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.
2018-07-25 11:41:00 Wednesday ET
President Trump hails and touts America's new high real GDP economic growth in 2018Q2. The U.S. is now a $20+ trillion economy, and America hits this mi
2018-04-07 09:36:00 Saturday ET
Facebook CEO Mark Zuckerberg testifies in Congress to rise up to the challenge of public outrage in response to the Cambridge Analytica data debacle and use
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
2019-08-09 18:35:00 Friday ET
Nobel Laureate Joseph Stiglitz maintains that globalization only works for a few elite groups; whereas, the government should now reassert itself in terms o
2018-01-29 07:38:00 Monday ET
President Donald Trump delivers his first state-of-the-union address. Several key highlights touch on economic issues from fiscal stimulus and trade protect
2019-02-15 11:33:00 Friday ET
President Trump is open to extending the March 2019 deadline for raising tariffs on Chinese imports if both sides are close to mutual agreement. These bilat