quote:

Originally posted by Elk Hunter:

quote:

Originally posted by Balzé Halzé:
^^^^ Oh. My. God.

Just where the hell would that money come from?

From the same place all the other federal expenditures come from. The Government Printing Office!

We've crossed a threshold... MMT

How the Government Pulls Coronavirus Relief Money Out of Thin Air

Treasury Secretary Steven Mnuchin speaks about the coronavirus in the James Brady Press Briefing Room at the White House, Monday, April 13, 2020, in Washington. (AP Photo/Alex Brandon)

The United States has responded to the economic havoc wrought by the coronavirus with the biggest relief package in its history: $2 trillion. It essentially replaces a few months of American economic activity with a flood of government money — every penny of it borrowed.

And where is all that cash coming from? Mostly out of thin air.

The traditional view of economic theory holds that governments and central banks have distinct responsibilities. A government sets fiscal policy — spending the money it raises through taxes and borrowing — to run a country. And a central bank uses various levers of monetary policy — like buying and selling government securities to change the amount of money in circulation — to ensure the smooth operation of the country’s economy.

But the relief package, called the CARES Act, will require the government to vastly expand its debt at the same time that the Federal Reserve has signaled its willingness to buy an essentially unlimited amount of government debt. With those twin moves, the United States has effectively undone decades of conventional wisdom, embedding into policy ideas that were once relegated to the fringes of economics.
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“It’s an epic moment in terms of breaking down the orthodoxy of church-and-state separation of the fiscal and monetary authority,” said Paul McCulley, a former chief economist of Pimco, a giant asset management shop.

Playing out in the background of this shift is a debate over what is known as modern monetary theory, which says countries that control their own currency can run much larger budget deficits than they typically do, in part because of the power of central banks to create new money to help finance the shortfall.

But to the theory’s adherents, the lock-step maneuvers by the Fed and the government were not the arrival of a far-out idea but the removal of a fig leaf.

“What it’s doing is just making more transparent a relationship between the Treasury and the Fed that has always existed,” said Stephanie Kelton, a professor of economics at Stony Brook University and one of the theory’s major advocates.

For those not attuned to the wonky worlds of monetary policy and government debt, the parallel policy changes might have been easy to miss.

On March 23, facing a roughly 30% stock market crash and growing dysfunction in key bond markets, the Fed announced its latest, and most significant, plan to pump cash into the financial system. The central bank said it would basically buy an unlimited amount of Treasury bonds and government-backed mortgage bonds — whatever was necessary “to support smooth market functioning.”

In the world of central banking, this muted statement qualified as seriously radical. The new policy didn’t put a number on the bonds the Fed would buy, a tacit nod to the idea that it could buy unlimited amounts.

Then, within days, President Donald Trump signed a $2 trillion economic rescue package into law. That package alone equaled about half of what the federal government spent in all of 2019.

Nobody knows exactly how much the relief bill will add to the national debt; it was cobbled together so quickly that there wasn’t time for the Congressional Budget Office to carry out an analysis, though one is expected to be published this week. But the Fed will be the biggest buyer by far of the bonds the government will sell to fund this spending.

Goldman Sachs analysts estimate the Fed will buy $2.4 trillion in Treasury securities as part of its recently reintroduced bond-buying programs. Economists at Morgan Stanley put the number at around $2.5 trillion in 2020 alone, rising to as much as $3 trillion for the entirety of the bond-buying program.

But the Fed isn’t an ordinary bondholder: By law, it has to pay its profits to the Treasury.

That means when the Treasury makes payments on bonds held by the Fed — either paying interest or paying it off at maturity — almost all the money eventually moves back to the Treasury.

When a government bond is involved, the cash moves from one government pocket to another.

“Once the central bank buys them, it’s as if the Treasury never issued them in the first place,” said Kelton, who was an adviser to Sen. Bernie Sanders’ 2016 presidential campaign. “For all intents and purposes, they’re retired.”

The CARES Act borrowing is, in many ways, the natural result of an evolution that began with the 2008 financial crisis. The bond-buying programs that central banks undertook around the world helped ensure low-cost financing for governments running giant deficits as policymakers contended with a deep recession and a prolonged period of lackluster growth. And despite constant, high-decibel warnings that such an approach would surely ignite a surge of inflation, it never happened.

That was a legitimate concern: Financial historians often point to disastrous periods when a central bank printed money for the government to pay its debts. A common example is Weimar Germany, when the central bank churned out bank notes that allowed the fragile government to repay onerous World War I reparations with essentially worthless marks, impoverishing most of the country in the process.

But at other times, the idea has worked just fine: Japan’s central bank has been buying huge chunks of the government’s bonds — effectively financing the central government of the world’s third-largest economy for years — without triggering the kind of inflation that traditional economic views would expect.

