By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
AmextaFinanceAmextaFinance
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Notification Show More
Aa
AmextaFinanceAmextaFinance
Aa
  • Banking
  • Credit Cards
  • Loans
  • Dept Management
  • Mortgage
  • Markets
  • Investing
  • Small Business
  • Videos
  • Home
  • News
  • Banking
  • Credit Cards
  • Loans
  • Mortgage
  • Investing
  • Markets
    • Stocks
    • Commodities
    • Crypto
    • Forex
  • Videos
  • More
    • Finance
    • Dept Management
    • Small Business
Follow US
AmextaFinance > News > The Future: How To Handle The Deficits And The Debt
News

The Future: How To Handle The Deficits And The Debt

News Room
Last updated: 2023/06/16 at 4:57 PM
By News Room
Share
8 Min Read
SHARE

Contents
Three thingsHere We Are

Well, we have completed the latest battle about the debt ceiling.

Now, it is time to move into the future. Now, we need to focus on the debt.

And, let me say, if we don’t voluntarily focus on the debt, we will be forced to focus on the debt.

The United States government has too much debt and, right now, the future of the debt looks out of control.

So here we are.

Three things

First, there is a fiscal battle brewing between the Republicans and the Democrats.

“Far-right Republicans whose votes will be needed to keep the government funded are demanding cuts that go far deeper than what President Biden and Speaker Kevin McCarthy agreed to in the bipartisan compromise they reached last month to suspend the debt ceiling, but such reductions are all but certain to be nonstarters in the Senate.”

“At the moment, completing the spending bills on a schedule that has not been met recently looms as a difficult goal to reach with the House and the Senate at Odds from the start….

Second, the structure of fiscal policy is in the midst of a change, a change that many are saying that is “beyond recognition.”

The world has changed.

What needs to be financed by the government has changed.

Many do not come near to recognizing that this change has taken place and needs to be incorporated into the govevernment’s budgeting.

Therefore, “we should expect government spending to be higher in the 21st century than it the 20th.”

The reason is that “structural changes in advanced economies (mean) more of their resources would have to go to things that are state responsibilities….”

Two such examples are health, because of ageing and education because of the growth of the knowledge economy.

But, these two examples are just a start.

Because of these pressures, more thinking is going to have to go into identifying these issues, identifying how to pay for them and “how to manage the political ructions paying for it will cause.”

Third, this last point is going to be very, very important going forward.

Daniel Henninger, writing in the Wall Street Journal, argues that “Government Spending Is the Central Issue of Our Time.”

Fiscal policies became the leading edge of the government’s policy efforts after the back of inflation was broken in the early 1980s.

The government responded with a policy approach I have titled “credit inflation.” This policy approach is based on government programs, supported by monetary policy, that directed spending into specific areas of the economy like housing, the stock market, the commodity markets, and so on.

The idea was to get generate asset price inflation rather than consumer price inflation.

As I have tried to show in my posts over the past decade or so, the government’s program was very, very successful.

From the 1980s through the 2010s, consumer price inflation was very modest. The Fed’s target consumer price index rose, through most of this time, somewhere around 2.0 percent to 2.5 percent on an annual compound basis.

Economic growth was a little lower than many officials wanted, but given the overall picture, policymakers were very satisfied with the combination of results they produced.

But, although problems developed here and there, nothing became that serious until the pandemic hit. The “pandemic’s two years accelerated the vulnerabilities.”

Having this disturbance and the government’s response to it and all the other things going on in the world, things are in a bit of disarray at this time.

Now, the government has to get things back in order.

How it will do so is what seems to be what Mr. Henninger is looking for.

That is why he contends that government spending will be the central issue of our time.

Here We Are

And, so, here we are. As I have discussed in other places, our fiscal affairs put us in a place of radical uncertainty.

The issues surrounding government spending and how the government finances itself are not fully defined at this time and cannot be defined at this time.

That is why the concern over the government’s fiscal policy will be such an issue.

There is going to be a massive amount of discussion about this process going forward. Perhaps the discussion about fiscal policy will take a little bit of the pressure off of the Federal Reserve

As I have argued, the Federal Reserve should not be a part of the daily news. Likewise, the government’s fiscal policy should not be a part of the daily news, but this is where our leaders have brought us.

And, we are going to have to live with it.

But, another important issue must be discussed at the same time.

What should the government do about the federal deficit? Should the government run fiscal deficits?

If I had my choice the government should have some kind of a balanced budget kind of framework.

Maybe the federal budget should be balanced over the course of a five-year period. Or, a ten-year period.

The government has got to establish some kind of discipline over its activity.

There are many good reasons why the government’s budget should be balanced. There are good economic reasons why the government’s budget should be balanced. Most have to do with the overall responsibility of a fiscal agent.

The important thing right now, however, is that more and more people are seeing the government’s fiscal activities becoming more and more prominent in public discussions.

Investors need to be aware of these discussions and why they are taking place.

Investors need to be prepared for what might be coming in the way of the government’s fiscal behavior.

Investors need to be able to enter into the discussions about the conduct of the government’s fiscal policy.

The government’s fiscal policy is becoming such an issue that there will be lots and lots of discussion about what it should be in the future.

Read the full article here

News Room June 16, 2023 June 16, 2023
Share this Article
Facebook Twitter Copy Link Print
Leave a comment Leave a comment

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Finance Weekly Newsletter

Join now for the latest news, tips, and analysis about personal finance, credit cards, dept management, and many more from our experts.
Join Now
Wall Street turns cautious on growth

Watch full video on YouTube

How ASML Makes Chips Faster With Its New $400 Million High NA Machine

Watch full video on YouTube

Donald Trump makes risky bet by rekindling his trade war with the EU

Donald Trump loves to make deals. And he may be calculating that…

Rating agencies in public brawl over scores for private credit

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects…

America cannot afford to sweep Biden’s blunders under the carpet

Democrats and much of the US media should take a moment to…

- Advertisement -
Ad imageAd image

You Might Also Like

News

Donald Trump makes risky bet by rekindling his trade war with the EU

By News Room
News

Rating agencies in public brawl over scores for private credit

By News Room
News

America cannot afford to sweep Biden’s blunders under the carpet

By News Room
News

Trump’s attack on Harvard won’t make America great again

By News Room
News

What EU exports are hit hardest by Trump’s 50% tariff threat?

By News Room
News

Donald Trump dismisses dozens of National Security Council officials

By News Room
News

UK investigates possible Russian involvement in Starmer arson attacks

By News Room
News

Donald Trump says Nippon Steel to form partnership with US Steel

By News Room
Facebook Twitter Pinterest Youtube Instagram
Company
  • Privacy Policy
  • Terms & Conditions
  • Press Release
  • Contact
  • Advertisement
More Info
  • Newsletter
  • Market Data
  • Credit Cards
  • Videos

Sign Up For Free

Subscribe to our newsletter and don't miss out on our programs, webinars and trainings.

I have read and agree to the terms & conditions
Join Community

2023 © Indepta.com. All Rights Reserved.

YOUR EMAIL HAS BEEN CONFIRMED.
THANK YOU!

Welcome Back!

Sign in to your account

Lost your password?