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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Economist; former chief economist of the International Monetary Fund.

• There were some long (too long) tweets earlier which stated it carefully. The basic point is that the decrease in interest payments is offset by a decrease in transfers from the central bank, leaving the deficit unchanged. This is the sense in which it makes no difference, except accounting. Then, there is a thousand caveats, which Quentin and others have discussed, and then the psychological/political effects that make things worse. But the basic point is the basic point. :)
  Quoting@JohnHCochraneOlivier: I know tweets are short, but you really should qualify “makes no difference”. To what—and not to what else? Inflation? Can all countries and banks default on all assets held by ecb with “no difference?” You don’t mean that of course. Don’t let them misquote you!

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Economics writer; author of the Noahpinion newsletter.

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Economics writer; author of the Noahpinion newsletter.

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Monetary economist known for NGDP-level targeting. Wrote TheMoneyIllusion until it closed in 2024 and now writes The Pursuit of Happiness.

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Monetary economist known for NGDP-level targeting. Wrote TheMoneyIllusion until it closed in 2024 and now writes The Pursuit of Happiness.

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Monetary economist known for NGDP-level targeting. Wrote TheMoneyIllusion until it closed in 2024 and now writes The Pursuit of Happiness.

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Economist at George Mason University, co-author of Marginal Revolution, host of Conversations with Tyler. Writes in short, dense claims about economics, culture and AI, and has moved position on AI in public more than once.

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