3 ms·
My point is duration transformation doesn't create new money, it moves future money into the present. This may increase the money supply immediately, but it dro
by arcticbull 3y ago
My point is duration transformation doesn't create new money, it moves future money into the present. This may increase the money supply immediately, but it drops over time back to where it would have been.
Money isn't "printed" in the real estate market, valuations are notional.
> Those debt obligations are getting paid back like the father of a deadbeat son is getting paid back: he'll roll the loans so that he can tell his golf buddies that he has been paid back, sure, but he isn't going to be paid back and he doesn't really expect to be paid back.
So what?
- jjoonathan 3y agoIt sure as shit creates money if the hypothetical future where you pay it back never actually arrives.
- arcticbull 3y agoBut you do always pay it back lol. The US has only very occasionally defaulted. And MBS' get repaid through liquidation if needed.
- jjoonathan 3y agoWhy don't you put some money where your mouth is and take my bet, then?
- arcticbull 3y agoI have no idea which bet, and no, I won't be. Thanks.
- jjoonathan 3y ago> How much do you want to bet that [Federal Reserve Total Assets] goes under, say, $1T by 2030? In your universe, the aggregate debt comes due, markets tank, and rich people take the L like grown ups. In my universe, the aggregate debt comes due, markets tank, rich people persuade politicians to pull the lever again, they do, the fed goes and buys their assets, markets go back up, and the fed balance sheet increases. The fed's long-term increasing balance sheet represents a long-term net cash flow right into rich peoples' pockets. Again, if you are confident in your view of the universe, I'm asking you to put your money where your mouth is.