The U.S. President said that a certain level of inflation could help pay down the national debt. Bond investors have long feared that the U.S. might let higher prices lower the real burden of its debt.—wsj.com
Category: MAT6
Macroeconomic Policy
Keywords: Federal budget, Debt, Supply-side, Fiscal stimulus, Monetary transmission
Parkin 14e Chapters 13, 14
Bade-Parkin 9e Chapters 16, 17
Parkin-Bade Canada 11e Chapters 13, 14
Parkin-Bade Australia 2e Chapters 16, 17
Parkin-Powell-Matthews 11e Chapters 29, 30
The U.S. National Debt Hits Record $40 trillion
The U.S. national debt has reached a record $40 trillion, driven by persistent budget deficits and rising interest payments. At just below $20 trillion in August 2016, the national debt has roughly doubled over the past decade.—cnn.com
Britain’s Laffer Curve for Capital Gains Tax On Top Earners
Many wealthy Britons have emigrated as capital gains taxes have increased. Despite this, a senior politician has proposed raising the highest capital gains tax rate from 24% to 45%.—wsj.com In October 2024, capital gains tax rates were increased for all categories of taxpayers. The capital gains tax rate for top earners rose from 20% to … Continue reading Britain’s Laffer Curve for Capital Gains Tax On Top Earners
Kevin Warsh and the Monetary Base
The Fed’s balance sheet grew to about $9 trillion after the financial crisis and still remains high at around $6.7 trillion, a primary concern for Fed chair nominee, Kevin Warsh, who proposes faster bond sales to reduce the size of the Fed’s balance sheet.—wsj.com The Questions Who is Kevin Warsh? What is the Fed’s balance … Continue reading Kevin Warsh and the Monetary Base
China’s Output Gap
Analysts say China’s economy is producing less than it could if labor and capital were fully employed. To close this gap in 2026, China’s economy would need to grow by more than 5.3 percent.—economist.com China’s Real GDP According to the National Bureau of Statistics of China, the country’s annual real GDP reached approximately 140 trillion … Continue reading China’s Output Gap
Federal Reserve Nominee Backs Reduction in Balance Sheet Size
The Federal Reserve nominee, Kevin Warsh, supports reducing the size of the Federal Reserve’s balance sheet. President Trump prefers lower interest rates to reduce the government’s cost of borrowing.—ft.com
Japanese Government Bond Purchases by the Bank of Japan
To end deflation, the Bank of Japan has for years been buying Japanese government bonds. As a result, after many years at zero or below, annual inflation has spent much of the past year above 3 percent. These bond purchases have also kept yields low and reduced the government’s cost of borrowing.—economist.com
Federal Reserve cuts rates to three-year low after fractious meeting
The Federal Reserve has cut interest rates to a three-year low … by a quarter point to between 3.5 to 3.75 per cent. Two of the 12 FOMC members objected to the cut and one wanted a larger cut.—Financial Times, December 10, 2025 The Questions What is the Fed’s dual mandate? Which inflation measurement does … Continue reading Federal Reserve cuts rates to three-year low after fractious meeting
China’s GDP Growth Set to Dip, Raising Pressure for More Stimulus
China’s economy is expected to grow by 4.8% from July to September, the slowest growth since the third quarter of 2024. The People’s Bank of China is expected to lower the required reserve ratio by 20 basis points.—reuters.com A basis point is one hundredth of one percentage point.
Fed Cuts Interest Rates Amid Weakening Job Market
The Fed lowered the federal funds rate at its recent meeting. The inflation rate rose from 2.7 percent in July 2025 to 2.9 percent in August 2025, and the unemployment rate rose from 4.2 percent to 4.3 percent during the same period.—npr.org