New from me: Biden wants to pay for a climate plan with taxes, not the deficit, to calm the eldritch demons of finance: bond vigilantes. This limits the scope of his package.
But in the 21st century, markets will punish failure to spend ENOUGH on climate businessinsider.com/biden-reshape-…
But in the 21st century, markets will punish failure to spend ENOUGH on climate businessinsider.com/biden-reshape-…
Bond vigilantes, so the old scary story goes, will demand higher interest rates as the government does more deficit spending, which is believed to increase the risk of default. Higher rates will eat up the budget, making deficit spending counterproductive.
Except there is no indication investors actually can or want do this to the federal government. After a years of deficit spending, inflation adjusted treasury interest rates remain negative. No one thinks the federal government will run out of dollars, because it makes dollars.
Local governments, however, are a different story. They can’t make dollars so they really are at the mercy of capital markets. And a growing body of research suggests markets are charging the places most at risk of climate disaster more to borrow.
So money is cheaper than free for the federal government, but growing more expensive for local governments on the frontlines of climate change.
So Biden should do the easy - and responsible - thing: use easy deficit money to pay for a climate plan that actually meets the threat.
So Biden should do the easy - and responsible - thing: use easy deficit money to pay for a climate plan that actually meets the threat.
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