Fiscal Policy
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Is the Debt Ceiling Lunacy?
“Unconstrained politicians are likely to authorize more borrowing than they should. The debt ceiling might provide a useful—if somewhat limited—constraint against excessive borrowing.” ~ William J. Luther
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There Is No Such Thing As Student Debt Cancellation
“The cancellation narrative is reinforced by advocates talking about the benefits of the debt relief, while remaining silent about its costs. There is no such thing as debt cancellation. The loan will be repaid. The only question is who will foot the bill.” ~ Nicolás Cachanosky
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Federal Reserve Operating Losses and the Federal Budget Deficit
“In 2023, the Fed will likely report tens of billions of dollars in operating losses as it raises interest rates to combat raging inflation. Will Fed losses increase the budget deficit as logic dictates they should, or will they be treated as an off-budget expenditure?” ~ Paul H. Kupiec & Alex J. Pollock
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Government Debt and Inflation: Reality Intrudes
“Sooner or later, absent substantially lowering government spending or raising taxes, interest payments will overwhelm the government’s budget. The situation might even be termed a sovereign debt crisis.” ~ Gerald P. Dwyer
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Fiscal Policy and Inflation
“When it comes to fiscal policy, we’re off the edge of the map. The typical stories told by unreconstructed Keynesians are clearly wrong. But that doesn’t mean we never need to worry about fiscal inflation.” ~ Alexander W. Salter
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Why Deficits Matter
“If we want to argue deficits matter more conventionally, we’ll have to do some more theoretical heavy lifting. The usual aggregate demand stories we tell don’t cut it.” ~ Alexander William Salter
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The New Status Quo for Public Finance
“After the 2008 financial crisis, the US never returned to pre-crisis growth levels. My expectation is that unless private investors find a means of avoiding this subsidization of federal borrowing, we never will.” ~ James L. Caton
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Is Larry Summers Channeling Benjamin Anderson?
“The post-2008 framework has incentivized the destabilization of monetary policy. The sooner we recognize this fact, the sooner we can seriously discuss a solution to the problem.” ~ James L. Caton
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Assessing Potential for Higher Inflation
“Monetary policy is intentionally supporting fiscal policy and supporting levels of indebtedness from the Federal government that are unprecedented. The result has been an explosion of M2 that increases the risk of inflation. There is a fair chance that policymakers will succeed. But, for the possibility of success, they risk a monetary-fiscal crisis.” ~ James…
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Politicians Turn Problems Into Power
“Politicians make grandiose claims about their various and sundry programs because those claims resonate with the people who receive government largesse. In the end, people receive pennies on the dollar compared to what they could have received had we decided just to write a check. Our government has become a tool that politicians use to…
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How Will We Pay for a $1.9 Trillion Spending Bill?
“Politicians are quick to ignore the costs of government spending in proposing legislation and obscure those costs by issuing debt rather than raising revenues. It is politically popular to issue debt and send checks to everyone. The benefits of the policy are clear: people get checks. The costs, which ripple out through financial markets as…
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Yellen was Right, the Federal Debt “Should Keep People Awake at Night”
“If the burden of interest payments increases, will Congress make the difficult decisions required to reduce federal spending? What contingency plan do Yellen and Powell have in their back pocket if the dollar suffers a speculative attack owing to an unsound fiscal position? Yellen was right: ‘It’s the type of thing that should keep people…
