Nima

Tax cuts reduce the theft and leave more net saving to the private sector, which is a necessary (not sufficient) pre-condition for economic growth.

Believe it or not: Anarchists, such as myself, do have the same quantitative methods at their disposal as non-anarchists. It's just that many anarchists choose to ignore them. In a fiat money system it IS indeed the government's role to provide for sufficient private sector saving, unless the territory achieves export surpluses, in which case it is foreign governments who deficit spend FOR the domestic private sector. Look at it like a prison: If the government throws people in a prison, it would be necessary for the government to feed those people if they want them to survive. I can observe and recognize this fact, regardless of whether or not I'm an anarchist.

Now that he's been elected I thought I'd share something I wrote before the election about Trump's general stance on taxes and the deficit, and how it can have positive implications on economic growth and jobs in the US. "This stance, coupled with a commitment to massive tax cuts may be an indication that Trump’s fiscal stance is in line with supplying the public the private sector saving needed to allow for a return to stronger growth than what we’ve been seeing over the past decade. Only time will tell."

Very interesting, thanks!

Got it, thanks for clarifying.

What's a "social libertarian"?

This one also has some interesting analyses: statespoll.com I think he adjusts polls to make turnout assumptions more empirical based on primary particiption.

Very cool. Thanks for sharing.

I second that. I invest most of my money that way. I wrote a post about it: https://beinglibertarian.com/growing-your-wealth-in-all-economic-cycles/

I wonder if you're referring to the Hungarian hyperinflation, which was from what I understand largely caused by the fact that the Hungarian government borrowed Dollars and then issued their own currency that was convertible into dollars at a fixed rate, not floating on the open forex market. Russia was in a similar situation at one point. Whenever you have arrangements like that, sovereign default and even hyperinflation are certainly a possibility. Please specify though which country or countries you're referring to so I can respond more precisely. Yes, housing bubbles and similar things can happen as a result of bank lending, and certainly the government purchasing mortgage backed securities via the Fed doesn't help here, if that's what you're referring to? Empirical evidence seems to show that the types of loans that caused home prices to skyrocket were so called liar loans which at one point supposedly made up 50% (or maybe even more) of all loan originations during the housing bubble peak. It's certainly good for the loan originator to know they have a taker in the Fed ultimately, but not so good for the country.

Mining doesn't store you much long term value, since mining output deteriorates as network hashing power grows.

Only if deficit spending exceeds the private sector's saving demand. See https://beinglibertarian.com/balanced-budgets-can-create-unemployment/

No. I'm pointing out the empirical fact that interest on the national debt is paid by the treasury by means of marking up the recipient's bank account, no money is raised via taxation to facilitate this transaction.

I agree. This is why MMT recommends to only issue very short term government bonds if any at all to manage the interbank lending rate. Or they can just do what they're doing now which is to pay interest on reserves, which basically makes even short term treasury instruments obsolete. Or they could not have ANY interest rate meddling, even short term and just let excess reserves drive the short term rate towards zero, as it would naturally if the Fed didn't drain excess reserves via bond sales. Note that any of these assets, bonds and bank reserves are always ultimately a debt of the government, so I wouldn't call it "free of debt", but I think you mean "free of interest bearing debt".

Just buy the coins. In almost every scenario you're better off that way in my personal experience, and I run an ASIC mining rig

You can look at it as if one business card represents $1. How much $1 ultimately buys in the economy results from ensuing private sector exchanges inside the private economy. If 10 business cards are injected and 10 are taxed away by period's end it doesn't matter how much one of these cards buys, the fact remains that 0 units of account are left in private sector pockets for net saving.

1) Many investors want to reserve a certain percentage of their portfolio for assets that are very safe. A 10 year government bond is safer than ANY other possible 10 year bond you can obtain on the market. Many pension funds HAVE to keep a certain percentage of their holdings in such assets. Just on a personal note, another example: I myself always preserve a certain portion of the portfolio for government bonds in order to be prepared in case a Depression/Deflation occurs. 2) The government repays a maturing bond by crediting the bondholder's bank's bank reserve account. This happens via electronic keystrokes and it happens all the time every single quarter, already, the government always "prints" the money to make its payments, to use your terminology. Inflation CAN enter the market for monetary reasons IF the government's deficit spending is so excessive that it exceeds the private sector's demand for net saving, but it doesn't HAVE to happen. 3) There are all sorts of "inflation" measures, but for example the most common CPI measure for the past year shows a consumer price increase of only about 1.4% for the past year https://fred.stlouisfed.org/graph/?g=7TjU- but like I said, it's certainly possible to have some price increases over time, however, so long as those are predictable and moderate, people factor it into their future expectations. For example, inflation can also simply occur as a temporary result of private bank lending, where the borrower makes purchases via newly created money, but then uses that money to improve production processes to ultimately bring prices down again accordingly.

