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.
2020-11-22 11:30:00 Sunday ET
A brief biography of Andy Yeh Andy Yeh is responsible for ensuring maximum sustainable member growth within the Andy Yeh Alpha (AYA) fintech network pla
2019-11-11 09:36:00 Monday ET
Apple upstream semiconductor chipmaker TSMC boosts capital expenditures to $15 billion with almost 10% revenue growth by December 2019. Due to high global d
2019-08-08 09:35:00 Thursday ET
Kobe Bryant and several other star athletes have been smart savvy investors. In collaboration with former Web.com CEO Jeff Stibel, the NBA champion invests
2024-04-30 09:30:00 Tuesday ET
With clean and green energy resources and electric vehicles, the global auto industry now navigates at a newer and faster pace. Both BYD and Tesla have
2025-01-31 09:26:00 Friday ET
The current homeland industrial policy stance worldwide seeks to embed the new notion of global resilience into economic statecraft. In the broader cont
2018-04-29 13:44:00 Sunday ET
College education offers a hefty 8.8% pay premium for each marginal increase in the number of years of intellectual attainment in contrast to the 5.6%-6% lo