our debts are denominated in our own currency, which proponents of MMT (Modern Monetary Theory) will tell you we have the ability to print to our heart’s content.
Wow! Starting right out of the gate with a strawman.
So all we need to do to pay off our federal debts is to fire up the money printer.
If you understood MMT you'd know that our debt "IS" our (net) money supply, so it would be impossible to pay off federal debt with more debt.
We could simply convert Treasury bonds to bank reserves, converting one form of money to another. However, people buy Treasury bonds because they want them, and they had the reserves prior to having bonds.
So, unless we stop selling bonds, which I'm OK with since they aren't a funding mechanism, that investors and banks like, the reserves would likely be converted back into bonds within a short time.
Even if we pay off just a portion of our debts this way, this would flood the world with dollars at the same time that it introduces skepticism towards the U.S.’ willingness and ability to pay back its debts with non-depreciated (a.k.a. non-printed) dollars, causing Treasury bond yields to rise.
Which dollars in your wallet or bank account are "printed dollars" and which are "non-printed dollars"? At what point in the history of the US dollar is the division between "non-depreciated" and "depreciated" dollars?
Did you hear the news? President FDR ended the convertibility of dollars to gold in '34 and President Nixon did the same for international trade in '71. Without a peg to a commodity or another currency the US dollar cannot, by simply creating more of them, inflate or lose value.
The fact that you believe that the "market" sets Treasury bond rates tells me you are getting info from YouTube or a crypto trade site. People will sell and trade bonds between themselves whenever a buyer and seller can agree on a price, but that has nothing to do with the Fed or Treasury.
That’s because the flood of dollars would make both dollars and fixed income investments denominated in dollars less attractive. So there would be two primary and somewhat contrasting forces at play — a weaker dollar vs. rising interest rates.
The Fed will always dictate bond rates, even if it has to purchase 100% of those offered, which it never does.
This suggests that you believe two false concepts. 1)That the value of money is diminished by its quantity and 2) that creating more money in the private sector means higher interest rates to sell Treasury debt.
Neither are true, but 2 is especially funny because if more reserves are created in the system the desire for interest bearing bonds would be greater, not less. The monetary/banking system hates excess reserves and will turn them into bonds, even at sub-inflation rates if necessary, as soon as possible.
This would create a strange tug of war where dollars are printed to try to keep bond prices up and interest rates low.
Bond traders have no impact on bond rates at Treasury which "are" the base price for interest rates. I don't understand why anyone would make opposing statements in the same sentences, but you keep doing it.
At the same time, the reason that bond prices are experiencing downward pressure is because of all the dollars printed both to pay off debts and to buy up bonds.
Treasury bonds are the direct result of deficit spending by Congress, which has to happen first or there is no money available to purchase bonds. The sovereign issuer of a fiat currency never "needs" to borrow to enable spending, but it does so to set a floor for investors and to enable the Fed to hit its inflation targets.
Once again, no one cares about secondary market traders of Treasury bonds because all their trades are zero-sum. Whatever someone looses is someone else's gain.
There is just so much wrong in the rest of your article that it makes my head hurt to think about going farther with this critique. Stick to your bitcoin hobby and leave the fearmongering over federal macro-econ to the professionals, the politicians.
