Moore is a sign of the times

Along with the MMTers, even Schiller is on the bandwagon.

Politics is now about the post shock, after we do our bit of Nixon.  And post shock outlook is not bad, it results in one major advance to central banking, observability into the government accounts. The exact accounts the Fed is bound by 'Right to Coin' law  to insure.

We are not curing the Fed, we are simply making the 'right to coin' be a little less volatile, one generation's improvement. The children of millennials will do the same, but it will less of a big deal for them.  Wealthy people will hedge it, instead of losing their mind.  Eventually the generational default will become another account entry, a white Gaussian noise.

It is not a crisis, we can live with the defect, we know the problem. It is like a badly done seasonal adjustment, government is mostly pro-cyclic.  The default method is simply, the Fed QE now and will opportunistically burn some of its pile, a future trend benefiting Congress. Hence we can partially break the link, Congress unlikely to renege.

Right to coin is fundamental, and bi-directional.  The Fed has the requirement to insure the government coin.  So, let us all get on board with the second path, it is not going away.  It implies one thing, central banks have to expose currency risk to government agencies, all parties concerned need to have Fed S/L accounts.  This both disperses government agencies from correlations, but moves the whole batch down the yield curve where interest charges are cheaper. It simplifies the debates in Congress, they are merely instructed to set priorities, and the agencies are in the position to manage their path forward.

Call this the millennial shock, we are all shocked that millennials partly figured out the time inconsistency problem, and they get to write off 4 trillion in melted ice.

What is opportunistic default?  The Fed burns bonds it holds whenever the burning would favor its own currency risk, reduce it, keep it closer to its bound.  Burning bonds has an immediate effect on interest charges, all the price variations take a slight inflationary path.  Government agencies which extend their loans beyond Congressional priority will feel the interest charges almost immediately.