Economics writer; author of the Noahpinion newsletter.

• Roundup #88: Is it time to panic yet?

  AI risk; AI and growth; AI and Saas; Rich people; Christians vs. Nazis; Japanese culture; State capacity; City size

  SaaSRelated

Economist; former chief economist of the International Monetary Fund.

• i was going to write something, but Quentin beat me to it... Let me put it another way, so that Chairman Coquerel @ericcoquerel understands and corrects his statement. When a state issues nominal bonds (bonds that pay in euros), the real value of interest payments varies with inflation, creating risk for investors. So they require a higher interest rate to compensate for the risk. In issuing inflation protected bonds, the state eliminates the risk and thus is able to get a lower rate. This decreases the burden of the debt. This is good. Always happy to help the Chair of the Finance Committee…
  Quoting@QuentinVandewe2Est-ce que LFI organise un concours Lépine pour la théorie du complot la plus idiote sur la dette ? Après la Banque de France qui revendrait la dette en secret, Mélenchon découvre que l'État « vient de proposer de nouveau des titres indexés sur le capital et des intérêts compensant l'inflation ». U…

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Economist; former chief economist of the International Monetary Fund.

• Repetition, I am afraid, is the key to convincing.... So let me repeat (Reaction to comments about Greece and the like. ) The argument that the cancelling of the public debt by the central bank has either zero or a negative effect, the argument that I have made this week, is not an argument about debt cancellation in general. Debt (partial or full) cancellation (or restructuring, or reprofiling) of the debt held by investors is a whole different ballgame. It has big real effects. It decreases the interest rate charge, but makes it harder to issue more debt: Creditors, who just lost money, are…

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Economist; former chief economist of the International Monetary Fund.

• No, and useful to repeat: Contrary to interventions such as QE or debt management by Treasury, cancellation of central bank debt has zero mechanical effect on the liabilities of either the central bank (bank reserves are the same) or the government (the debt held by private investors is the same)
  Quoting@AlexStewartNF@ojblanchard1 At the consolidated-government level the cash flow nets. The remaining question is distribution and duration: who holds the liabilities, when they reprice, and whether transfers fall on the same households that receive the interest.

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