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.
2018-06-02 09:35:00 Saturday ET
The finance ministers of Britain, Canada, France, Germany, Italy, and Japan team up against U.S. President Donald Trump and Treasury Secretary Steven Mnuchi
2019-09-15 14:35:00 Sunday ET
U.S. Treasury officially designates China a key currency manipulator in the broader context of Sino-American trade dispute resolution. The U.S. Treasury cla
2018-12-01 11:37:00 Saturday ET
As the solo author of the books Millionaire Next Door and Richer Than Millionaire, William Danko shares 3 top secrets for *better wealth creation*. True pro
2018-06-17 10:35:00 Sunday ET
In the past decades, capital market liberalization and globalization have combined to connect global financial markets to allow an ocean of money to flow th
2022-10-25 11:31:00 Tuesday ET
Corporate investment insights from mergers and acquisitions Relative market misvaluation between the bidder and target firms drives most waves of mergers
2018-01-08 10:37:00 Monday ET
Spotify considers directly selling its shares to the retail public with no underwriter involvement. The music-streaming company plans a direct list on NYSE