Stephanie Kelton Profile picture
Jul 4, 2020 7 tweets 6 min read Read on X
I wish I had kept track of the many wonderful photos people have shared since the book released on June 9. Going to start now.
OK, I combed back through and found/saved a bunch of them.
Some samples... #Animals ImageImageImageImage

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More from @StephanieKelton

Jun 11
"Each time the Federal Reserve acts as a lender of last resort, it prevents some financial institution or some financial market from collapsing. 1/
When it does this, it introduces additional Federal Reserve liabilities into the economy and extends a Federal Reserve guarantee over some set of financial practices. 2/
Thus in 1966 it protected banks that used certificates of deposits, in 1969-70 it protected the commercial paper market, and in 1974-75 it extended the Federal Reserve guarantee to those who owned the liabilities of offshore branches of American banks. 3/
Read 13 tweets
Apr 20
20 yrs ago, Scott Fullwiler wrote this paper, comparing the (then extant) practice of hitting interest rate targets via day-to-day open-market operations and managing TT&L accounts with the yet-to-be-adopted practice of paying interest on reserves. 1/…
Scott concluded that instead of replacing non-interest bearing reserves with interest-bearing Treasuries, it would be far "more direct and more efficient" to turn the non-interest bearing reserves into interest-bearing reserve balances (IBRBs). Treasury could then stop issuing securities altogether. 2/Image
But don't financial markets need Treasuries for a whole variety of reasons? Could we really just stop issuing them? Scott explains why the answer is yes. 3/Image
Read 7 tweets
Apr 7
"If we could wave a magic wand and wipe out Treasury interest payments, we would have a lot of desperate people who had lost the income from savings bonds, Treasury bills, notes, and bonds and the pension funds that were holding them... 1/2
This in turn would mean less spending on goods and services, less production, and less employment for a lot of other people." 2/2
~Robert Eisner (1994)
"It is sometimes argued that this involves a regressive redistribution of income, on the assumption that the rich receive interest income...
Read 5 tweets
Mar 29
If you see the MMT documentary, Finding the Money, you’ll hear about my struggle to make sense of @wbmosler’s ideas, including his argument that the three-sources view of public spending was wrong. 1/
Like any Econ student, I had been taught that government must choose how to pay its bills: Tax, borrow, or print.

@wbmosler argued that there was only one option. 2/
It didn’t seem right, but I worked through the mechanics of government finance (for the US) and eventually convinced myself that @wbmosler was correct. There is only one way to pay. 3/
Read 7 tweets
Mar 24
Sorting through materials for my next book and stumbled on this piece outlining the influence of MMT in Chinese policymaking circles. 1/…
"Modern Monetary Theory can inspire China to make sure central bank easing supports government spending, several prominent economists said, as Beijing turns to fiscal policy to boost economic growth." 2/
"China urgently needs to 'liberate' itself from traditional ideas that fiscal and monetary policy must be kept separate and that government deficits are bad, according to Liu Shangxi, head of the Chinese Academy of Fiscal Sciences, a think tank under the Ministry of Finance." 3/
Read 10 tweets
Jan 10
Gov spends $100 (G)
Non-gov sector now has $100
Gov taxes $90 (T)
(G-T) = gov deficit = $10
Deficit has added $10 to non-gov
Treasury sells $10 gov bonds
Non-gov swaps $10 for $10 bonds
NET RESULT: $10 increase in net financial assets to the non-gov sector (w/ or w/o bonds) 1/ Image
Without the bond sale, the $10 would stay in bank reserve accounts at the Fed, where it would earn whatever the Fed chooses to pay on overnight reserve balances (IOR). 2/
No one would refer to the interest payments the Federal Reserve is making as the “interest burden,” and no one would refer to the funds in reserve accounts as “government debt,” even though they are liabilities (debt) of the Federal Reserve. 3/
Read 6 tweets

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