[thoughtstheseus]

Curious how local and state governments can face “fiscal chaos” while debt issues by the federal govt. is highly desirable. People say governments run deficits during economic downturns (which is true) but in the US local and state spending is more pro-cyclical.

[mylons]

Cities can’t print money

[xtacy]

Didn't the Fed say it will buy up to $500B of municipal bonds as part of the new QE program?

[mylons]

Not sure, but the Fed is still in control here. They will buy as they see fit. Where as SF would almost certainly love to issue themselves some debt to pay these bills right now.

[thoughtstheseus]

I’m not an expert in this area but I don’t think the fed funds operations by printing money. They issue debt which people exchange for money.

Although lately the fed just buys that debt back with printed money so...

[mylons]

They create money via debit issuance. You’re not wrong, but they in fact just created 3T+ dollars that kinda went everywhere unaccounted for.

It’s just easier to say they can print money because the common man doesn’t quite understand how debt translates into new money.

[quxpar]

You're like halfway through the expanding-brain meme. It ends with 'actually, they just add a few zeroes to a few balance sheets, printers don't need to be involved'. All this theory around debt is a rationalization of the money printer.

[thoughtstheseus]

Or cut off a few zeros and slap on a new name like Iran just did.

[mylons]

Haha o/