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Would the impact of Gov. Debt reduction to zero be positive or negative?

Yes, I know, the answer is it all depends.

The thought behind this is how do you calculate the value of near-zero risk financial assets (e.g. US Gov. debt) in constructing a risk balanced portfolio.   There must be a net value in this goal to having liquid near-zero risk assets at (I would argue) pure efficient market determined prices.

At the extremes there are two limits, both unrealistic.   1.)  Gov. Debt. crowds out private financial sector savings/investment; 2.) Real private sector assets are the equal of public sector debts.

But the reality probably lies somewhere along the continuum from zero debt to infinite debt.   In a sense this is a Laffer Curve argument (the LC is of course correct at the limits, the shape in between is unknown and not even guaranteed to have continuous derivatives).   So accepting it may not be mono-peaked, shouldn't we expect that the availability of near-zero risk financial assets increases the mean risk premia of all assets, and hence ultimately real investment?  In other words it seems possible/probable that having liquid T-debt increases the financial flexibility of the system and, up to a point, results not in crowding out, but more private risk normalized distribution of savings?

I don't think there's any question that some amount of risk free assets are good. T-bonds are a lot like a diversified bond portfolio because their credit quality is based on the credit quality of the entire underlying economy's cash flows. This operates like a savings account for a lot of people. That's a good thing. Certainly better than a savings account with credit risk issued by a bank or non-bank. What level of this is good? I think that's the question everyone is trying to figure out. At some point this should cause inflation, no?

Cullen?