It’s a ‘one man’s savings is another’s debt’ world, and the causation is from loans to deposits, etc. 😉
Yes, ‘savings desires’ grow and compound and need to be continually ‘offset’ by deficit spending- public or private- to sustain demand. See attached bank credit growth chart as a rough proxy for private sector deficit spending:
With my permanent 0% policy rate proposal risk adjusted returns on new investments go to 0.
Their policy options differ.
Yes, the tsy could mint the coin and sell it to the Fed. But either the Fed or Tsy has to pay interest on net spending if it wants a policy rate higher than 0%, so for all practical purposes nothing has changed?
CB member banks are agents of the CB which is an agent of the state that legislates that said bank deposits will be accepted for payment of taxes.
Tax liabilities are expressed in units of the state currency, so those units are best understood as tax credits. The state accepts its tax credits as the means of extinguishing its tax liabilities.
When the President was informed that there were 11 Brazilian children in detention he asked ‘how many zeros in a brazillion?‘ 😉
Banks debit and credit accounts on their own books. Banks don’t alter accounts on other bank’s books.
“Deficit” and “surplus” are residual accounting information.
And the tsy then shifts those funds to its fed account as it doesn’t make payments from that commercial bank account?
People confuse productivity stories (automation) with unspent income stories (unemployment).
Warren B. Mosler(e)k Bertxiotua
I guess the Chairman of the NY Fed back in ’46 was just drunk and writing fiction with this article? Right? http://bilbo.economicoutlook.net/blog/wp-content/uploads/2010/04/taxes-for-revenue-are-obsolete.pdf …