You said the magic word "money printing" vs "QE" is an important topic of mine. I am trying to get my head around it, but not sure where to get the data from :)
Could you please clarify what you mean by that?
"We barely even had a deficit in 1998 and now it is 6.3%, which of course is
actual money printing unlike QE – so you have a deficit and asset prices both
pushing the real economy higher while the Fed still thinks the neutral rate is
2.5%. They are going to learn the hard way that it is higher"
As far as I understand, the deficit is not necessarily money printing.
Example: The government borrows the 6.3% deficit. The lender is either non US entities or US entities (other than the FED). If the FED, then it is money printing I would say? If it is not the FED, then it's just existing money that is lent to the government. There is no money printing, YET. :)
A lot of non-US entities would lend to the government (say the Japanese). Even the Chinese and pocket the difference. That is the carry trade on a sovereign level.
Is this incorrect? If so, then how do you know it is money printing - where do you get the data from? :)
To clarify - for the real economy deficits are money printing and you are right that the deficit is not technically money printing. As for why I see the deficit as real economy money printing - it is because the government's deficit is the private sector's surplus. So every dollar of deficit spending creates actual demand in the economy and gets spent. Does it tie money up in bonds, sure but those bonds are just positive cash flowing assets that folks can lever up and spend on the back of anyway. The deficit is net wealth/net worth for the private sector. It increases liquidity, growth, and inflation (both consumer prices and asset prices) where I think QE only increases asset prices. To me QE is banker money and deficits are real people money. Not at all saying it is a free lunch as it gets paid back in regular taxes or most likely inflation taxes.
So, we agree it's NOT NET new money, correct? It's existing money being lent to and spent by the government. I may even call this government re-circulation or re-distribution from savers (investors) lending to the government to someone else (* private or government sector). No?
* I think "the government's deficit is the private sector's surplus" - is not necessarily always the case. Do you have the data to support this? If by private sector you mean me, you and every other human being, then yeah at the end of the day that is true (MMT is relatively good prescription for that).
I know there are so many parameters, but some of these are really important and I am not sure anyone has the data to understand the impact of each (parameter). Some of that is dependent on the future i.e. where the government will spend the money (in US or abroad).
You said the magic word "money printing" vs "QE" is an important topic of mine. I am trying to get my head around it, but not sure where to get the data from :)
Could you please clarify what you mean by that?
"We barely even had a deficit in 1998 and now it is 6.3%, which of course is
actual money printing unlike QE – so you have a deficit and asset prices both
pushing the real economy higher while the Fed still thinks the neutral rate is
2.5%. They are going to learn the hard way that it is higher"
As far as I understand, the deficit is not necessarily money printing.
Example: The government borrows the 6.3% deficit. The lender is either non US entities or US entities (other than the FED). If the FED, then it is money printing I would say? If it is not the FED, then it's just existing money that is lent to the government. There is no money printing, YET. :)
A lot of non-US entities would lend to the government (say the Japanese). Even the Chinese and pocket the difference. That is the carry trade on a sovereign level.
Is this incorrect? If so, then how do you know it is money printing - where do you get the data from? :)
It's all about the data :-)
Thank you.
To clarify - for the real economy deficits are money printing and you are right that the deficit is not technically money printing. As for why I see the deficit as real economy money printing - it is because the government's deficit is the private sector's surplus. So every dollar of deficit spending creates actual demand in the economy and gets spent. Does it tie money up in bonds, sure but those bonds are just positive cash flowing assets that folks can lever up and spend on the back of anyway. The deficit is net wealth/net worth for the private sector. It increases liquidity, growth, and inflation (both consumer prices and asset prices) where I think QE only increases asset prices. To me QE is banker money and deficits are real people money. Not at all saying it is a free lunch as it gets paid back in regular taxes or most likely inflation taxes.
Yeah, ok, fair point. Thank you.
So, we agree it's NOT NET new money, correct? It's existing money being lent to and spent by the government. I may even call this government re-circulation or re-distribution from savers (investors) lending to the government to someone else (* private or government sector). No?
* I think "the government's deficit is the private sector's surplus" - is not necessarily always the case. Do you have the data to support this? If by private sector you mean me, you and every other human being, then yeah at the end of the day that is true (MMT is relatively good prescription for that).
I know there are so many parameters, but some of these are really important and I am not sure anyone has the data to understand the impact of each (parameter). Some of that is dependent on the future i.e. where the government will spend the money (in US or abroad).
Thank you !