Ep. 236 Jon Stewart Asks Great Questions of Federal Reserve Chief
In a recent episode of “The Problem With Jon Stewart,” the former Daily Show host asks former president of the Kansas City Fed Thomas Hoenig why the Fed couldn’t have bailed out homeowners, or just “quantitative ease” away the Treasury’s debt. Hoenig gives muddy answers, so Bob tries to clarify.
Mentioned in the Episode and Other Links of Interest:
- Jon Stewart’s full interview with Thomas Hoenig.
- Jon Stewart skewers Paul Krugman.
- Jon Stewart interviews Kelton and Gray on MMT.
- Bob’s book Understanding Money Mechanics.
- Help support the Bob Murphy Show.
The audio production for this episode was provided by Podsworth Media.
About the author, Robert
Christian and economist, Chief Economist at infineo, and Senior Fellow with the Mises Institute.
The question that Jon Stewart danced around but failed to ask was, “Why not use inflation to devalue all of our debts and thus shaft our creditors?”
The correct answer, of course, is “Shhhh, shut up you idiot!”
QE is still a central bank creating units of currency to buy assets, though, isn’t it? So it could later sell those assets to remove some units from circulation (provided those assets retain any value). It’s not the same as if a central bank just created money and *gave it away* to a government to pay its debts. This wouldn’t be “quantitative easing” of a national debt, right?
Maybe this was where some of the guest’s confusion was coming from?
What Jon Stewart meant is that the Fed creates dollars out of thin air to buy the Treasury debt from the Chinese (say). Then the Fed just rips up the Treasury securities instead of demanding that the federal government send over the dollars that the Treasury securities entitle the owner to.
Well done Bob, well done. I feel like we’re living in crazy times when Jon Stewart comes across as extremely moderate.