2018-06-01 07:30:00 Fri ET
treasury deficit debt employment inflation interest rate macrofinance fiscal stimulus economic growth fiscal budget public finance treasury bond treasury yield sovereign debt sovereign wealth fund tax cuts government expenditures
The U.S. federal government debt has risen from less than 40% of total GDP about a decade ago to 78% as of May 2018. The Congressional Budget Office predicts that this ratio will surge to 96% in 2028. Although many blame the Trump tax cuts as the key root cause, the increases in health care and retirement benefits suggest a different real reason for U.S. deficit severity.
Harvard professor Martin Feldstein attributes the recent rise of U.S. budget deficit from 4% to 5% of total GDP to increases in Medicare and social security retirement benefits for middle-class older Americans. These increases in core health care and retirement benefits account for about 2.7% of total GDP. The neoclassical Sargent-Wallace thesis suggests that the central bank cannot finance incessant increases in core deficits with government bond issuance regardless of money supply growth. This money supply expansion would lead to inexorable inflationary pressures that defeat the dual mandate of both maximum employment and price stability in the suboptimal fiscal-monetary policy coordination. Inflation serves as a seigniorage tax that would in turn dampen real macroeconomic variates such as household consumption, capital investment, labor supply, and total economic output. In light of this ripple effect on sustainable financial market growth and prosperity, the law of inadvertent consequences counsels caution.
If any of our AYA Analytica financial health memos (FHM), blog posts, ebooks, newsletters, and notifications etc, or any other form of online content curation, involves potential copyright concerns, please feel free to contact us at service@ayafintech.network so that we can remove relevant content in response to any such request within a reasonable time frame.
2019-02-01 15:35:00 Friday ET
Our proprietary alpha investment model outperforms the major stock market benchmarks such as S&P 500, MSCI, Dow Jones, and Nasdaq. We implem
2019-05-30 16:44:00 Thursday ET
AYA Analytica finbuzz podcast channel on YouTube May 2019 In this podcast, we discuss several topical issues as of May 2019: (1) Our proprietary alp
2020-09-03 10:26:00 Thursday ET
Agile business firms beat the odds by building faster institutional reflexes to anticipate plausible economic scenarios. Christopher Worley, Thomas Willi
2022-02-05 09:26:00 Saturday ET
Modern themes and insights in behavioral finance Shiller, R.J. (2003). From efficient markets theory to behavioral finance. Journal of Economi
2018-12-03 10:40:00 Monday ET
Bank of England publishes its latest insights into the economic impact of Brexit on British real productivity, capital investment, and labor supply as of 20
2018-03-15 07:41:00 Thursday ET
The Trump administration's $1.5 trillion hefty tax cuts and $1 trillion infrastructure expenditures may speed up the Federal Reserve interest rate hike