Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
I have been thinking (and asking questions here as some might have noticed) if there is a point to state borrowing fiat currency.

An argument could be constructed that the government could control amount of money circulating by on one hand regulate the CB rate and the conditions it is borrowed out under, and on the other give the opportunity to park your money with the state to suck up money that is not invested. Then as a rule, the bond rate should be slightly below the CB rate (if it is over banks can borrow from CB and to government, which is just another bank subsidy, if it is far below you get a wide span where the profitability of investment does not depend on CB rate), and the amount that the government borrows should be irrelevant.

Can I have this argument chopped up now?

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by A swedish kind of death on Wed Nov 23rd, 2011 at 09:52:08 AM EST
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