Why deficits are sustainable and inflation has a life of its own
Roger Farmer again.
The clients of a currency banker have a choice with their pit boss at the S%L. They can agree to inflationary losses, ex ante, or not. In central banking, each new generation agrees not to pay the debt service of stuff government purchased long before they voted. We realize the monetry osses at that point.
Another alternative is the currency banker only loses money when it has been snookered by hidden productivity growth. We can do that and keep prices stable. It all depends on the contract, ex ante; the trading pits will Wienerize the balances.
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