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Why does the Treasury sell securities when the gov’t can issue money?

Summary:
A question from a viewer answered. Debt sales are a reserve drain operation. That's all. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.pitbulleconomics.com/mmt-trader/?s2-ssl=yes/ Download my podcasts! New one every week. https://www.buzzsprout.com/1105286 Mike Norman Twitter https://twitter.com/mikenorman

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A question from a viewer answered. Debt sales are a reserve drain operation. That's all. Trade and invest using the concepts of MMT. Get a 30-day free trial to MMT Trader. https://www.pitbulleconomics.com/mmt-trader/?s2-ssl=yes/ Download my podcasts! New one every week. https://www.buzzsprout.com/1105286 Mike Norman Twitter https://twitter.com/mikenorman Why does the Treasury sell securities when the gov't can issue money?
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

30 comments

  1. Mike, what do you think of Cullen Roche and his book, pragmatic capitalism?

    • I've known Cullen for about 15 years or more. Some years back we were friends and communicated pretty regularly. Then, it kinda seemed like he got pissed off at MMT and the MMT people, like Warren Mosler, so he went on this whole rant against MMT, making sure to "point out" (according to him) it's failings. I don't know what pissed him off so much. Maybe it was a cry for attention. Who knows?

  2. Could you explain the differences between regular banks and shadow banks?

  3. Mike I've heard you say the fed can only control the short end of the yield curve. What does that mean?

  4. Follow up question: Why should we care if the overnight rate goes to zero?

  5. Christopher Mastrangelo

    Mike your videos are fantastic and you do a great job breaking it down. Question about the banking system: If loans create deposits and banks don't need deposits in order to be able to lend (loanable funds model) then why do they compete to get deposits and what do they need deposits for at all if not to "fund" loans. Thanks much! Keep up the great work!!!

    • @Christopher Mastrangelo when money is deposited into your checking account it is debited to Bank Assets by increase $x and Credited to your account $x to record their increased liability to you. (double entry – every debit has a corresponding credit) We are the bank's Creditors. Customer accounts are a liability to the bank and when you record a credit to a liability it shows an increase in liability.

    • @Christopher Mastrangelo think of the Balance Sheet accounting equation ASSETS = LIABILITIES +CAPITAL/SHAREHOLDERS EQUITY

    • And yes your deposit now sits as an asset in a bank's reserves

    • Christopher Mastrangelo

      @Tina Ryan Thanks for clearing that up

    • @Christopher Mastrangeloglad to help anytime.

  6. Great vid Mike, question MMT and higher Minimum wages

  7. I think its always helpful if you include a blurb on the whole debt ceiling drama every few years. How would you explain shutting down the govt. Maybe its because RIGHT NOW the govt needs to borrow or tax in order to spend, due to Federal Reserve Act prohibiting Fed from buying securities directly from Treasury. (Treasury selling securities to primary dealers is called BORROWING even if Fed immediately buys them as part of Open Market Operations.)

  8. Don't trust Mike, he's lying…. In fact, it was all invented by the reptilians to enslave the human race ))))) … And Mike is their agent, sold out to the reptilians….

  9. Great video

  10. Great question and answer!

  11. Hey Mike I love your podcasts. I want to get into investing. I was wondering, maybe you or someone else here can answer it, what is a good training video I should start in your pitbull economics site to apply my knowledge of MMT to investing?

  12. Uhohhotdog Gaming

    Ok but if overnight rate goes to zero…so what?

    • Exactly. So what? That's where it should be anyway, but institutional "think" believes the rate should be positive. At least the Fed believes that. In Japan the rate is negative. The "natural" rate of interest is zero, anyway. You are right.

  13. Great stuff!

  14. I'm LOVING these edu videos! 🙌

  15. Sectoral Balances

    The best thing Joe Biden could do for the people is implement medicare4all. And what sort of economy do you have if you have sick people. You have a sick economy.

  16. Sectoral Balances

    Why does the government sell bonds? So that it can hit it's overnight interest rate target.
    https://youtu.be/pex89N9Oqog

  17. Why would reserves piling up drive the interest rate towards 0? Doesn't the Fed have the power to just set the rate, regardless of the amount of dollars in reserves?

    I feel like I'm not thinking of something basic here.

  18. The fed issues treasury bonds to reduce the amount of $ in the economy without destroying them like via taxation. Truthfully it's irrelevant in a full implementation of MMT, but it persists under the current insane system. If the fed gave up this mythology around inflation rates or alternatively ran a sane public banking system, treasury bonds would become irrelevant.

  19. Basically the fed couldn't make a profit based on what you're saying am I right or wrong Mike? Thanks in advance

  20. The Old man taught me Mental strength or mental gain is all about standing strong in our own reality. Harry Fink a very successful man. black rocks one of the biggest investors. But Mike what about your own success? which sells your own newsletter online. Harry can't boast that can he Mike? In mental gain we are so firm and strong in our own self worth that we can acknowledge people have different views to ours without slagging them off and abusing them online. That's what the old man taught me.

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