Mindful Money has put together a really excellent Q&A which includes Steve Keen, myself and a few other unorthodox monetary views. The questions in my section range from why I write, what’s the most controversial things I’ve said, to what are my recommended books. Here’s a brief snippet:
What’s your most controversial blog post?
Following QE2 I wrote a story titled “the Fed is not monetizing the debt“. As is well known, most believe QE is “money printing” and inflationary. But my view is entirely different. My view is that the Fed isn’t printing money. They’re swapping reserves for bonds which forces portfolio managers to alter their asset mix, but doesn’t alter net financial assets in the real economy. Therefore, the term “money printing” is misleading. People thought I was crazy for believing this, but after QE2 failed miserably and my predictions came true (that it wouldn’t work) more and more people have adopted this view of QE as having little to no impact.
What’s the Elephant in the room?
The elephant in the room is definitely this idea that the US government (or any autonomous currency issuer) can “run out of money”. The US government has an institutional arrangement whereby it can always procure funding via taxes and bond sales. The Primary Dealers are required to bid at Treasury auctions so funding is never a concern. Ie, there is no solvency constraint in the USA like there is in Greece so there are no bond vigilantes in the USA who are going to attack our bond markets and drive us into insolvency. Our constraint is inflation, which is a totally different animal. But most people can’t get beyond the idea that the government is like a revenue constrained household….
Read the full interview here.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.