tag:blogger.com,1999:blog-5713178645208582139.post288023753465453061..comments2024-03-22T02:37:15.030-05:00Comments on Macro Musings Blog: Monetary Policy Efficacy During a "Balance Sheet" RecessionDavid Beckworthhttp://www.blogger.com/profile/04577612979801459194noreply@blogger.comBlogger11125tag:blogger.com,1999:blog-5713178645208582139.post-36995428616399009792013-07-22T16:32:51.396-05:002013-07-22T16:32:51.396-05:00I think Beckworth agree with you on that point bas...I think Beckworth agree with you on that point based on his other writings. Just that the creditor here is the bank.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-46415243517689127012011-06-27T08:43:21.019-05:002011-06-27T08:43:21.019-05:00I’m pretty sure I agree with Anon just above. To p...I’m pretty sure I agree with Anon just above. To put Anon’s point in my own words, David Beckworth is not quite correct to say that “for every debtor deleveraging there is a creditor getting more payments”. <br /><br />That is true where the creditor being repaid is not a bank. But where someone who has borrowed from a bank repays the bank, the bank just extinguishes the money, or to use Anon’s Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-74472398156542932352011-06-26T12:20:21.576-05:002011-06-26T12:20:21.576-05:00Anonymous above:
Deleveraging that leads to colla...Anonymous above:<br /><br />Deleveraging that leads to collapse of loans and deposits means that the medium of exchange has fallen. For a given money demand this reduction in the money supply by the banking system means that there is an is a new excess money demand problem. That is the point being made above: creditors are creating an excess money demand problem that the Fed could address. Of Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-79003872705110015412011-06-26T11:41:21.226-05:002011-06-26T11:41:21.226-05:00The point of deleverging is that both loans AND de...The point of deleverging is that both loans AND deposits collapse. It's what MMT describes as the collapse of horizontal money. For every dollar of loans repaid, a dollar of deposits disappears. <br /><br />Taxes collapse vertical money. The severe collapse in horizontal money through bankruptcy is replaced by vertical money through government bailouts.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-76121510997675534212011-06-26T09:48:00.331-05:002011-06-26T09:48:00.331-05:00Sure about this:
Yes, deleveraging is a drag on th...<i>Sure about this:<br /><b>Yes, deleveraging is a drag on the economy, but for every debtor deleveraging there is a creditor getting more payments... </b>(And if the debtor is not making payments and defaulting then the debtor still has funds to spend.) </i><br /><br />The parenthetic finesse is an off-point distraction, or worse. The debtor cannot both pay debt and spend because is is broke, Jazzbumpahttps://www.blogger.com/profile/07337490817307473659noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-42415828419294180052011-06-26T05:58:05.862-05:002011-06-26T05:58:05.862-05:00Came here via Krugman's post.
It is importan...Came here via Krugman's post. <br /><br />It is important to realize that (for a closed economy), the public debt is a mirror of net financial assets of the private sector combined. <br /><br />In the case of open economies, the stock identity is <br /><br />PrNFA = PD + NIIP<br /><br />i.e., Private Sector Net Financial Assets is equal to the public debt plus Net International Investment Ramananhttps://www.blogger.com/profile/11123448543333785121noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-76401611633359620072011-06-25T16:42:37.252-05:002011-06-25T16:42:37.252-05:00Worth mentioning also is the interest on reserves ...Worth mentioning also is the interest on reserves problem. It behooves banks to sit on capital, earning interest from the Fed. <br /><br />Everybody talks a lot about the Great Depression, although it was 80 years ago, in an economy much different from today, including international trade, capital flows, currency flows (a trillion in US cash offshore, we think). <br /><br />Does the US economy Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-79278791512185028302011-06-25T15:27:58.701-05:002011-06-25T15:27:58.701-05:00A New Keynesian, a Quasi-Monetarist, and an Austri...A New Keynesian, a Quasi-Monetarist, and an Austrian walk into a bar. <br /><br />The New Keynesian, a Treasury official, pulls out his work credit card and says "free beer for everyone!" When his friends ask him why he did this, he says, "in the liquidity trap, fiscal stimulus pays for itself."<br /><br />The Quasi-Monetarist, a Fed official, then pulls out his company card Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-19227180182767025932011-06-25T07:42:00.999-05:002011-06-25T07:42:00.999-05:00Yes, deleveraging is a drag on the economy, but fo...<i>Yes, deleveraging is a drag on the economy, but for every debtor deleveraging there is a creditor getting more payments. </i><br /><br />This is an unsophisticated argument. When unemployment is high and/or wages are declining relatative to debt, bank models show a higher propensity to default and so the same debt is worth less. They are not recirculating the money because they are reserving dwbnoreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-6811092674180606682011-06-25T04:17:22.268-05:002011-06-25T04:17:22.268-05:00Sure about this:
Yes, deleveraging is a drag on th...Sure about this:<br /><b>Yes, deleveraging is a drag on the economy, but for every debtor deleveraging there is a creditor getting more payments... </b><br /><br />Not so sure about this:<br /><b>In principle the creditor should increase their spending to offset the debtor's drop in spending. The reason they don't--creditors sit on their newly acquired funds from the debtor instead of The Arthurianhttps://www.blogger.com/profile/16501331051089400601noreply@blogger.comtag:blogger.com,1999:blog-5713178645208582139.post-72052749927201882852011-06-24T13:29:39.176-05:002011-06-24T13:29:39.176-05:00On this last sentence:
I also acknowledged, howeve...On this last sentence:<br />I also acknowledged, however, from the start that in the absence of a well defined level target it was bound to be limited and politically polarizing. I believe Bernanke knows all this--as is suggested by his work on Japan--but he is faced by political constraints and has burned up most of his political capital on QE1 and QE2. <br />I came to realize Bernanke "João Marcushttps://www.blogger.com/profile/13658264244033012660noreply@blogger.com