3 ms·

I mean, if we didn't interfere with the buying/selling of treasuries, wouldn't that be equilibrium?

by boppo1 4y ago

notahacker 4y ago
It'd just be a considerably less stable equilibrium than the one we have now. It's not like treasuries and dollar reserves a central bank put into circulation before a certain date are natural things emerging out of a market demand and the ones after they put into circulation after a certain date are "interference". There is a market for credit and a dependency of that market on artificial things called dollars the Fed conjured from thin air regardless, the only question is whether the Fed's policy on artificially created dollars is to continue to attempt to supply them in quantities necessary to maintain a stable economy or not.
- boppo1 4y ago
  The market for treasuries would exist exist without theed, since they're issued by the treasury. Why not set a limited quantity of dollars and have that be that, or a quantity that strictly grows at some pre-defined and predictable rate? I'm familiar with the argument that people would theoretically hoard deflationary currency, I'd counter that people will always spend to eat and purchase shelter. Calling shots like we are obviously isn't working and the only 'stability' seems to be a nominal one in asset prices. Everyone is otherwise bemoaning how broken the economy is. Great, we kept boomer pensions safe and quietly watched wage/salary earners' purchasing power erode. Seems like a false 'stability' to me.
  - notahacker 4y ago
    > The market for treasuries would exist exist without theed, since they're issued by the treasury The market to exchange dollars for treasuries would not exist without dollars. Since we've established that it was OK for the Fed to "interfere" to create dollars in the past, it seems absurd to pretend that doing so if future is somehow different. > Why not set a limited quantity of dollars and have that be that, or a quantity that strictly grows at some pre-defined and predictable rate? Because that's even more arbitrary (it's still the Fed creating the monetary base, they're just delinking it monetary base from credit demand and ignoring the effects of the quantity of money on the economy) People aren't going to invest deflationary currency in productive enterprises to purchase food and shelter. They're not just going to invest it (and the rich don't need to spend very much of their wealth on food and shelter). Guess the proles will have to work harder for lower wages to make up for it. You think it's bad now....

I mean, if we didn't interfere with the buying/selling of treasuries, wouldn't that be equilibrium?

by boppo1 4y ago

I mean, if we didn't interfere with the buying/selling of treasuries, wouldn't that be equilibrium?

It'd just be a considerably less stable equilibrium than the one we have now. It's not like treasuries and dollar reserves a central bank put into circulation before a certain date are natural things emerging out of a market demand and the ones after they put into circulation after a certain date are "interference". There is a market for credit and a dependency of that market on artificial things called dollars the Fed conjured from thin air regardless, the only question is whether the Fed's policy on artificially created dollars is to continue to attempt to supply them in quantities necessary to maintain a stable economy or not.

boppo1 4y ago
The market for treasuries would exist exist without theed, since they're issued by the treasury. Why not set a limited quantity of dollars and have that be that, or a quantity that strictly grows at some pre-defined and predictable rate? I'm familiar with the argument that people would theoretically hoard deflationary currency, I'd counter that people will always spend to eat and purchase shelter. Calling shots like we are obviously isn't working and the only 'stability' seems to be a nominal one in asset prices. Everyone is otherwise bemoaning how broken the economy is. Great, we kept boomer pensions safe and quietly watched wage/salary earners' purchasing power erode. Seems like a false 'stability' to me.
- notahacker 4y ago
  > The market for treasuries would exist exist without theed, since they're issued by the treasury The market to exchange dollars for treasuries would not exist without dollars. Since we've established that it was OK for the Fed to "interfere" to create dollars in the past, it seems absurd to pretend that doing so if future is somehow different. > Why not set a limited quantity of dollars and have that be that, or a quantity that strictly grows at some pre-defined and predictable rate? Because that's even more arbitrary (it's still the Fed creating the monetary base, they're just delinking it monetary base from credit demand and ignoring the effects of the quantity of money on the economy) People aren't going to invest deflationary currency in productive enterprises to purchase food and shelter. They're not just going to invest it (and the rich don't need to spend very much of their wealth on food and shelter). Guess the proles will have to work harder for lower wages to make up for it. You think it's bad now....