tag:blogger.com,1999:blog-2277215496195926573.post5112472886887822749..comments2024-01-01T07:41:51.347-08:00Comments on RALPHONOMICS: Do central banks need assets?Ralph Musgravehttp://www.blogger.com/profile/09443857766263185665noreply@blogger.comBlogger2125tag:blogger.com,1999:blog-2277215496195926573.post-40223241704941144782015-02-23T10:46:58.779-08:002015-02-23T10:46:58.779-08:00Re "bonds", those bonds would strictly s...Re "bonds", those bonds would strictly speaking be central bank bonds if the central bank and government are regarded as different entities. Alternatively if CB and govt are regarded as one and the same, then your phrase "government bonds" would do. All a bit semantic!!!Ralph Musgravehttps://www.blogger.com/profile/09443857766263185665noreply@blogger.comtag:blogger.com,1999:blog-2277215496195926573.post-44563978998525471032015-02-23T08:07:28.303-08:002015-02-23T08:07:28.303-08:00You wrote:
"If a central bank has NO ASSETS ...You wrote:<br /><br />"If a central bank has NO ASSETS to sell, thereād be nothing to stop it wading into the market and offering to borrow at a rate just above the going rate for near risk free loans. That would have the desired deflationary effect."<br /><br />Here, I think you intend that the "market" is the private sector as contrasted to the Central Bank which is the government sector.<br /><br />With that clarification, I agree that government (or Central Bank) can borrow from the private sector, trading private money for government bonds. This would reduce the amount of money available in the private sector.<br /><br />Roger Sparkshttps://www.blogger.com/profile/01734503500078064208noreply@blogger.com