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Dumb article that gets so many basic things about Money Supply and Debt wrong

by deltree7 4y ago

lbotos 4y ago
Care to elaborate?
- deltree7 4y ago
  1) Spurious correlation between Cumulative Debt and currency circulation. 2) Confusing yearly numbers like GDP to long-term Debt. Debt/GDP are just a ratio, we don't know what the upper limit it or does it even matter. 3) An inflationary era also means higher tax receipts. https://rollcall.com/2022/05/09/tax-revenue-boom-fuels-steep-budget-deficit-decline/ https://rollcall.com/2022/05/09/tax-revenue-boom-fuels-steep... which can easily cover any extra interest you may have to pay
yieldcrv 4y ago
Agreed, I would also agree it is trapped but not for these reasons. They all want to control inflation, and are all considering or trying the same methods of doing so. The EU and Eurozone's lack of "fiscal union" is unique, but not really that relevant. The Central Bank there is going to crater the credit market, just like the Central Bank in the US is going to do. They are the biggest financial whales and they 1) stopped buying 2) now have trillions to sell, and are going to sell at a massive scale that's unheard of, to whom? good question, can the market absorb this much? At what price if the market literally isn't big enough for this amount of selling pressure? and its still too small of a scale for what they are actually trying to do 3) are going to let some bonds mature, and not let the paid back money get into circulation again, so there is just less of it for everyone else (note: sometimes they say they are only going to do 3) and not 2), very confusing) It doesn't matter that the EU one has a bunch of member-state debt, while the US Central Bank largely ignores municipal bonds and while having a bunch of national govt bonds (treasuries) on its balance sheet. They both hold corporate bonds now, and mortgage backed securities. Neither own stocks (although the US one bought some bond ETFs, which are stocks of funds that only own some bonds). They both stopped buying, are letting things mature, and also directly selling. Its going to be bad for everyone partially because its only an attempt to control inflation. Case in point being that energy costs will remain high either way. They're aiming to destroy optimism and re-range asset prices, where the yield of those assets are a higher ratio to their price. (aka stock prices more closely matching their profit or revenue growth or dividend payouts, bonds yielding higher)

Dumb article that gets so many basic things about Money Supply and Debt wrong

lbotos 4y ago

Care to elaborate?

deltree7 4y ago
1) Spurious correlation between Cumulative Debt and currency circulation. 2) Confusing yearly numbers like GDP to long-term Debt. Debt/GDP are just a ratio, we don't know what the upper limit it or does it even matter. 3) An inflationary era also means higher tax receipts. https://rollcall.com/2022/05/09/tax-revenue-boom-fuels-steep-budget-deficit-decline/ https://rollcall.com/2022/05/09/tax-revenue-boom-fuels-steep... which can easily cover any extra interest you may have to pay

yieldcrv 4y ago

Agreed, I would also agree it is trapped but not for these reasons. They all want to control inflation, and are all considering or trying the same methods of doing so. The EU and Eurozone's lack of "fiscal union" is unique, but not really that relevant. The Central Bank there is going to crater the credit market, just like the Central Bank in the US is going to do. They are the biggest financial whales and they 1) stopped buying 2) now have trillions to sell, and are going to sell at a massive scale that's unheard of, to whom? good question, can the market absorb this much? At what price if the market literally isn't big enough for this amount of selling pressure? and its still too small of a scale for what they are actually trying to do 3) are going to let some bonds mature, and not let the paid back money get into circulation again, so there is just less of it for everyone else (note: sometimes they say they are only going to do 3) and not 2), very confusing) It doesn't matter that the EU one has a bunch of member-state debt, while the US Central Bank largely ignores municipal bonds and while having a bunch of national govt bonds (treasuries) on its balance sheet. They both hold corporate bonds now, and mortgage backed securities. Neither own stocks (although the US one bought some bond ETFs, which are stocks of funds that only own some bonds). They both stopped buying, are letting things mature, and also directly selling. Its going to be bad for everyone partially because its only an attempt to control inflation. Case in point being that energy costs will remain high either way. They're aiming to destroy optimism and re-range asset prices, where the yield of those assets are a higher ratio to their price. (aka stock prices more closely matching their profit or revenue growth or dividend payouts, bonds yielding higher)