Debunking Economics - the podcast7 Tammi

The complete guide to the bond market

In this episode, Phil and Steve take listeners on a guided tour through the mechanics of government bond markets — stripping away the myths, misunderstandings and textbook clichés that usually cloud the topic. Starting from a listener question, they explore why governments issue bonds in the first place, how deficits translate into reserves within the banking system, and why double‑entry bookkeeping is the only reliable way to understand what’s really happening behind the scenes.

Steve explains that when governments spend more than they tax, they create deposits in private bank accounts and matching reserves for the banking sector. Bond issuance doesn’t “fund” this spending — it simply prevents the Treasury’s account at the central bank from going into overdraft, because most governments have imposed legal restrictions on doing so. Phil pushes on the role of banks, reserves and the idea of “bond vigilantes”, while Steve clarifies the difference between the primary and secondary bond markets, and why private banks are never constrained by reserves when issuing loans.

The conversation also tackles common misconceptions: that banks lend out deposits, that reserves are part of the money supply, or that bond sales create new money. Instead, Steve shows how reserves move around the system, why they can only be used for interbank settlement or buying bonds, and how government deficits are the true source of reserve creation. The result is a clear, engaging walkthrough of a system that’s often presented as mysterious — but becomes surprisingly logical once the accounting is laid bare.

Hosted on Acast. See acast.com/privacy for more information.

Tämä jakso on lisätty Podme-palveluun avoimen RSS-syötteen kautta eikä se ole Podmen omaa tuotantoa. Siksi jakso saattaa sisältää mainontaa.

Jaksot(522)

The always moving equilibrium

Equilibrium is a fantasy—and this conversation explains why. Phil and teve explore how the belief that markets naturally self-correct has shaped economic policy, contributed to the failure to anticipa...

16 Syys 36min

What did Keating do for Australia?

Paul Keating is often sold as the man who modernized Australia - but what if the reforms that made him legendary also helped create the financialized, boom-and-bust economy we live with today? Steve a...

9 Syys 42min

The risks of hedging

In this episode, Prof Steve Keen and host Phil explore the complexities of hedging, its applications, pitfalls, and its impact on markets and the economy.Hedging, rife in the financial and commercial ...

2 Syys 28min

Burnham on Buying British

The UK Prime Minister Andy Burnham has said he wants government departments to focus on buying British, The UK state spends roughly £300bn to £400bn a year on public procurement—and currently treats i...

25 Elo 40min

Ways to foster innovation

Unless you are one of the tech bros, it is difficult for anyone to push on with innovative ideas, probably why the world seems reliant on the US for the next big thing. If you not running a Megacap ge...

18 Elo 39min

Do we actually need bonds?

There’s only one reason a government issues bonds. It’s so their account with the central bank is not overdrawn. It’s only regulation that stops the central bank from saying a rapidly expanding defici...

13 Elo 40min

A reality check on bonds and government spending

A listener (Doug) left a comment on YouTube saying I assume Phil intends to play "devil's advocate" when he speaks as though taxes are necessary for money issuance by governments with sovereign curren...

4 Elo 53min

AI, inequality and basic income

Phil happened upon a book to Australian economist Joshua Gans (and Andrew Leigh) called Innovation & Inequality – how to create a future that is more Star Trek than Terminator. He discusses some of th...

29 Heinä 44min