https://www.marketwatch.com/story/a-new-plan-might-be-taking-shape-in-washington-to-help-manage-explosive-u-s-debt-d4f4a309
Good. I like to hear bold ideas tackling seemingly intractable problems.
Okay. Worth a try. Probably can't hurt to throw crypto in the mix. We are already almost beyond the point of no return as it is.
Wowzers. That's a good point.
I'm all for trying something. Best idea I think I've heard is to freeze federal spending for a couple years. No cuts but no mandatory increases either. Eventually things even out.
Quote:
George Saravelos, a strategist at Deutsche Bank, has devised a new framework for how the U.S. could better manage its debt without actually doing much to reduce it. He calls it the "Pennsylvania Plan," after Pennsylvania Avenue in Washington. Elements of the proposal appeared to have already been implemented, he said.
Saravelos's proposal wouldn't do much to alleviate the national debt. In fact, it would most likely push yields on long-dated Treasurys higher. But it could buy the U.S. more time to fix the problem, which is critical considering that the appetite in Washington for raising income taxes on individuals and businesses remains quite limited, according to Saravelos.
…
The broad strokes involve reducing the reliance on foreign investors to absorb much of the supply of newly issued U.S. debt, while adopting policies that encourage U.S. pension funds and other domestic investors to step in and buy more.
While reducing the deficit by either raising taxes or cutting spending would certainly help address the debt, Saravelos said there is simply no appetite in Washington to tackle the debt head on.
Good. I like to hear bold ideas tackling seemingly intractable problems.
Quote:
The administration's advocacy for stablecoins - cryptocurrencies typically pegged to the dollar, usually at $1 per coin - could help the administration put Saravelos's plan into action, since stablecoins are often backed by Treasury bills and other ultra-safe assets. Their growing use could boost demand for U.S. debt.
Also, the push for exempting Treasurys from banking leverage ratios could increase banks' capacity to absorb more government bonds.
Okay. Worth a try. Probably can't hurt to throw crypto in the mix. We are already almost beyond the point of no return as it is.
Quote:
In Saravelos's view, the biggest vulnerability facing the U.S. economy isn't the national debt, or the yawning trade deficit in goods. Instead, the fact that foreign investors own far more U.S. assets than U.S. investors own of foreign assets means the U.S. has become dangerously dependent on foreign money.
Wowzers. That's a good point.
Quote:
If nothing is done to change this, it could potentially destabilize the Treasury market if more foreign investors choose to move their money elsewhere, Saravelos said. Deutsche Bank has highlighted signs that foreign investors have started to pull their money from U.S. assets since Trump unveiled his "liberation day" tariffs on April 2, although it appears to be a gradual process so far.
I'm all for trying something. Best idea I think I've heard is to freeze federal spending for a couple years. No cuts but no mandatory increases either. Eventually things even out.
Trump will fix it.
