tag:blogger.com,1999:blog-5953818443099553136.post6869365890589103261..comments2023-05-28T08:33:51.529-07:00Comments on Suvy's Thoughts: The International Role for the United States in the Current Financial CrisisSuvy Boyinahttp://www.blogger.com/profile/14498944095362886178noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-5953818443099553136.post-22394612410081960272015-12-30T14:08:18.022-08:002015-12-30T14:08:18.022-08:00If you listen to Trump's interviews, he consis...If you listen to Trump's interviews, he consistently points out trade deficits the US has with every other country and goes on to attack other countries governments and central banks. He may be coming off like a clown, but he has a point.Suvy Boyinahttps://www.blogger.com/profile/14498944095362886178noreply@blogger.comtag:blogger.com,1999:blog-5953818443099553136.post-76330179423770388192015-12-30T14:00:14.298-08:002015-12-30T14:00:14.298-08:00Technically, it doesn't have to be a Bancor. A...Technically, it doesn't have to be a Bancor. A simple way to reconcile this problem would be to tax the accumulation of American assets abroad for all accounts bigger than, say, $5 billion.<br /><br />As for the US government and Congress, I both agree and disagree. With regards to the old elite, you're absolutely correct. Within the fringes of the parties with the demographic shifts, there is the exact opposite shift. There's a reason why trade is becoming such a huge issue in this upcoming election and if it's not resolved, it'll be a bigger issue in the next election. For example, someone like Donald Trump (for all his clownish behavior and his absurdity) has basically built an entire campaign off this post. When he says "we don't win anymore" and points to trade deals, this issue is exactly the one he's referring to. This is coming from a person who doesn't like Trump.Suvy Boyinahttps://www.blogger.com/profile/14498944095362886178noreply@blogger.comtag:blogger.com,1999:blog-5953818443099553136.post-36800237804999579522015-12-30T04:53:19.077-08:002015-12-30T04:53:19.077-08:00I like the suggestion of the bancor use! However t...I like the suggestion of the bancor use! However the biggest opposant of such bancor is the US congress and US government. You see how it's difficult to give even a small % of voting right to China in the IMF. Realistically we must wait for another big scale Financial crisis, or USD currency crisis before any serious talking of a new international monetary system.Anonymoushttps://www.blogger.com/profile/09121806339893688654noreply@blogger.comtag:blogger.com,1999:blog-5953818443099553136.post-63985585909919246842015-12-08T11:37:24.689-08:002015-12-08T11:37:24.689-08:00Good comment, and I agree. I actually think the ki...Good comment, and I agree. I actually think the kind of monetary system that you're thinking of is better for developing countries because they can centralize finance for investment and development needs while still having a decentralized consumer base. It's a much better model than the USSR/Communist model of turbocharging savings rates and targeting GDP growth that much of the developing world took up in the past 100 years.<br /><br />Such models just make the monetary system more centralized, which does carry benefits. I also don't think it's a sustainable situation to have the country with the most guns and strongest military to consistently run current account deficits into perpetuity (quite frankly, this scares me).<br /><br />Essentially, such models centralize money creation. Right now, we have something much closer to free banking (it's not completely free banking, but it's really close and this is what my previous post was on).Suvy Boyinahttps://www.blogger.com/profile/14498944095362886178noreply@blogger.comtag:blogger.com,1999:blog-5953818443099553136.post-50568794081803500202015-12-08T11:32:50.588-08:002015-12-08T11:32:50.588-08:00Central banks buying any assets by expanding their...Central banks buying any assets by expanding their balance sheets is technically printing money, and that includes government bonds. The only thing about the way the Fed has currently been operating is that it's essentially become the world's largest hedge fund. In a way, QE is nothing more than seigniorage by the feds.<br /><br />I was referring to thinking of government deficits as money in my previous comment, which can be under certain conditions, as we both seemed to agree.Suvy Boyinahttps://www.blogger.com/profile/14498944095362886178noreply@blogger.comtag:blogger.com,1999:blog-5953818443099553136.post-70951599497829098672015-12-08T10:29:24.335-08:002015-12-08T10:29:24.335-08:00Also, if the intent of central banks is to buy gov...Also, if the intent of central banks is to buy govt bonds and simply hold them to maturity without ever selling them, isn't that essentially money printing? Seems like that's the state of the world whether CBs admit it or not.Markhttps://www.blogger.com/profile/12888701978794309054noreply@blogger.comtag:blogger.com,1999:blog-5953818443099553136.post-88072835343207485962015-12-08T10:22:09.772-08:002015-12-08T10:22:09.772-08:00Agreed. All i'm suggesting is that the world d...Agreed. All i'm suggesting is that the world doens't HAVE to work this way and may change.Markhttps://www.blogger.com/profile/12888701978794309054noreply@blogger.comtag:blogger.com,1999:blog-5953818443099553136.post-72744968714935308922015-12-08T07:19:22.827-08:002015-12-08T07:19:22.827-08:00Money is usually (almost always) a financial asset...Money is usually (almost always) a financial asset, which means that it's a liability on the other side of the balance sheet. In other words, money is debt.<br /><br />There's a lot of stuff thrown out about "new" theories on "political economy", by which I'm primarily referring to something called modern monetary theory. Ironically, it's not modern. It's some old idea that goes back, as far as I know, at least 225 years and probably dates back further than that.<br /><br />Anyways, governments in today's financial systems don't really have their own payment system. In reality, they use the private financial and banking system. They have incoming funds and outgoing cash flows like anyone else. Yes, the Treasury has an account at the Fed, but so does basically every bank and many other financial institutions.<br /><br />Also, since the US is the reserve currency, the shift in issuance of government assets by the American government affects the current account balance. When the US government issues a T-bill or--to a lesser degree--a T-bond, it's creating a safe, liquid asset for the FX sector to hold. So by doing so, you're expanding liquidity (or money, depending on how you define money).<br /><br />Also, the Federal Reserve cannot finance the Treasury at auction by law. So the Fed only operates through the secondary Treasury market.<br /><br />Increasing the government deficit doesn't create money. It CAN create money under a monetary system with given conditions (like Alexander Hamilton's monetary system in the 1790's), but not in the current one. The Treasury is like every other firm in the country: it must acquire financing before it can spend and finances its deficits by issuing Treasuries at auction.<br /><br />Please don't read stuff like MMT (I'm not saying you are, but it sounds like you are) because there's a lot of assumptions that're simply assumed away and can't be assumed away. Stuff like MMT is really pernicious and comes from people who don't understand geopolitics since most "political economy" or theories based on political economy really are nothing but a complete waste of time.<br /><br />If you wanna know how the world works, imposing geopolitical constraints on financial systems will tell you way more than economic or political economic theories that are written by people who either don't fully state their assumptions or make implicit assumptions they don't even realize and such is the case with MMT.Suvy Boyinahttps://www.blogger.com/profile/14498944095362886178noreply@blogger.comtag:blogger.com,1999:blog-5953818443099553136.post-49462966434558722282015-12-08T06:51:51.824-08:002015-12-08T06:51:51.824-08:00What if the US (or any reserve currency) simply cr...What if the US (or any reserve currency) simply creates money (or lowers taxes, etc) instead of letting debt expand.Markhttps://www.blogger.com/profile/12888701978794309054noreply@blogger.com