fbonetti

That's hilariously accurate.

You also seem to be arguing that centrals banks don't create new money, which is an odd assertion, especially for a proponent of MMT. From the article you posted:

> "QE involves a shift in the focus of monetary policy to the quantity of money: the central bank purchases a quantity of assets, financed by the creation of broad money and a corresponding increase in the amount of central bank reserves. The sellers of the assets will be left holding the newly created deposits in place of government bonds."

> "QE has a direct effect on the quantities of both base and broad money because of the way in which the Bank carries out its asset purchases. The policy aims to buy assets, government bonds, mainly from non-bank financial companies, such as pension funds or insurance companies. Consider, for example, the purchase of £1 billion of government bonds from a pension fund. One way in which the Bank could carry out the purchase would be to print £1 billion of banknotes and swap these directly with the pension fund. But transacting in such large quantities of banknotes is impractical. These sorts of transactions are therefore carried out using electronic forms of money."

> But if there's a fall in aggregate demand at a given price level, there are _fewer_ dollars chasing the same number of goods for a period of time. So if government spending is greater than taxation for that given period, it doesn't necessarily cause inflation.

I actually completely agree, but with a caveat. It may not cause inflation in terms of this years price level being higher than last years price level, but it will cause a decline in the purchasing power of the dollar. For example, let's say in the absence of intervention the price level would fall by 2%, but with intervention the price level would stay the same. That's still a 2% decline in purchasing power.

> The "monetary base" increases because of the way they define the monetary base.

The monetary base is defined as the sum of all currency (including coin) plus bank deposits. It increases or decreases completely at the Fed's discretion, because the Fed has the unique ability to create reserves. This isn't some semantic trickery.

> So, what you are saying is that government deficits are inflationary because they add money to the economy, but, on the other hand, government surplus don't retire money from the economy?

Honestly I don't know what point you're trying to make, or what deficits or surpluses have to do with anything. A deficit or surplus is merely the delta between total revenues and an arbitrarily defined budget.

Inflation is caused by additional dollars chasing the same number of goods. Printing money does not create goods and services - it merely decreases the value of each dollar relative to everything else. If I had a machine that could create an unlimited amount of gold at zero cost, the price of gold would approach zero if I made and sold enough of it. I don't know why you would think dollars would be any different.

> Yes, but the assets the Fed buy (when practicing QE) are in the accounts of the commercial banks in the Fed. After buying them, those assets are not there anymore, and, instead there is money (1). And money is basically a government bond that pay 0% interest.

Yes, the bank exchanges an asset (like a treasury) in exchange for reserves (base money). The question you need to ask yourself is, where did those reserves come from? Another question you need to ask is, when Fed engages in QE, why does the monetary base increase?

Buy the stuff the Fed is propping up - stocks and real estate.

Adults are capable of deciding risk/reward factors when selecting a job. There are many jobs that are well known for being grueling, and yet people still sign up to take those jobs because they value the compensation more than other considerations.

The thrust of ABC is that artificially cheap credit, induced by the central bank, causes malinvestment. Interest rates are signals of risk. When you artificially lower interest rates, people take on more debt than they normally would and invest in capital improvements that only make sense in a low interest rate environment. When the central bank attempts to raise those interest rates to the natural level, or there’s a large change in consumer preferences that causes a drop in aggregate demand, all of those over leveraged business fail en masse, which results in layoffs, reduced production, and falling asset prices. It has nothing to do with inventory.

The Fed artificially lowered the interbank rate to zero percent for ~7 years after 2008, bought other treasuries across the yield curve, and bought trillions in mortgage backed securities. This created an environment that disincentivized saving and encouraged borrowing for both individuals and businesses alike. The market growth over the past 10 years was completely fueled by this artificially cheap credit. The economy was already extremely fragile before the coronavirus hit due to how over leveraged everyone was.

If you aren't happy with Amazon, Facebook, Google, Apple, etc, you can choose not to be a customer of them. You can't opt out of paying taxes.

> people simply value the utility they gain out of these tools higher than privacy.

Exactly. I bet if Facebook offered a paid, ad-free version of their service, 99.9% of people would not use it. The monetary value of Facebook is $0 for most people.