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The ECB raised its day tender rate to 2.75% today and got far fewer tenders, as USD market rates had gone below that in anticipation of lower rates.

But that should just mean the USD ‘market rates’ will rise to over that level and the USD borrowers will come back to the ECB in big size as it’s just a game of musical chairs


9 Responses

  1. Warren, Wouldn’t a low-income rebate be much more progressive than a payroll holiday and thus more effective as a stimulus tool.

  2. By ‘effective’ i assume you mean ‘bang for the buck’

    think of an extreme- a tax cut that didn’t increase demand. in that case you have reconsider why the tax is there in the first place, as the function of taxes is to reduce demand.

    since spending is not revenue constrained, the bang for the buck helps determine how large a fiscal adustment is required to get demand where you want it.

    So i’m concerned about progressiveness to the extent that the payroll tax is highly regressive, and i’d guess there is no political support for a regressive taxation per se. Which delivers more bang for the buck isn’t an issue as above.

    But to your other point, a low income rebate might add more demand than the same funds released for spending with a payroll tax cut.

    And offering a job to anyone willing and able to work is better still as useful output can be realized.

    I like the payroll tax holiday because it stops removing spending power of over $20 billion per week right away, and can remain that way as long as necessary meaning it’s open ended in that respect.

    a rebate would be a measured amount, given once and then monitored, like the last one.

  3. But out of curiousity, if you were running the meeting, what would you propose? I know that in general you’re a fan of floating FX, so I hardly think you’d want to go back to the old Bretton Woods, but is there anything you’d propose that would be an improvement on the current system?

  4. yes. but it can all be done unilaterally, as per the ‘proposals’ on this site. (need to update them a bit)

    in fact, whoever does it unilaterally and alone ‘wins’ ragarding standard of living

  5. “in that case you have reconsider why the tax is there in the first place, as the function of taxes is to reduce demand.”

    My rich friends in palm beach said high taxes were in place so that the elitists could keep the blacks out of the nice trendy restaurants and housing areas and off the yachts at the marina.
    That without their ability to “tax” those guys, those guys might actually work hard and save enough money to buy all the nice homes in the USVI and put the lazy bum elitists who just sat on their butt all day making tax laws eating nice meals on their yacht at the marina out of power. humm.

    “And offering a job to anyone willing and able to work is better still as useful output can be realized.”

    My friend Brittney Spears said she is willing for the government to pay her 1 million a year to be a mystery shopper and her big ambition in life was to beat imedla marcos’s shoe collection – I am stoopid Warren, I need a big brain like you to tell me how subsidizing brittney leads you and I to stargate atlantis cities with 10,000 year or longer human lifespans? How is that the path to prosperity? Just because you can put a donkey to work out in your front yard plowing your manicured landscaping – why is that so good? What if the donkey wanders over to your driveway and sits on your supercar and crushes the hood and his friend the goat eats your tires – you make me laugh! 😉

    Hammerin Hank looked silly in his bowtie tonight in front of the american and chinese flags – some asian guy asked him what of the thousands of factories that have already closed in china – why should they revalue the renimbi – LOL! Why weren’t you there Warren – telling them that a weak renimbi kept their kids dying mining the mines while our brittney spears got to shop til she drops – a win win situation for both respective groups of kids right? Pathetic.

  6. When Is warren Mosler going to “make it happen?”

    When is he going to fly to washington and tell hanky panky and benny winny that china kids and south american kids slaving in silver mines and US kids shopping til they drop for silver bracelets in the big shopping mall is really disgraceful for all kids involved. That perhaps MORE is not better and brittney sitting down and not shopping anymore and the silver mining kids sitting down and not mining anymore is not the end of the world?

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