Raising interest rates would increase fiscal stimulus and improve the balance sheet
Hi Cullen, could you please clarify this statement you wrote in one of your old articles?
“4. Raising rates would actually increase the budget deficit which would be a form of backdoor fiscal stimulus and further balance sheet improvement.”
Won’t raising rates increase the interest income on bonds the government has to pay back to its creditors? How exactly would that improve the balance sheet if the US government has foreign creditors like China and Japan holding large amounts of US treasuries?
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