Richard Murphy: Zergatik DTM? Warren Mosler-ekiko eztabaida (4)

February 25 2018 at 8:30 am

Should the policy rates be set at zero?
If so, what is the next role of central bankers?

Richard Murphy says:

February 25 2018 at 9:59 am

Your answer is?

Francisco J Flores says:

February 26 2018 at 3:18 am

I disagree with Warren. No reason the Job Gty couldn’t be permanent. You can start with: Execute on national “To-Do List” (infrastructure; alternative energy; high speed rail; rehire every teacher, fire fighter, cop laid off in last 8 years; quintuple trade school and community college staff – free tuition. If folks don’t have skills, train them.

warren mosler says:

February 26 2018 at 5:13 pm

Nyn:

Yes, I have proposed a permanent 0 rate policy. And I see no evidence that a 0 rate policy causes inflation or currency depreciation, but anecdotal evidence of the reverse- it promotes price stability and a strong currency.
And the role of central bankers is banking regulation and supervision.

John Dorge:

Are not treasury securities and reserves a separate world from the real economy operations of a commercial bank?

LET ME FIRST STATE THAT ALL BANKS- CENTRAL AND COMMERCIAL- ARE JUST T ACCOUNTS. THAT SAID,
TSY SECS AND RESERVES ARE BANK ACCOUNTS AT THE CENTRAL BANK, FUNCTIONALLY IDENTICAL TO CHECKING AND SAVINGS ACCOUNTS, FOR EXAMPLE, AT COMMERCIAL BANKS.
BALANCES IN RESERVE ACCOUNTS AND SECURITIES ACCOUNTS AT A CENTRAL BANK ONLY CHANGE WHEN THE CB CHANGES THEM,
WHICH IS CALLED DEBITING AND CREDITING ACCOUNTS- AGAIN FUNCTIONALLY IDENTICAL TO COMMERCIAL BANKS DEBITING AND CREDITING ACCOUNTS ON THEIR BOOKS.

Can a bank create a debt for the state to buy the treasury security in the same sense as it can for a mortgage borrower?
YES, A COMMERCIAL BANK COULD IN THEORY LEND DIRECTLY TO THE TREASURY AND BOOK A NEW LOAN AND A NEW BANK DEPOSIT ON ITS BOOKS.
Isn’t the consequence of double-entry book keeping that any bank is capable of lending to that borrower without regard for the finite position of its reserves?
YES, THOUGH STATE REGULATION CAN DISRUPT THAT CONDITION.

If so, shouldn’t competition for these loans drive commercial rates down to some risk premium?
IT DOES.

Thanks again for your time.
YOU’RE MOST WELCOME!

Francisco:

I disagree with Warren. No reason the Job Gty couldn’t be permanent. You can start with: Execute on national “To-Do List” (infrastructure; alternative energy; high speed rail; rehire every teacher, fire fighter, cop laid off in last 8 years; quintuple trade school and community college staff – free tuition. If folks don’t have skills, train them.

FOR ME, THOSE TYPES OF JOBS FALL UNDER ‘NORMAL PUBLIC EMPLOYMENT’ AND SHOULD BE HIRED AND PAID ACCORDINGLY, VS WHAT I’VE CALLED THE TRANSITION JOB, WHICH IS FOR THE ‘EXTRA’ PEOPLE THAT HAVE BECOME UNEMPLOYED DUE TO STATE POLICY WITH THE STATE NOT DESIRING TO HIRE THEM. THE POINT THEN IS TO RETURN THESE PEOPLE TO PRIVATE SECTOR EMPLOYMENT, A PROCESS FACILITATED BY A TRANSITION JOB AS I’VE DESCRIBED.

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