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Nomura’s McElligott: Don’t Mistake Curve Steepening For Something It’s Not
There's been quite a bit of hand-wringing and breathless pontificating this week over the self-evide
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I remember in grade school learning about “Wampum”. Illusions. Gift shops at Civil war sites sold Confederate money for pennies. Money changes. Go with the flow. Illusions work. Gold is too slow. No going back to old currencies once the illusion fades.
“We’re still laboring under what might very fairly be described as a series of medieval beliefs about deficits and their financing”
It’s our Calvinist legacy where debt and borrowing is considered sinful.
Though, if a US company or entrepreneur declares bankruptcy it’s called the “magic of US capitalism. You can walk away and start over!”
That does not hold when it is an individual, however. Student loans, credit card bills etc are all marks of moral failing. Think bacdk to Rick Santelli and the spawning of the Tea Party movement. “Borrowers must be punished for their slothfulness!”
And look, nobody is suggesting sending every American $40 million in the mail. I continually chuckle at the belabored attempts of MMT critics to resort to the silliest extremes in order to refute something they can’t otherwise refute.
It reminds me of how frustrated some people get when, confronted with the actual, verbatim policy ideas from Progressives (as opposed to caricatures of those ideas from conservative media), people always just resort to digitally shouting; “So you wanna be Venezuela?!?”
It’s just so disingenuous, because nobody is under the impression that making every American a millionaire overnight with a direct deposit from Treasury is a good idea just like nobody wants to be Venezuela. Every argument against MMT is a straw man. And it’s not because there aren’t good arguments against it. Rather, it’s because those good arguments are deep in the economic weeds, where everyone is too intellectually lazy to go.
There’s a policy difference between Right: “Trickle down from Oligarchs”, Center: “Corporations First, Middle Class and Up Covered”, and Left: “Take Care of Everyone (via Government)”
Thus we all are using MMT, it’s just a matter of how it’s distributed.
I had to chuckle when I saw the “spike” in bond yields yesterday. As if J-Pow won’t be there to stand on top of the curve and smother it into submission. And after chuckling, I bought some TLT. Thanks Fed.