tag:blogger.com,1999:blog-6704573462403312459.post8909728160149533768..comments2024-03-27T08:14:24.828-04:00Comments on Moneyness: A free market case for CBDC?JP Koninghttp://www.blogger.com/profile/02559687323828006535noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-6704573462403312459.post-27723848033366484782021-11-02T12:47:43.124-04:002021-11-02T12:47:43.124-04:00AliExpress coupons<a href="https://exospecial.com/aliexpress.com" rel="nofollow">AliExpress coupons</a>SHAHIN FREELANCERhttps://www.blogger.com/profile/08418879387225563509noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-49532829496730490372019-10-29T16:20:24.932-04:002019-10-29T16:20:24.932-04:00Ok, fair enough.
"But my question is about w...Ok, fair enough.<br /><br />"But my question is about whether or not you're saying that the government "spends their money"; as in, is the money the government spends the same money that it previously collected from taxpayers? Does the government "spend taxes"?"<br /><br />If an entity (ie the government) issues a debt, you are right that it extinguishes that debt when it takes it back in taxes.<br /><br />But if one branch of the government, the central bank, issues a debt, the other branches, the executive or the judiciary, can't cancel it. They use it in the same way that Walmart uses it.<br /><br />So I guess it depends on how you are defining the term "government".JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-44848795030174183982019-10-28T13:51:50.725-04:002019-10-28T13:51:50.725-04:00It's not especially relevant to your point in ...It's not especially relevant to your point in this post, I'm just trying to tease out your view on the matter. It is quite important in general, for reasons, eg. covered here: https://splinternews.com/the-dangerous-myth-of-taxpayer-money-1819658902. Also relevant is the work of Camille Walsh, documenting how "taxpayer solidarity" has played a role in dramatically exacerbating school inequality. <br /><br />It seems philosophical (and it is), but it ultimately makes a great deal of difference to people's lives :)Sam Leveyhttps://www.blogger.com/profile/00143876903088086293noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-55505199993297110212019-10-28T11:39:30.067-04:002019-10-28T11:39:30.067-04:00"Does the government "spend taxes"?..."Does the government "spend taxes"?"<br /><br />I'm not sure why his question is relevant, as I haven't said anything about taxes in this post. (Yes, I have used the term taxpayers, which is another way of saying citizens. If you prefer, you can reread the entire post and substitute in citizens in the place of taxpayers). <br /><br />All I'm saying is that if the government wants to fund some sort of project, and it typically uses 30-year bonds to do so, it may be cheaper to issue digital deposits instead. And this is good for citizens.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-33058319596728338932019-10-28T02:13:38.578-04:002019-10-28T02:13:38.578-04:00But my question is about whether or not you're...But my question is about whether or not you're saying that the government "spends their money"; as in, is the money the government spends the same money that it previously collected from taxpayers? Does the government "spend taxes"? It sounds like you're saying that yes it does, but I think that is logically inconsistent with treating fiat money as a debt instrument.<br /><br />And if it doesn't, then why should we care about financing costs when the economy is at less than full employment? The only reason I can think of is inequality.Sam Leveyhttps://www.blogger.com/profile/00143876903088086293noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-35907174563590706742019-10-27T07:23:21.538-04:002019-10-27T07:23:21.538-04:00"Do you mean that the government will be spen..."Do you mean that the government will be spending less of their money on interest?"<br /><br />Yes, that's what I mean. Perhaps the government can issue a 5-year bond at 5%, and CBDC at 2%. Add in an extra 2% in other costs for managing the CBDC network. So it can issue a little less 5% debt and a little more 4% debt and reduce its overall financing costs.JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-46078369759224475332019-10-26T17:12:54.860-04:002019-10-26T17:12:54.860-04:00I'm genuinely confused here: do you believe th...I'm genuinely confused here: do you believe that taxes can finance government spending, or do you not? If you treat currency as a debt instrument, then I don't see how you can logically argue also that the government can 'spend taxes': if the currency is a debt, then when that debt is returned to the government, it is redeemed. The government can't 'hold' its own debt any more than a bank can hold bank deposits at itself. <br /><br />So when you say things like "that's a win for taxpayers," what do you mean by that? Do you mean that the government will be spending less of their money on interest? I think that's entirely inconsistent with the premise of this article. On the other hand, if you mean that taxpayers must have their consumption reduced in order to free up resources for bondholders to consume out of interest without inflation, then this should only be true at full employment, not true in general. Sam Leveyhttps://www.blogger.com/profile/00143876903088086293noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-55126124006481169782019-10-26T16:53:15.337-04:002019-10-26T16:53:15.337-04:00Good points, Ralph. I had forgotten about the NS&a...Good points, Ralph. I had forgotten about the NS&I. There's also postal banks, which are an old type of CBDC. <br /><br />You won't get any arguments from me about deposit insurance. Mind you, full reserve banking isn't the only way to solve the problem. Fractional reserve banking without deposit insurance also works. Over here in Canada our banking system has spent the majority of its history without deposit insurance, and it did fine. JP Koninghttps://www.blogger.com/profile/02559687323828006535noreply@blogger.comtag:blogger.com,1999:blog-6704573462403312459.post-48207335058037696902019-10-26T10:35:02.594-04:002019-10-26T10:35:02.594-04:00The British government already issues CBDC, and ha...The British government already issues CBDC, and has done so for decades, via the British government run savings bank, “National Savings and Investments”. I assume some other countries do likewise, but I’m not sure which ones.<br /><br />NSI does not offer “absolutely instant access” accounts, nor check books or debit or credit cards, but money in their so called instant access accounts can be got out in about 24 hours and transferred to a normal commercial bank, from where the money obviously can be transferred to whoever the relevant account holder wishes.<br /> <br />Next, I don’t buy the argument that “The argument could be made that the banking industry is far more important than other industries because it does a lot of lending, and if lending slows then everyone loses.”<br /><br />Clearly if lending slows ALL ELSE EQUAL, then “everyone loses” (i.e. GDP falls). But of course there is no need for all else to be equal: that is, any loss in demand and GDP stemming from less lending can be made good by standard stimulatory measures. The net result would be less debt funded economic activity and more non debt funded activity. Given the VAST EXPANSION in banks over the last 50 years or so relative to GDP (a ten fold expansion in the UK) and the very dubious nature of some bank activities, it is very likely that a CONTRACTION in debt based activity and a rise in non debt based activity would be beneficial.<br /><br />Finally I suggest there is another bank subsidy, closely related to the content of the above article, which the above article missed. It’s this. If I lend $X to a bank by depositing $X at a bank, that liability of the bank is backed by taxpayers, i.e. by deposit insurance, not to mention trillion dollar loans to commercial banks at near zero rate of interest when banks are in trouble – nice being backed by an insurer with an infinitely deep pocket, isn't it? In contrast, if I lend $X to a non bank corporation, e.g. by buying some of its bonds, there is no taxpayer backing for me! There is no excuse whatever for that preferential treatment for money lenders (aka banks).<br /><br />Full reserve banking disposes of the latter anomaly. That is, under FR, those who want total safety can have it: their money is lodged at the central bank, with commercial banks acting as agents for the central bank. But little or no interest is earned on that money.<br /><br />In contrast, where depositors want their money loaned on under FR, their money goes into a special investment account (effectively a mutual fund), where depositor / savers carry the ENTIRE risk involved. I.e. there is very explicitly no taxpayer backing for that money. The latter “two account” system has effectively already been adopted by the Money Market Mutual Fund industry in the US. <br />Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.com