Media, please take note. Every article should include both this information and information on real interest rates for the entire US Treasury yield curve.
"Biden's infrastructure plan will cost 1% of GDP over the next decade at a real interest rate of -0.6%" is the proper framing. Or perhaps "the productivity & growth gains from this alone, coupled w/ the negative real interest rates, will reduce federal debt levels by 2031."
No one wants to hear this, b/c it feels wrong in the gut & runs against the household analogy. But $2T is a <tiny> fraction of what we should be borrowing right now to invest in all of the things, to maximize 🇺🇸 power, prosperity, & future prospects.

markcopelovitch.com/post/how-much-…

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with Mark Copelovitch

Mark Copelovitch Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @mcopelov

29 Mar
"we no longer have a political party devoted to fiscal conservatism"

The party spending now to avoid another Lost Decade will end up overseeing debt-to-GDP reduction via growth & investment by 2028, & the media will still be offering this both sides/govt-as-household nonsense.
"as Brian Riedl of the Manhattan Institute warns, even a small rise in rates “could bring a full-scale debt crisis.”

No, it won't. That's not how this works. That's not how any of this works:

markcopelovitch.com/post/how-much-…
What does one mean by a debt crisis? A sudden stop? An inability to borrow? To pay? Hyperinflation? There's neither a model nor empirical evidence of this in modern US history. The US had no problem borrowing, spending or servicing debt even at the peak of the oil/Volcker shocks. Image
Read 5 tweets
18 Mar
I broadly agree w/ Kelton's conclusions re: debt & inflation for the US ().

But I confess, I remain puzzled by the need for/novelty of MMT. You get to exactly the same conclusions w/ standard open-economy macro for countries w/ floating exchange rates.
That the austerians & deficit hacks won the debate for so long is not a problem w/ economic theory. It's problem of politics & the media listening to the wrong economists. They could have listened to @paulkrugman or @martinwolf_ or @sjwrenlewis instead.

Or any number of Federal Reserve chairs in the last 15 years.

Read 5 tweets
18 Mar
No, it's not back to the 1960s. No, serious people aren't saying "debt doesn't matter and there are no effective supply constraints." Yes, global capital flows, the international monetary system, history, & data are completely missing again.

Each of these pieces fails to take into account the 🇺🇸position in an era of unprecedented global finance & dollar hegemony. If you want to claim folks are ignoring debt sustainability & "supply constraints," you need to actually assess those seriously:

markcopelovitch.com/post/how-much-…
We're not 🇬🇷 or 🇮🇹. We're not even 🇯🇵. The reason people are saying "debt doesn't matter & there are no effective supply constraints" is that, at debt/GDP of 100% (or even 200%), the 🇺🇸is not remotely near them. They surely exist, but you can't even see them over the horizon.
Read 10 tweets
18 Mar
Vos offers nothing more than Paul Ryan's rehashed talking points re welfare hammocks

He utterly fails the @froomkin test ("Who is proposing intelligent solutions? Who is blocking them? And why?)

And his implication is that universal health coverage is not one of his priorities
It's difficult to overstate how extreme a policy position this is. Per below, support for government involvement in providing health care is almost universal, once one accurately categorizes what that means:
Read 5 tweets
17 Mar
“Delicate moment”

“Shot higher”

The 🇺🇸 government must now pay a real interest rate of <checks notes> -1.76% to take your money for 5 years, and 0.14% to take it for three decades. Very delicate, indeed.
These rate increases are <exactly> what you want to see. The 2-10 year increases are evidence investors believe the pandemic economy will soon end & actually believe US fiscal policy won’t fail this time around. The ultra-low 0-2 year yields are evidence this will take some time.
Financial media seems to be missing the macroeconomic forest for the daily market movement trees. This is puzzling, since it obsessed about rate “normalization” a few years ago. Now it’s happening b/c we’re <finally> getting monetary & fiscal policy working together. Carry on.
Read 6 tweets
16 Mar
👇 This “no one knew” take is nonsense. On stilts.

Obama listened to Summers and Emanuel instead of Romer, and this turned out to be an economic and political error from which his presidency (and the US economy for a Lost Decade) never really recovered.

I mean, @paulkrugman spent most of 2009 saying variations of this.

knowledge.wharton.upenn.edu/article/nobel-… Image
Lots of things went wrong, and many besides Obama and his advisers are complicit. But this “no one could possibly have known the economics” view is simply not credible in 2021. We know and have lived through far too much to take this seriously.
Read 5 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!