Heterodox
Brad DeLong has written a primer on Modern Monetary Theory (MMT), and just gave an important lesson about MMT: if you want to understand MMT, you need to read a primer written by a MMTer. I am not going to hold myself out as an expert on DeLong's thinking, but I would argue that a fear of bond market disruptions is a constant theme in his writings. Bond Economics If You Want To Understand MMT...Brian Romanchuk
Read More »Brian Chappatta — Bond Vigilantes Won’t Corral Stampeding Budget Deficits
He doesn't understand MMT, but it throwing in the towel anyway.Bloomberg OpinionBond Vigilantes Won’t Corral Stampeding Budget Deficits Brian Chappatta
Read More »Bill Mitchell — Bank of Japan once again shows who calls the shots
On August 1, 2018, the 10-year Japanese government bond yield, shot through the roof (albeit a very low one). Yields shifted from 0.05 per cent on July 31 to 0.129 on August 1, which was the largest one-day rise since July 29, 2016 (when the yield rose 0.101 per cent). The Financial Times article (August 1, 2018) – Japanese bond market jolted as traders test BoJ resolve – wrote that “traders wasted no time in testing the Bank of Japan’s resolve to loosen its target range for the debt...
Read More »Bill Mitchell — Limits to government spending are not determined by private bond markets
The article had a picture of the latest progressive political star – Alexandria Ocasio-Cortez with the caption that she: ... backs the view that restraints on a government’s spending are primarily set by the amount it can borrow without fuelling inflation. Progressive types then thought it was useful to retweet this incessantly for a few days.My response – I certainly hope that Alexandria Ocasio-Cortez does not back that construction of the limits on spending for a currency-issuing...
Read More »Ellis Winningham — The Bond Market Doesn’t Control Anything; the Currency-Issuing National Government Does
More myth debunking.Ellis Winningham — MMT and Modern MacroeconomicsThe Bond Market Doesn’t Control Anything; the Currency-Issuing National Government DoesEllis Winningham
Read More »Bill Mitchell — The bond vigilantes saddle up their Shetland ponies – apparently
One of Bill's best titles. Maybe "unicorns" would be better than ponies though. It's fantasy all the way with them. Last week (February 8, 2018), we witnessed the US Senate spectacle with Rand Paul embarrassing himself with his lack of economic knowledge but also embarrassing both major parties – the Republicans for their gross hypocrisy and the Democrats for their gross idiocy. The – Congressional Record – of Paul’s speech (starting S817) is a classic. Also, last week, the stables were...
Read More »Bill Mitchell — When relations within government were sensible – the US-Fed Accord – Part 1
The topic centres on an agreement between the US Federal Reserve System (the central bank federation in the US) and the US Treasury to peg the interest rate on government bonds in 1942. What the agreement demonstrated is that a central bank can always control yields on government bonds, which includes keeping them at zero (or even negative in the current case of Japan). What it demonstrates is that private bonds markets, no matter how much they might huff and puff about their own importance...
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