This entry was posted on Friday, March 9th, 2012 at 6:23 pm and is filed under Radio.
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As far as i hear this is a replay of your post on March 1st, 2012.
I raised there the question about whether cb will always execute payment instructions from tsy and how independent the cb is.
You replied with that congress is boss of both tsy and cb.
That is correct of course and thus they can arrange any payment.
This very Congress however leaves in place all the outdated self imposed restrictions, such as debt ceiling, no-overdraft rule etc.
Don’t get me wrong, I am in favor of restrictions on govt spending, but not those restrictions.
How big do you see the risk that Congress and Senate one day will e.g. not increase the debt ceiling and voluntarily default? This especially in light of what is going on in Europe with PSI.
This week we saw some sell off in tsy secs. Do you see that as a normal correction, rotation to equities, sign of economic recovery, or do you see this as first sign of fear in the bond markets for European like PSI style of ‘resolving’ things?
This is kind of off topic but I figured I would ask you guys because your knowledgeable. Oil is only priced in dollars, right, or do you need actual dollars to buy it? I’m having an arguement with the austrian types about what gives the dollars value and I need to put them in their place.
As long as you are answering some off-topic questions. I’ve tried longer versions but will keep it short. If China used its dollar reserves to go on a consumption buying spree, could that generate inflation in the US? enough to be a problem? If China used its dollar reserves to buy real US assets, is that a problem? For instance if they gained control over some important sector.
I’m still trying to understand if there is really no downside to the continued trade deficit with China.
Thanks guys. The argument centers around how important oil being priced in dollars is. I say it doesn’t matter but this kid keeps saying that other countries are being forced to used the dollar because payment requires actual dollars and that the sky will fall if oil is priced otherwise. I just convinced him and a few others that the quantity theory of money can’t be right so I figured I would take a stab at this.