Money

[Christian Gregory]

> >
> >But in reality, the government couldn't care less
> >whether or not anyone wants to buy its bonds.  It
> >already has the money.  All that's happening is that
> >people are exchanging a government obligation that
> >doesn't pay interest (money) for one that does
> >(bonds).  If people would rather hold onto
> >non-interest bearing cash, why should the government
> >care?

The government should care because the preference for cash (over bonds) is
not costless.  In a growing economy, the cash preference may reflect
expectations of debt-inflation, or help trigger it. In a slowing economy,
the preference for cash over bonds leaves you with Japan.

I thought this kind of high-handed, technocratic rhetoric (let them eat
dollars!) died in the 70's.

Christian