Karl Smith: Why Is The US Government Still Collecting Taxes? THE DEFICIT EARNS A PROFIT!!!
I hesitate to excerpt from this because it says it all so well and so briefly. But:
…the more taxes the US government collects, the more money it loses.
When the US government declines to sell a 10 year Treasury bill at a real rate interest rate of –0.57 percent it is agreeing to pay, to the bond market a fixed rate of 0.57 percent over the next ten years. …
Now you say, sure but interest rates can turn [on] you. And, they absolutely can. But, at minimum you must recognize that you are arguing that the US government enter into an interest rate swap with the Global Financial system because [
you that]your intuition about the path of interest rates is superior to that of the Global Bond Market. …And, be aware, the Counterparty in this swap is folks like Goldman Sachs, JP Morgan, Morgan Stanley, and yes Barclay Capital.
Are you sure that you want to buy this swap?
Why Is The US Government Still Collecting Taxes?: Should Lambs Lay Down With Lions Edition – Forbes
Cross-posted at Asymptosis
the corollary to that is that government spending when real interest rates are negative also earns a profit, as ezra klein pointed out last week…
Sure sure. Next you’ll be convincing me there is some magical system to convert practical sensible ideas into actual policy.
The real issue who should be creating money. For not only do financial markets cause inflation they have always backrupted whatever country they have been used since around 300BC.