Meh! US 10-yr yield is 0.66% & my guess is that nominal GDP in the next 10 years will surpass the cost of funding & therefore not an issue to deleverage.
USA national output is = 100 per year. Debt =120; Cost of debt is less than 1%
US tax to GDP revenue is 24.3% in 2018 vs OECD of 34.3%
How does the gov get out of this?
Easy, u either grow our output faster than the debt or u raise the tax ratio. The US has plenty of tax room!
US tax to GDP revenue is 24.3% in 2018 vs OECD of 34.3%
How does the gov get out of this?
Easy, u either grow our output faster than the debt or u raise the tax ratio. The US has plenty of tax room!
Don't forget the US gov is smart & tend to be generous. What did it do after GFC? It ABSORBED TOXIC DEBT & it also allowed for firms + households to declare bankruptcy.
So what? Treasury can fund cheaply so helps w/ ZIRP + QE.
Same now. Fed + Treasury absorbs borrowing costs!!
So what? Treasury can fund cheaply so helps w/ ZIRP + QE.
Same now. Fed + Treasury absorbs borrowing costs!!
What the stimulus is doing is saying, look, households, without income can borrow credit card at HIGH RATE or the gov can borrow at <1% & then give these people they shut down to stay at home cash + unemployment claims. Fed helps by buying too. Absorbing costs for riskier sectors
Note that other govs are not doing this. China is a good example!!!
Central gov balance sheet super lean! Local govs absorb tons of debt, so do the firms & increasingly households.
Small widening of fiscal shows that it wants a trim central gov balance sheet. US is the opposite
Central gov balance sheet super lean! Local govs absorb tons of debt, so do the firms & increasingly households.
Small widening of fiscal shows that it wants a trim central gov balance sheet. US is the opposite
