Nathan Tankus

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…

That article was my first introduction to Tankus's writings, and I must say that I disagree - it's not great.

I found Partnoy's article quite persuasive, and Tankus's response [1] not convincing.

For example, this is confused, in my opinion:

> Remember that collateralized loan obligations are simpler instruments than collateralized debt obligations. There is one layer between individual loans to corporations and CLOs whereas CDOs were two layers away from individual mortgages. Second, because CDOs were made up of mortgage backed securities, what mortgage backed securities were in them mattered. It's important in this context to know what the purpose of CDOs were. They were the equivalent of kitchen leftovers thrown into a lunch special the next day and cooked in such a way as to hide that they aren’t fresh. CDOs generally took the riskier and lower rated portions of mortgage backed securities and made up entire securities out of them.

I disagree. They are quite similar. Mortgages are wrapped into Mortgage Backed Securities, yes, but they are typically not tranched. So it's basically more or less like one big "average" mortgage. Those then are put into a CDO, and tranched. (Two levels of tranching are normally called CDO-squared.)

Next, house values are somewhat floored - a house can loose 30% value, maybe 40 or 50%, but that's really quite unlikely. Debt, per se, will normally also have some significant recovery value if equity goes to zero. However, a comparatively…

I'm a bit confused reading this, the argument that the 1%+ echelon are ~= to corporations in an aggregate model, and that effectively corporations are underinvesting?
Or rather that the 1% are under-consuming, and so any evaluations of net household saving/consumption are skewed because there is dramatically more saving on one side and more aggregate debt on the other. I haven't seen what recent levels of corp/household/gov/balance spending/saving are.

I also like to refer to this post for these kind of macro questions. I'm not an economist, but it's interesting to see how all the pieces fit together.

https://nathantankus.substack.com/p/where-do-profits-come-from

A carefully curated list of salient examples that conservatives pretend are systemic?

Forgive me if my interest in arguing with someone who quotes "CRT in schools" (with a salient example) and an intentionally (?) crude understanding of what "defund the police" means on the website that courted far right populists[1] is rather insubstantial.

I think we're just too far apart to reconcile anything. A YouTube personality called Vaush might be your kind of rhetoric if you look for left leaning people to address the claims head on, in length. I don't have the breath for it.

[1]: https://nathantankus.substack.com/p/i-am-leaving-substack

Money printer could potentially prop up the market longer if we printed money for the people most hit by the crisis. IE, the small business owners and the poor/middle-class that will and are struggling to pay bills and rent.

Nathan Tankus goes over this one facet quite well [1] which is that essentially landlords are going to burn themselves down trying to extract rent from tenants that will fundamentally be unable to pay due to the coronavirus. Once those people are forced out of their homes then we'll see the crisis hit full speed.

[1] https://nathantankus.substack.com/p/suspending-evictions-is-about-saving

If you want a detailed technical view of what the Fed is doing I highly recommend Nathan Tankus' blog. Though I don't think he's specifically covered Blackrock's role.

https://nathantankus.substack.com/

I'd start with the series "The Federal Reserve's Coronavirus Crisis Actions, Explained"

https://nathantankus.substack.com/p/the-federal-reserves-coronavirus