Yellen on debt financing
More from Treasury Secretary nominee Yellen:
- there is advantage to finding data with long-term debt issuance
- asked about 50 year bond said would be pleased to look at issue and possible market for bonds of that maturity
- some investment programs for public sector would have strong returns that argue in favor of borrowing to finance them
- crucial keep in mind interest burden on debt in the term of GDP
- as debt grows, need more tax revenue needed to pay the interest, and curtails other spending
With interest rates so low, the risks for the surge in US debt is a precipitous rise in interest rates. Borrowing longer-term and matching against longer-term infrastructure investment programs makes sense. However, it is a small piece of the overall debt that the US will need to fund. The yield curve has steepened a bit after the comments with 2 year now down -0.2 bps which the 30 year bond is up 1.6 bps.
On schools Yellen says:
- Schools need more resources
- Pres. elect Biden wants to open up schools in the next 100 days
Other comments:
- Social Security, Medicare have played an essential role for Americans. These benefits must be preserved
- one way to diminish imbalances is to find ways to deliver healthcare more cheaply, efficiently
- Focus is now on providing relief and not raising taxes
- It is important that corporations and high net worth individuals pay their fair share of taxes
- Treasury Secretary has to be a voice for fiscal sanity, pledges to do that
- low interest rates are likely for a long time
