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Well, yes, Professor

The answer to this one is simple: the government issues a replacement bond, and the financial markets subscribe to it, and the world carries on as before. The interest rate may have changed, but that’s about it. And if the government issued the new bond and there were no buyers (which is incredibly unlikely), that would not be a problem: the government could just QE it and hold it until there were buyers. It really is that simple. We are not in hock to financial markets, whatever politicians would like us to think.

But just QE ing all the bonds increases the money suply and leads to inflation. At which point you’ll say just tax more. But if you could tax more then you’d not have had to issue the bond, would you? So, no, it’s not that simple.

6 thoughts on “Well, yes, Professor”

  1. Having no buyers is not incredibly unlikely, The interest rate will determine if it’s bought or not. Too low a rate and no one wants it. Too high and it becomes inflationary.

  2. Dennis, Inconveniently Noting Reality

    We are not in hock to financial markets, whatever politicians would like us to think.

    A financial market is a market in which financial securities are traded .

    How can “we” be in hock to a financial market? It’s a market.

    He doesn’t even understand what a market is.

    And he’s teaching the youth of today…

  3. We are not in hock to financial markets…
    Well we have over a trillion of debt so we’re in hock to someone.
    And we are in pawn to some foreign powers owning large parts of our infrastructure as well.
    But hey ho, let’s just denounce the debt and do what Greece, Argentina and the rest of them do.

  4. Now there are people who say Spud is a delusional, egotistical, pompous idiot. But why?

    Geoff “i think it is up to you to prove that as you will be basically saying all the major central banks on the planet are wrong and the ex accountant richard murphy is right.”

    Spud “And yes, I am right and central banks are wrong.”

  5. today we’re not in hock to financial markets, but yesterday he was complaining of financial services as being a master not a servant. spud gets more bellendish each day. he should stick to demanding more tax and that he will steal our pensions- at least he’d be more consistent (albeit delusional)

  6. Issue replacement bonds…. isn’t that trading in secondhand bits of paper, which on odd numbered days he was demonising.

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