Friday, February 28, 2014

Bryce Covert — The Deficit Fell Faster Last Year Than Any Since The End Of World War II


We're supposed to celebrate this? The good news, though, is that it's mostly due to rising revenue rather than spending cuts.

2 comments:

mike norman said...

Nice to know, but how do you make money from this? My Forex trading course is the only applied MMT course anywhere. What good is knowledge of MMT if you don't know how to use it to make money?

Personally, I'm tired of whining about how everyone has economics wrong and we (MMTers) are the only ones who know the truth. I've decided to put my knowledge of money systems to use and I'm using it to trade the currenc markets and doing incredibly well.

So are my students.

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The Rombach Report said...

"Nice to know, but how do you make money from this?"

Mike - I'll leave the FOREX side to you, but as far as fixed income goes, the smaller the deficit gets the greater will be the pressure on credit spreads to widen. How to make money from this outlook? Good question and glad you asked. Sell a 5 year strip of Eurodollar futures against a long position in the 5-year Treasury future in a duration neutral hedge ratio. This position is analogous to being long 5 year swap spreads which will generate profit as 5 year swap spreads widen.