Who's talking about this? No one, except right here on Mike Norman Economics.
Like Matt Franko has been pointing out, interest paid is not an economic drag. It's an economic stimulus. When the Fed raises rates watch everything take off, stocks, the economy, inflation, etc. Not the dollar, though.
Keep in mind that while Treasury made that quarterly payment, the same quarterly payment was made last year, just slightly less. ($36.5 billion) so year-over-year spending comparisons remain pretty much where they've been since May. FY 2015 up $100b over FY 2014.
Trouble is, we need people spending who can't afford Treasuries.
ReplyDeleteWhether interest is a stimulus depends on where the money comes from. If it comes from taxpayers, then it's not stimulus. If it comes from fresh borrowing and the Fed makes sure interest rates don't rise as a result of that fresh borrowing, then that's stimulatory.
ReplyDeleteIt comes from the authority imbued in govt institution to credit a non govt bank account towards public purpose Ralph... rsp
ReplyDeleteSpending generates tax.
ReplyDeleteInterest is spent and then respent by other ppl and generates an amount of tax and saving eventually.