Crises Notes

https://www.crisesnotes.com/elon-musk-wants-to-get-operational-control-of-the-treasurys-payment-system-this-could-not-possibly-be-more-dangerous/

> I try to keep emotion out of this newsletter. I have always tried to write Notes on the Crises in a calm, detached tone so that the information I highlight shines through. However, I must be honest with readers: I’m absolutely terrified. When I first read the Washington Post’s reporting I subsequently had a panic attack. I am not subject to those. I didn’t have one during the start of Covid-19 when I started writing about the full health, economic, and political consequences in March 2020 and knew before many, many people that millions would die. Nor at any time subsequently did I have one. Even as someone who has spent an unusual amount of time thinking about the Treasury’s internal payments system for a person who has never been in government, I find grasping the full implications of Elon Musk and his apparatchiks reaching into and trying to exert full control over the Treasury’s payment system mind-boggling.

> There is nothing more important on the entire planet than getting Elon Musk and DOGE out of the Bureau of the Fiscal Service and allowing career civil service employees to run the Treasury’s internal payments system without capricious and self-serving interference from billionaires and their allies. This effort must fail if we are to safeguard any semblance of due process and lawfulness in the executive branch. A vague…

One way to think about it: the world you are proposing is equivalent to one where the central bank fully monetizes all government debt. That possibility is a strict subset of the space of possible monetary policies we have today. The Fed could decide to do that, but it would have significant implications. It would push down interest rates substantially, which would (according to conventional thinking) potentially trigger inflation and incentivize various sectors of the economy to shift their portfolios towards riskier assets in an attempt to pursue greater returns. This could have a substantially destabilizing effect.

Another way of looking at the problem: generally, money is printed by banks, not by governments. The liabilities of the banking sector is precisely what we use as money. A bank is a "debt monetizer": it holds assets (often debt) on one side of the balance sheet, and balances that against money as a liability. https://nathantankus.substack.com/p/banks-as-debt-monetizers-monetary

This property holds true for both central banks and private banks. They both print money that is balanced by assets on the other side of the balance sheet.

There are some benefits to this worldview:

- We have a unified model of banking that explains both central and private banks. "“Everyone can create money; the problem is to get it accepted“ -Hyman Minsky

- In a very real sense, all money is backed by something

If you just print money and use it outside of this framework, you…

Krugman is the best-sounding stuff of the mainstream. Since that what you brought up, I would start with https://www.crisesnotes.com/paul-krugman-functional-finance-flip-flop/ . Arguable Krugman is so good about not saying terrible stupid shit, that it might come at at cost of not being internally consistent or acknowledging when his views in fact change.

Krugman at least was a "New Keynsian", which is a very complicated confused thing in the way the neoclassical parts and keynesian pieces are mashed together. I mostly subscribe to the Post-Keynesian stuff, which makes a lot more sense to me, and is more embracing of the weird/humanities side of Keynes. https://vebaccount.substack.com/p/the-post-keynesian-worldview-in-five is a good primer, and really that person's entire corpus is a gem of really good writing. For something that (at least in the last few years) is much more grounded, try http://jwmason.org/the-slack-wire/.

Now you might say that the opposition's views of the mainstream is an unfair place to begin. To that, I say just look at the shit Larry Summers says.

It's the best data that's available at the time. It's been collected in a consistent fashion for a significant duration of time. To understand how a new methodology would differ, we'd want to run a new process in parallel for a couple years.

A few notes from an interview on the Odd Lots podcast, interviewing Bill Beach, former head of the BLS:

* Response rates among surveyed employees are roughly:

Month 1 68%

Month 2 83%

Month 3 93-94%

* Large employers tend to respond sooner, and are staffed to handle these requests better.

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April 2025 interview: https://podcasts.apple.com/us/podcast/some-of-americas-most-important-economic-data-is-decaying/id1056200096?i=1000705520320

August 2025 interview (after BLS head statistician was fired): https://podcasts.apple.com/us/podcast/bill-beach-on-how-trump-just-politicized-us-economic-data/id1056200096?i=1000720631550

Some notes and a transcript: https://www.crisesnotes.com/bloomberg-odd-lots-podcast-transcript-an-interview-with-former-bls-commissioner-bill-beach/

I want the hype to die and the bubble to pop as much as Ed and Cory and everyone else writing about it but right now it’s just them basically recycling the same bad news and posting about it. I’d love to see some writing which looks at the factors which caused previous pops and to line them up with factors today to try and determine what’s actually coming. Clearly the market is irrational as hell right now but seemingly very little is going to change that. The closest I’ve seen to what I’m looking for is the coverage over at Notes on the Crises[0] and he also seems bewildered.

Edit: I found this piece which does look at historical bubbles/market events and tries to discuss how they plan out in terms of timing [1]

0: https://www.crisesnotes.com/ 1: https://paulkrugman.substack.com/p/why-arent-markets-freaking-out

I was pleased to read Nathan Tankus' take[1] on all this, although I wish I understood it better, which was that a lot of policy ideas that have been somewhat fringe are becoming mainstream in the last week:

> The prospect of unlimited deposit insurance, whether de facto or de jure, is leading to a large-scale reconsideration of views among even “moderate” banking scholars.

I imagine that's usually how real policy progress happens: interesting ideas are always getting thought up and proliferated, but it takes a big upheaval to move them over to being really possible.

[1]: https://www.crisesnotes.com/every-complex-banking-issue-all-at-once-the-failure-of-silicon-valley-bank-in-one-brief-summary-and-five-quick-implications/?ref=notes-on-the-crises-newsletter