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View Diary: The debt ceiling dance and the trillion dollar coin (218 comments)

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  •  Yes, coin=QE=monetization =NOT inflationary (0+ / 0-)

    Loge, you are right that the coin would be the same as spending, following the silly rule that spending has to be matched with "borrowing", and then the Fed doing QE, buying the bonds just issued.   Since there would be fewer bonds & more dollars than if we did the usual silly "borrowing" bond sales, the effect of the coin would be to LOWER interest rates.  All this is indeed  effectively "printing money" or "monetizing the (new) debt".

    SO WHAT. Monetizing debt & printing money is if anything deflationary compared to selling bonds = "borrowing".  Lots of QE/debt monetization/low rates recently.  And no serious inflation. That's how WWII was "financed" - largely by "printing money" - and there was remarkably little inflation. The idea that "printing money" and "debt monetization" is mystically inflationary is a mainstay of modern mainstream economics - and is unadulterated, preposterous garbage, with neither logical, theoretical nor empirical support.

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