The answer is anyone holding cash. The Federal Reserve's plan to monetize the 2026 maturity wall is a deliberate scheme to dissolve your purchasing power.
The alternative will require some imagination. It is to merge the Treasury and Fed, for the Fed to buy the debt and retire it, and whoever gets the cash gets taxed heavily. We are not there yet. At least the austerity falls on the banks, which can go bankrupt. Better than people.
The owners of cash, government debt, and crypto will be transferring value from themselves to the government. This won’t end well as the economy continues to slow down.
I enjoy many of your columns. For example, your column on China’s technology breakthrough is excellent.
But your columns on monetary policy, like this one, are perplexing.
First, your opposition of government to the people is very Reaganesque, and equally disingenuous.
Our government is deeply in debt because it provides services to people that are not being paid for. Social welfare programs - Social Security, Medicare, Medicaid, SNAP, TANF, housing assistance - make up 60% of the federal budget. Tax credits - EITC and CTC - make up another 3%. Add in other programs supporting low income families, such as educational grants and housing assistance - we are looking at 2/3 of the federal budget going directly to people. Then we can add the aid provided by FEMA, the maintenance of our National Parks, etc., well, you get the picture.
Somebody has to pay for all of these services that our government provides to Americans. We do not tax ourselves enough to cover the cost of the services we receive. So our government has to borrow to cover the shortfall.
When payment is due, we have to come up with money to cover it. This is not a ‘capitalist’ conspiracy to transfer wealth. It’s the result of receiving more services than you pay for.
Appreciate the reply. The disagreement isn’t about services or why deficits exist. It’s strictly about how the bill gets paid when refinancing tightens.
Taxes and spending cuts are the direct route. The other route is to lean on money creation and capped yields so inflation reduces the debt in real terms. No conspiracy needed, just incentives.
The alternative will require some imagination. It is to merge the Treasury and Fed, for the Fed to buy the debt and retire it, and whoever gets the cash gets taxed heavily. We are not there yet. At least the austerity falls on the banks, which can go bankrupt. Better than people.
The owners of cash, government debt, and crypto will be transferring value from themselves to the government. This won’t end well as the economy continues to slow down.
Wasn't this supposed to happen in 2025 though? https://www.firstnational.ca/commercial/resources-insights/article/will-the--9-trillion-maturity-wall-in-2025-force-u.s.-treasury-yields-higher
Iconoclast— the cost of the constant military interventions is a problem.
I enjoy many of your columns. For example, your column on China’s technology breakthrough is excellent.
But your columns on monetary policy, like this one, are perplexing.
First, your opposition of government to the people is very Reaganesque, and equally disingenuous.
Our government is deeply in debt because it provides services to people that are not being paid for. Social welfare programs - Social Security, Medicare, Medicaid, SNAP, TANF, housing assistance - make up 60% of the federal budget. Tax credits - EITC and CTC - make up another 3%. Add in other programs supporting low income families, such as educational grants and housing assistance - we are looking at 2/3 of the federal budget going directly to people. Then we can add the aid provided by FEMA, the maintenance of our National Parks, etc., well, you get the picture.
Somebody has to pay for all of these services that our government provides to Americans. We do not tax ourselves enough to cover the cost of the services we receive. So our government has to borrow to cover the shortfall.
When payment is due, we have to come up with money to cover it. This is not a ‘capitalist’ conspiracy to transfer wealth. It’s the result of receiving more services than you pay for.
Appreciate the reply. The disagreement isn’t about services or why deficits exist. It’s strictly about how the bill gets paid when refinancing tightens.
Taxes and spending cuts are the direct route. The other route is to lean on money creation and capped yields so inflation reduces the debt in real terms. No conspiracy needed, just incentives.