US DEBT AT 130% PERCENT OF GDP

March 16, 2021 in News by RBN Staff

 

via: email

(Article as quoted in email submission. Originally via WSJ, linked below)

“Jerome Powell lobbied publicly for months for more fiscal spending in the name of spurring the economy. Congratulations to the Federal Reserve Chairman, who has succeeded in catching the fiscal bus. Now his wish is Treasury Secretary Janet Yellen’s command as the Fed has to finance the vast fiscal deficits to come.

That’s the context to consider as the Federal Open Market Committee meets this week amid rising interest rates and market inflation jitters. Fed officials have been telling the public there is nothing to worry about, that they have the tools to manage any rate or inflation breakout. But investors aren’t crazy to be watchful, no matter how blithely the Fed assures.

The sheer magnitude of the deficits to be financed is a rare experiment in U.S. fiscal history. Even before the $1.9 trillion spending bill passed, the Congressional Budget Office estimated the deficit as a share of GDP would be 10.3% in fiscal 2021. With the Pelosi-Schumer-Biden blowout, the deficit this fiscal year will now be in the neighborhood of 18% of GDP. That’s the highest by far since the four wartime years of 1942-1945.

That’s also a lot of Treasury bills, notes and bonds to sell. U.S. investors have historically been able to finance about 4%-5% of GDP. The appetite of foreign buyers will depend on relative interest rates, currency values and confidence in the U.S. economy. Treasury’s Feb. 25 auction of seven-year notes was a warning sign as low demand almost led to failure.

Treasury auctions since have been more robust, but there’s little doubt that the Fed will be a bulk purchaser of U.S. debt for years to come. The Fed is currently buying $120 billion a month of Treasurys and mortgage securities, and (unlike in Europe) there is no limit on the amount it can buy.”

I’M SHOWING DEBT PERCENT OF GDP AT 130%.
(WE’RE SPENDING ABOUT 30% MORE THIS YEAR THAN WE WILL MAKE, WITH NO END IN SIGHT.)
THEY’RE SAYING,  with the Pelosi-Schumer-Biden blowout, the deficit this fiscal year will now be in the neighborhood of 18% of GDP.
WHAT A LOAD OF CRAP.
https://fred.stlouisfed.org/series/GFDEGDQ188S

THIS IS AN IMPORTANT ISSUE, BECAUSE IT LAYS THE GROUND WORK FOR A COMPLETE CRASH OF THE SOCIALIST DEMOCRAT SYSTEM AS WE KNOW IT.

– Crazy Heart



 

Source: WSJ

Powell Catches the Fiscal Bus

Congress passed the spending he wanted. Now he has to finance it.

Powell testifies before the U.S. Senate Committee on Banking, Housing, and Urban Affairs in 2018

 

Jerome Powell lobbied publicly for months for more fiscal spending in the name of spurring the economy. Congratulations to the Federal Reserve Chairman, who has succeeded in catching the fiscal bus. Now his wish is Treasury Secretary Janet Yellen’s command as the Fed has to finance the vast fiscal deficits to come.

That’s the context to consider as the Federal Open Market Committee meets this week amid rising interest rates and market inflation jitters. Fed officials have been telling the public there is nothing to worry about, that they have the tools to manage any rate or inflation breakout. But investors aren’t crazy to be watchful, no matter how blithely the Fed assures.

The sheer magnitude of the deficits to be financed is a rare experiment in U.S. fiscal history. Even before the $1.9 trillion spending bill passed, the Congressional Budget Office estimated the deficit as a share of GDP would be 10.3% in fiscal 2021. With the Pelosi-Schumer-Biden blowout, the deficit this fiscal year will now be in the neighborhood of 18% of GDP. That’s the highest by far since the four wartime years of 1942-1945.

That’s also a lot of Treasury bills, notes and bonds to sell. U.S. investors have historically been able to finance about 4%-5% of GDP. The appetite of foreign buyers will depend on relative interest rates, currency values and confidence in the U.S. economy. Treasury’s Feb. 25 auction of seven-year notes was a warning sign as low demand almost led to failure.

Treasury auctions since have been more robust, but there’s little doubt that the Fed will be a bulk purchaser of U.S. debt for years to come. The Fed is currently buying $120 billion a month of Treasurys and mortgage securities, and (unlike in Europe) there is no limit on the amount it can buy. …

*QUOTED ARTICLE CONTINUES HERE: WSJ OPINION


 

I’M SHOWING DEBT PERCENT OF GDP AT 130%.
(WE’RE SPENDING ABOUT 30% MORE THIS YEAR THAN WE WILL MAKE, WITH NO END IN SIGHT.)
THEY’RE SAYING,  with the Pelosi-Schumer-Biden blowout, the deficit this fiscal year will now be in the neighborhood of 18% of GDP.
WHAT A LOAD OF CRAP.
https://fred.stlouisfed.org/series/GFDEGDQ188S

THIS IS AN IMPORTANT ISSUE, BECAUSE IT LAYS THE GROUND WORK FOR A COMPLETE CRASH OF THE SOCIALIST DEMOCRAT SYSTEM AS WE KNOW IT.

– Crazy Heart