Adherents of MMT have long argued that the United States can — and probably should — run much larger budget deficits than it did already. In recent years, this belief has been most often associated with left-leaning politicians such as Sanders and Rep. Alexandria Ocasio-Cortez of New York.

But the ideas have found broader currency in some unlikely places, such as Wall Street. In recent years, some at huge money management firms and gold-plated investment banks have increasingly turned to MMT as a useful analytical framework to understand the strong links between central banks and markets that have grown since the financial crisis.

“MMT has been invoked so many times by completely mainstream people and politicians,” said L. Randall Wray, a professor of economics at Bard College who has written seminal papers on modern monetary theory. “Even Trump used almost word for word what we’ve been saying all along.” (“You never have to default because you print the money,” Trump said as a candidate in 2016.)

Other experts counter that coordination between the Fed and the Treasury may be justified in a national crisis, but that a continuing large-scale expansion of government deficits could have negative consequences, such as higher inflation.

“I think the Treasury did the right thing. I think the Fed is doing largely the right thing,” said Glenn Hubbard, a professor of finance and economics at Columbia University. “There shouldn’t be an ongoing dance of borrowing money and printing money. This isn’t the lesson to learn from this episode.”

Even so, the growing comfort with the Treasury Department’s relying on the Fed to buy its bonds — and help finance large deficits — is an important shift in the conventional thinking of politicians and policymakers, said McCulley, who retired from Pimco in 2015 and now teaches at Georgetown University.

“What this crisis has brought to the forefront is that this isn’t an academic debate anymore whatsoever,” he said.

McCulley said the speed with which the crisis took hold — and the unique circumstances of a nearly nationwide lockdown of consumers — meant political leaders had little choice but to vastly expand deficits. And, he said, those who usually question how deficits will be paid for have been rendered mute.

“How do we pay for it?” McCulley said. “We print the damn money.”

https://www.nytimes.com/2020/0...-stimulus-money.html

^^^ Cringe.

Well if we are going to print our way out, guess we have money to pay all the illegals too, maybe government funded solar panels on every house in America while we are at it.

This is a dangerous road we are driving down and everyone is ignoring the 'bridge out' sign.

I think I felt a disturbance in the force, oh wait that's just my retirement becoming worthless.

Food banks pet shelters friends local buinesses will get the most of mine.

I checked TurboTax this morning to see if they maybe applied it to the money I owe the Fed's in July since I have not received it yet. No luck!

Taxes are ready to go, just not filing until 7/15.

Seen on Facebook today. Some people really don't understand how things work.



Article - Why are the fat cats at the bank stealing your stimulus.. I'll give you a hint, it's because people already spent it and the bank was generous enough to extend them credit to cover them spending money they didn't have.

The person who wrote that thing about banks "great profits" has multiple postgraduate degrees

I had not received mine and keep trying to pull up my info or my wife’s info on the IRS page to no avail. Finally I read somewhere to enter your address in ALL CAPS and it worked. It let me enter my 2018 info along with my bank info so now my refund should be coming. I guess since I usually pay they claim they did not have my bank info.

I guess the government is the only entity that can be so inept as to create an automated system that recognizes capital letters but not lower case.

quote:

Originally posted by mrvmax:
I had not received mine and keep trying to pull up my info or my wife’s info on the IRS page to no avail. Finally I read somewhere to enter your address in ALL CAPS and it worked.

THANKS FOR THE INFO! Just tried again and, all caps worked for me!

Keep getting this message, I'll try the all caps later and report back.

quote:

Originally posted by Skins2881:
Keep getting this message, I'll try the all caps later and report back.

Stolen

This message has been edited. Last edited by: parabellum,

thats the same error message I get

My daughter finally got hers. Very helpful for her, almost 3 months rent. Her unemployment finally kicked in as well. She needs it.

Tried again, no luck. Guess we'll just have to wait for the check. This who damn thing is going to be over by the time I see it probably.

This time it recognized me, but not accepting AGI/Refund entries.

I was surprised when last Thurs. (4/23) I got my check in the mail. I was under the impression mailed checks were going to take a lot longer.
I think I filed my '19 taxes 3/31 (turbo tax) and my last name starts w/ "S" so I'm not sure of the rhyme or reason.

Mine was not supposed to be deposited untill the 29th but came yesterday along with my tax refund. I am replacing at least 2 tires on my van. Kinda wanted all 4 new but cant justify throwing away 2 which are in great shape. Now if Sams Club and WalMart will just open back up their automotive sections.

I got a check today.

Mine got direct deposited two weeks ago but my brother got a live check last Saturday.

Funny thing is last Saturday I got a letter from the White House signed by DJT telling me that mine had been direct deposited. There must be a uproar from the Dems over this, I've just missed it?

I tried using all caps - it worked; I didn't get the error message I got previously.
Thanks for that tip.
Leave it to the Federal government to not be able to process mixed-case text correctly.

got 1 of 2 in direct deposit today.

Still not working for me.