What is the real return from government debt? Long term view is tax income vs debt costs. It is up and down, up and down. The chart compares the yearly yield cost on all debt, with yearly yield on tax receipts. My eyeball observaion tells me government is losing on debt.
And we have to treat seigniorage taxes as an interest rate payment, so the blue line is actually scaled up a fourth after the 2008 crash. That drop in the blue just after the crash is the Fed taking up tax collection duties.
Econs often tell you the instantaneous comparison with the current rate vs current consumer inflation, or five year forward on consumer inflation. Government does not shop at Walmart much and the comparison is a bad idea. Whatever gains the government makes during expansions always seem to be lost during recessions.
Also note that the bond market generally watches total debt costs vs current ten year rte, keeping those two in line. The key drive in all this is disinflation, the economy is much better at pricing.
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