Sunday, June 4, 2017

If the curve steepens before the debt limit vote

If he senators raise the debt limit we would expect them to finance a bunch of short term debt with long term. But the vote  is directly observable to all, including the events leading up. What if wealth ditches the ten year, and grabs the one year, up front of the vote? Suddenly, hours before the vote, 50 senators from small states see a major change, their favorite small programs are swamped by new interest charges. They vote now, and we reset.

One of many paths, and the public debt limit display will  bring out the worst of us, our best part.

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