparing it to a company and not a household, do any of you think this is a better metaphor.

@Achrononmaster Год назад

Further to my point below: banks operate on a spread rate, have a fixed cost of funds. So they do not need government sponsoring via a > 0% rate on reserves or T-bills/bonds. It is a competitive market too, the banks will not hike their rates too far or they lose customers. If on a small Island with a single bank they could set any rate I suppose, but they'd be pilloried for sure.

@webfreakz Год назад

If I understand correctly we could stop paying the banks interest for purchasing those bonds from the treasury and make it legal for the central bank to purchase those bonds directly from the treasury so that we could stop paying interest on bonds to banks, as we wanted to compensate the banks for running this scheme (computers, accountants, etc) in the old way. Would that create other issues? Would private sector (people, or pensionfunds) still be able to buy bonds then but they would then be brought to the market by the central bank?

@ThomasVWorm 9 месяцев назад

I don't see, why bonds will be needed at all, when they are not sold to the private banks. The government does not need more than a loan from the central bank, which is interest free, since it makes no sense to pay interest at all. The state is the owner of the central bank and the treasury gets the profits of the central bank, which means, the state would pay itself interest and uses it to finally repay its debt. So interest only circulates once between the central bank and the treasury, which is pointless. When we do it with bonds, what interest should the bond have? Here we have the same problem. Without interest, bonds are pointless. Interest is only of interest to the private sector. Practically, the central bank and the state are the same thing. Public debt is a loan given to the private sector, which is repaid by paying taxes. Even here interest is not needed at all and makes no sense. Interest is used by a bank to create an income for itself. The state does not need it, since its ability to spend is created by indebting its population by demanding taxes and finance this debt by a loan from the central bank. So no bonds and interest needed at all for public spending. Which leaves us with the question, which purpose bonds may have. Bonds practically reduce demand in the private sector. So they have the same purpose as taxes. And bonds bring back savings into circulations when the saver saves bonds instead of money. But having more money in circulation can also be achieved by taxing less than needed. Then you did mention pension fonds. What is the purpose of bonds here? When money is being saved, to bring back money into circulation. But the same is achieved, when the fond redistributes money from the young to the old. So we find hardly a use case for bonds.