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Activist #MMT - podcast

Jul 31, 2023

Welcome to episode 146 of Activist #MMT. Today I talk with author, mathematician, and bond analyst Brian Romanchuk, on the basics of the secondary market and how it relates to the primary market. Brian starts with a brief tutorial of how bonds are priced, which is seen very differently from the points of view of the primary and secondary markets. For an in-depth treatment of this topic, you can listen to episodes 30 and 31 of MMT Podcast with Steven Hail.

(Here's a link to part two. A list of the audio chapters in this episode can be found right below [above the full-question list].)

Brian then describes bonds (and more broadly, securities) in general, the population of who buys and sells them, some of the reasons why they are bought and sold, and several anecdotes of how it all happens.

What can be said is this: rich people rarely if ever buy US treasuries on their own, as individuals. Additionally, the biggest players in securities trading never speak publicly in order to prevent jeopardizing their advantage – they keep their mouths shut. These two facts alone put a huge hole in the idea of so-called bond vigilantes. Although I'm not necessarily interested in the idea of bond vigilantes, it's one of the most obvious and common myths that comes up regarding the secondary market.

Whatever the case, the idea that the market can somehow overrule the national government is clearly false. This is for at least the following three reasons:

  1. only the national government can create and delete its own bonds.
  2. Only the national government can create and delete its own money – which is required to purchase those bonds.
  3. And the national government (for countries such as the United States, UK, Australia, Japan, and Canada) have little to no foreign denominated debt, which means they do not offer to convert their money into anything else.

What this means is that the national government, through the collective action of its citizens (US!), has the power to stand up to the market even if they somehow object to the actions of that government.

The only way the market can overpower the national government is if the government chooses for it to be that way – such as when representatives and regulators are bought off by the biggest players in that market. This is further bolstered by the populace being sufficiently duped into believing it all to be "unfortunate, but necessary." This is a primary battle-front in the centuries-long war between rich and poor, which, unfortunately, the rich have all but won.

And now, onto my conversation with Brian Romanchuk. This is part one of a two-part conversation. Enjoy.

In order to preserve both my podcast and my sanity as I proceed through Torrens University and Modern Money Lab's graduate program in MMT and ecological economics (🦉🤝🌍), I've slowed my podcast from one episode a week, to once a month. For as little as a dollar a month, patrons of Activist #MMT can hear all three parts with Brian right now. You can start by going to


Audio chapters

  1. 5:33 - I don't care about bond vigilantes per es, it's just the most common (mythical!) topic discussed.
  2. 7:43 - The core reasons why the government, not the market, is in charge.
  3. 11:18 - The definition of money. Even a pizza coupon is money, but not as understood by the general public.
  4. 12:04 - A government bond is a security, governed by securities laws.
  5. 12:49 - The basics of price and yield
  6. 21:41 - Price and yield versus par value and coupon rate – terms as used in the primary versus secondary market
  7. 24:45 - Computer era versus pre-computer era
  8. 29:48 - despite lots of corruption and instability, he will always get $100 back from that.
  9. 33:14 - Primary market
  10. 36:05 - "Basis points"
  11. 44:34 - Your company benefitted fixed-income earners
  12. 47:11 - Does your company know when bonds are purchased from primary or secondary dealers? Does the distinction matter?
  13. 52:21 - John Harvey: the internet ended personal connection in trading
  14. 1:00:21 - The internet allows you to do a large quantity of small transactions BUT everyone can see it (it's publicly viewable)
  15. 1:01:06 - "Reallocation between bonds and equities."
  16. 1:04:24 - Duplicate of introduction, with no background music (for those with sensitive ears)