The real world doesn't have to subscribe to MMT. MMT is a description of how the real world works.
Of U.S. bonds? No, they don't just set a "nominal" rate. Bonds don't work like that. The Fed sets a target rate, then they participate in the bond market to achieve that rate. That is the "effective" rate.
According to Austrian legend. But in the real world, that doesn't happen.
Luckily, bond traders understand how things work, and they understand that fiat currency regimes can always pay their obligations. Risk of default = zero. That's why
yields are so low.
Again - you need to brush up on what is Keynesian and what isn't. QE isn't. I already explained that to you. Keynes was a fiscal policy guy, and he advocated leaving monetary policy alone, save for interest rates.
Is that where Austrian theory was spawned?
Their yields are low because that's where their central bank targets them.
In the real world, Japan can afford to pay that interest, and more. Those bonds are perfectly safe. The only concern Japanese bondholders might have is holding long-term low-yield bonds while interest rates and/or inflation passes them by and makes their investment look bad. But there is zero risk of any of those bonds being defaulted on.
Lucky for Japan that interest rates won't rise unless and until the BOJ decides to raise them.
The yen already floats. Do you understand what that term means?
First of all, Japanese efforts to create inflation are neither Keynesian nor MMT ideas. Second, they aren't having much success with it, because monetarism doesn't work.
I invite you to do the same. And while you are at it, read up on Keynes, too.
Jesus H.
MMT is not how the world works, its not even close.
If it were the Treasury would simply pay off the US debt and the European Union would have entered into massive stimulus instead of implementing austerity.
You cant be this uninformed.
Bond rates are NOT low because the Fed set a minimal target rate.
They're are low because the FED is purchasing massive amounts of them there by manipulating over all demand and that affects their value.
Higher value lower yields.
Simple supply and demand stuff here.
The Fed doesn't set the rate on bonds, the markets do.
When Spanish and Italian bonds shot up not too long ago it wasn't because the overall monetary policy changed.
It was because the markets decided that their debt was a greater risk.
And Japan can't afford ANYTHING if its bonds are deemed worthless.
Do you realize who holds most of Japans debt ?
Their Consumers. What good is a FIAT currency if its worth nothing on the International markets ?
I told you to go educate yourself on Japans crisis.
Japan depends on imports plus 80 percent of their energy is imported also.
A devalued Yen buys less imports, a devalued Yen hurts their consumers and forces them to pay more for energy and everything else.
Go read up on how the Japanese Keynesian malfeasance has hit the Japense Consumer the hardest.
MMT is such a one dimensional concept.
