Wednesday, September 2, 2015

With One Month to Go


YoY leading govt spending thru end of August with another month to go in the US FY:



Looks like we will end up (AGAIN) around $4.2T for the FY.

9 comments:

Malmo's Ghost said...

And this means exactly what?

Matt Franko said...

https://en.wikipedia.org/wiki/Source–sink_dynamics

Matt Franko said...

And here:

https://en.wikipedia.org/wiki/Current_sources_and_sinks

Malmo's Ghost said...

Are you saying these flows or lack thereof if that be the case will lead directly to an economic decline? What is your primary point?

Matt Franko said...

Mal, Status quo +/- .... ie "muddle thru"... rsp,

Malmo's Ghost said...

Got it. Thanks.

Matt Franko said...

Still might be a good idea to look over the two links.... ;)

Ryan Harris said...
This comment has been removed by the author.
Tom Hickey said...

A change in the FFR would only have an effect on price level to the degree it affects demand. The reason it could have a deflationary bias rather than the predicted inflationary one is reduction of interest income that could affect spending. On the other hand lower rates encourage investment borrowing. This would probably get translated through the housing channel in terms of lower mortgage rates.

But there are so many potential factors involved, it's probably impossible to tell independently of context.

The MMT point is just one factor and it's difficult to weight it out of context.

Actually, one of the reasons that WM recommends permanent low rates is to encourage investment. The lower interest pay out would tend to undercut inflation, too.

WM acknowledges that low rates could stimulated speculation in assets and he says that that this is best handled by regulating lending so as to prevent imprudent lending against collateral.