Today’s Economic tips:
“The Market” does not set yields on Govt “debt”. Govt does.
Govt issues “debt” & offers whatever interest rate it wants to pay for it.
The purpose of issuing “debt” is not to fund Govt spending. Is to offer savings accounts to the private sector.
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“The Market” does not set yields on Govt “debt”. Govt does.
Govt issues “debt” & offers whatever interest rate it wants to pay for it.
The purpose of issuing “debt” is not to fund Govt spending. Is to offer savings accounts to the private sector.
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“Debt” (bonds) don’t have to be issued every time we run a deficit. Govt can choose not to.
There is no reason why issuing bonds corresponding to a deficit would be more or less inflationary than not doing so.
Can we now stop being scared of the “Govt Debt” bogeyman?
There is no reason why issuing bonds corresponding to a deficit would be more or less inflationary than not doing so.
Can we now stop being scared of the “Govt Debt” bogeyman?
Interest on Govt bonds is not paid for with taxes. It’s paid for with newly created money & constitute a relatively ‘small’ additional income to the private sector (Think pensioners investing in bonds).
Govt bonds are the safest form of investment there is. Because Govt never goes bankrupt and can always, ALWAYS pay the interest in bonds denominated in its own currency.
I.e. There will always be demand for Govt bonds.
I.e. There will always be demand for Govt bonds.
