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.
2020-06-17 09:23:00 Wednesday ET
Successful founders focus on their continuous growth, passion, perseverance, and the collective wisdom of most team members. William Ferguson (2013) &
2018-03-07 07:34:00 Wednesday ET
President Trump tweets his key decision to oust State Secretary Rex Tillerson after several months of intense disagreement over diplomatic affairs. Trump so
2019-03-13 12:35:00 Wednesday ET
Uber seeks an IPO in close competition with its rideshare rival Lyft and other tech firms such as Slack, Pinterest, and Palantir. Uber expects to complete o
2019-11-13 11:34:00 Wednesday ET
The new Brexit deal can boost British pound appreciation and economic optimism. British prime minister Boris Johnson wins the parliamentary vote on his new
2022-05-30 09:32:00 Monday ET
The new semiconductor microchip demand-supply imbalance remains quite severe for the U.S. tech and auto industries. Our current fundamental macro a
2026-02-02 12:30:00 Monday ET
With U.S. fintech patent approval, accreditation, and protection for 20 years, our proprietary alpha investment model outperforms most stock market indexes