The main reason someone would buy a negative yielding bond would be that the yield on shorter maturity bonds of the same risk class is even deeper into negative territory. If the government sells bonds it just replaces bank reserves with future claims to bank reserves. Both bonds AND bank reserves are basically a liability of the government, so it's more like one type of liability is swapped out with a different one. The real moment when the government becomes indebted is when it spends money into existence by crediting private sector bank reserve accounts.

Well, what I was pointing out is that the interest may be growing but it doesn't HAVE to grow. My point was that at any point the government can decide how many bonds of which duration it wants to sell and how much interest to pay on those. It is a policy choice that the government has 100% control over, if they want to change it. You see evidence of this in that under sovereign floating fiat systems governments which huge national debts, some of the largest public debts/GDP of all industrialized nations such as Japan, are perfectly capable of maintaining a regime of low or even negative interest rates for even their 30 year government bonds!

It is a commonly propagated myth that banks multiply loans on top of bank reserves based on the allowed maximum. Empirically that doesn't seem to be the case. Rather, banks make loans first, and later on acquire the required reserves by offering savings accounts or by borrowing on the interbank lending market, or by borrowing from the Fed as a last resort if needed (rare). The amount of loans banks create is constrained by the availability of willing and able borrowers, not by reserve requirements or anything like that. It almost makes more sense to look at the bank as extensions of the government, vested with the permission to make loans in the form of government insured claims to high powered money.

I don't have children or grand children. But the point is that it's not future generations that are impacted by present day fiscal policy decisions, it's always present day people and the power is in the hands of present day people to change the country's debt condition, meaning how much spending power is allocated towards today's bondholders is always a decision we can make today. When politicians tell you that it's not, they're LYING to you.

New money only enters the wider money supply when either the government spends money via the treasury (resulting in someone's checking account markup along with his bank's bank reserve markup at the Fed), OR when a private bank makes a new loan to someone, again resulting in the recipient's checking account markup at this private bank (this time no added bank reserves though). Banks generally make new loans when they find willing and able borrowers, meaning people who need permission to withdraw labor, machinery, and other productive factors from the market (that permission being granted in the form of a checking account markup) and who are in the bank's estimation going to improve existing production processes as a result and be rewarded with a profit, in short entrepreneurs. Everyone who has received a loan before needs a checking account markup in order to repay the loan. This, along with government deposit insurance and the bank's guarantee to convert the markup into bank reserves upon clearing and cash upon withdrawal, creates an inherent demand for checking account markups. See the section "Private Bank Lending" in my post https://beinglibertarian.com/mmt/for a more elaborate description, does that help maybe?

I didn't say "no inflation" at all. But generally it's been pretty low and most importantly predictable. Shocks are what's most problematic. The government debt represents exactly the private sector's interest bearing component of its net saving, that is its claims on the public sector's acceptable tax settlement tokens. ... one hypothesis I would advance is that lazy rich people like safe guaranteed long term income, and rich people are also politically involved ... one hypothesis I would advance is that lazy rich people like safe guaranteed long term income, and rich people are also politically involved ... one hypothesis I would advance is that lazy rich people like safe guaranteed long term income, and rich people are also politically involved ... one hypothesis I would advance is that lazy rich people like safe guaranteed long term income, and rich people are also politically involved ... one hypothesis I would advance is that lazy rich people like safe guaranteed long term income, and rich people are also politically involved Nobody denies that there is some level of ongoing inflation in this system. But some people have shown that empirically people adjust pretty well to slow and predictable price changes, it's shocks that create much more chaos & disruption. The banks naturally only need bank reserves (a) in order to settle checks between different banks and (b) settle tax payments between taxpayer and the government. In the US for example they also need bank reserves to always be at a certain percentage of checking account money in circulation, mostly because people don't really understand how this monetary system works and that the Fed always accommodates the demand for reserves anyway in case a bank doesn't have reserves to clear a check or a tax payment. Bank reserves that banks have to hold over what they would naturally want to hold function basically like a tax on banks, because they can't invest the money in other, higher interest bearing assets. Canada for example has no bank reserve requirements at all.

It's a great question and a big topic. If the government injects so much money via deficit spending that it significantly exceeds the private sector's net saving demand, it's possible that this will create significant and undesirable inflation. But we're actually far from that right now as far as numbers show. Bank reserves by themselves, as rosencrantz accurately pointed out, are unlikely to produce any inflationary pressures since they don't circulate in the private economy yet the way checking account money does.

Here is a new post that was published today, where I explain why the national debt doesn't matter, but also on what regard it does matter! Here's the conclusion: "Thus, unlike the popular story we’re being told about how poor disenfranchised future generations will be fleeced unless we pay down the national debt, the national debt does matter, only it matters to us in the present right here and now, and not to some obscure future generations down the road." Feedback & comments as always appreciated!