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.
2017-07-13 08:35:00 Thursday ET
President Donald Trump has announced that a major Apple iPhone upstream supplier, Foxconn Technology Group (aka Hon Hai Precision Group), will invest $10 bi
2019-07-25 16:42:00 Thursday ET
Platforms benefit from positive network effects, scale economies, and information cascades. There are at least 2 major types of highly valuable platforms: i
2018-02-19 08:39:00 Monday ET
Snap cannot keep up with the Kardashians because its stock loses market value 7% or $1 billion after Kylie Jenner tweets about her decision to leave Snapcha
2018-06-01 07:30:00 Friday ET
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 predict
2017-05-01 09:45:00 Monday ET
Apple now pursues an early harvest strategy that focuses on extracting healthy profits from a relatively static market for the Mac, iPhone, and iPad, all of
2018-09-03 09:31:00 Monday ET
Amazon follows Apple to become the second American public corporation to hit $1 trillion stock market valuation. Amazon's founder and chairman Jeff Bezo