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Politics : Politics for Pros- moderated
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To: sm1th who wrote (756478)2/2/2022 9:34:34 AM
From: skinowski   of 793887
 
Yes, they simply print. I think the most important function of the Fed is an unspoken one - to make sure the Treasury always has money available that they can “borrow”.

Now, they’re discussing the super new idea - the Modern Monetary Theory. In two words, the government decides on priorities and authorizes the creation of all the funds they need. Taxes are no longer meant to pay for government's costs, but simply to mop up “excess liquidity”. For as long as the CPI is stable, they do not need to worry. But if it’s up, they would need to take steps to “mop up” excess liquidity.

It’s clear that politicians will spend like crazy - and the mopping up part will end up ignored due to being unpopular. Imho, it’s a brainchild of academics who have too many clever ideas - and too little sense.
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