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Posted by Uwe Burkheiser (81.210.153.20) on 13:27:14 03/27/04
In Reply to: Re: National Review Online - Questions posted by Warren Mosler
: : 4. If tax increases are no option how will the Treasury pay for the Treasury securities at maturity? In other words is the Treasury simply able to credit the balance due on the Fed account (as outlined above) without issuing new Treasury securities?
:
: Yes, at maturity the security account is debited and a member bank reserve account credited. Again, there may be 'self imposed constraints' but no operational constraints.
Thanks Warren - for working on a Saturday!
Follow up question:
Is not, what you call 'self imposed constraints' a prudent safeguard for preventing the government from being financed directly by the Fed? And if that would ever happen (financing by the Fed) how would it affect the chartalist reasoning?
Have a pleasant weekend & thanks again
Uwe
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