Loose limits on public-debt issuance in developed countries do not mean that there are no limits. As former IMF chief economist Olivier Blanchard has argued, it means that “if safe interest rates are expected to remain below growth rates for a long time,” then “debt rollovers, that is the issuance of debt without a later increase in taxes, may well be feasible.”
The subsidy at the ten year rate is almost one percent. We pay 1.6% and growth is slightly negative, and tax income is dropping faster than growth is dropping. We are paying a heavy deflationary price for the Fed tax collecting function, the regulated banking system is drying up. Finance was still paying th bank taxes from the last intervention.
The Fed is in a trap, all bungled up, way off equilibrium. It is losing market share too fast. If you want a looser Fed then free the Fed of its government restraints a bit better, with a long term contract. The trade is the only way out.
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