Misalignment of U.S. Fiscal Policy and the Federal Debt

In September, 2026, U.S. President Trump announced his intent to have the U.S. Government send $5000 to every American, which would cost that government about a trillion dollars, in the event that Trump’s Republican group retains control of the U.S. House and U.S. Senate in 2027 after the upcoming “midterm” election. The attempt to sway the electorates to vote for Republican federal representatives and senators paid no heed to the $40.2 trillion debt of the U.S. Government. Even characterizing the proposed payments as “dividends” ignored the fact that the money would have to be paid for, either by federal taxes, tariffs, or issuing more Treasury bonds (i.e., federal debt). It was not as if the payments would go out from money that the government already had. Such electioneering so misaligned from prudent fiscal policy amid such a high public debt raises the question of whether a government “of the People” can govern responsibly rather than merely in line with instant gratification.

The full essay is at "Misalignment of U.S. Fiscal Policy and the Federal Debt."

On the Federal Reserve’s Quantitative Easing: Impacts on the U.S. Debt and Inflation

With government-bond purchases of $3.9 trillion (including mortgage-backed bonds) from November 25, 2008 to October 30, 2014, the U.S. Federal Reserve Bank stimulated the American economy by keeping interest rates low. This in turn kept the U.S. Treasury department’s interest payments on the gargantuan federal debt lower than would have otherwise been the case. Put another way, the Federal Reserve Bank’s massive foray into stimulating the economy made holding debt and borrowing still more money less costly than it would otherwise have been, and thus enabled the government’s penchant for debt-financing over raising taxes and/or reducing spending. “Enabling an addict” would be a less charitable way of putting the Fed’s role vis-à-vis the U.S. Government. In this essay, I explore problems resulting from the Fed’s stimulus on the government’s debt-financing.

 

The full essay is at "The Federal Reserve's QE"