3 ms·
Yes really. It's called modern money theory. https://www.youtube.com/watch?v=TDL4c8fMODk https://www.youtube.com/watch?v=TDL4c8fMODk https://www.nytimes.com/20
by jganetsk 9y ago
Yes really. It's called modern money theory.
https://www.youtube.com/watch?v=TDL4c8fMODk https://www.youtube.com/watch?v=TDL4c8fMODk
https://www.nytimes.com/2017/10/05/opinion/deficit-tax-cuts-trump.html https://www.nytimes.com/2017/10/05/opinion/deficit-tax-cuts-...
The US federal government pays for things by crediting bank accounts (hence money creation). The fact that the federal government also issues Treasury securities is a political constraint, not strictly required from a technical standpoint. The Federal Reserve then uses Treasures as a reserve drain when they are trying to hit their overnight interest rate targets.
- tryptophan 9y agoThe way I understand it is that the fed has to(maybe not in law, but in practice) sell securities to accomplish its mandate of maintaining a stable currency. If they did not then it would cause lots of inflation. Is that correct?
- jganetsk 9y agohttps://en.wikipedia.org/wiki/Open_market_operation#United_States https://en.wikipedia.org/wiki/Open_market_operation#United_S... They are mainly trying to control the size of bank reserves by buying and selling securities, with the goal of hitting a target interest rate. When they are worried about inflation, they increase interest rates.