In certain corners of Washington and on the populist right, a theory that has been gaining traction that goes something like this: America’s real problem is that it is too successful.
Lacy Hunt disagrees—interest rates trend down as the private economy is starved of investment. Japan still borrows for 40 years below 4%. The deficit is surely of existential concern though, and the economy and country are ruined by such a course.
I do not know about convenience premium. but note that CDS market has increased the spreak risk of 5 year debt and comparatively higher than many other countries
I enjoyed this read, Veronique. The decoupling between dollar convenience and Treasury convenience is really interesting. The dollar serves as infrastructure, while Treasuries are a product that runs on it. You can lose faith in the product without losing faith in the infrastructure, but that gap can only widen for so long before one drags the other down. That $300B DOGE number is brutal.
"The US is not approaching a fiscal cliff so much as it’s in a fiscal downward spiral, and the speed of descent is not linear."
Is this basically the fiscal equivalent of an aviation death spiral? If so, this is a strong argument for the narrative, not the numbers.
What changes when voters confront the numbers instead of the narrative?
This brief fiscal literacy test gets at a deeper question: how different would our politics look if citizens actually understood the tax system?
https://delphicmirror.substack.com/p/voter-fiscal-literacy-test?utm_campaign=post-expanded-share&utm_medium=web
Lacy Hunt disagrees—interest rates trend down as the private economy is starved of investment. Japan still borrows for 40 years below 4%. The deficit is surely of existential concern though, and the economy and country are ruined by such a course.
I do not know about convenience premium. but note that CDS market has increased the spreak risk of 5 year debt and comparatively higher than many other countries
I enjoyed this read, Veronique. The decoupling between dollar convenience and Treasury convenience is really interesting. The dollar serves as infrastructure, while Treasuries are a product that runs on it. You can lose faith in the product without losing faith in the infrastructure, but that gap can only widen for so long before one drags the other down. That $300B DOGE number is brutal.