Blowing the budget?

Financial markets don’t like it when governments announce plans to spend more money. That’s why there’s concern over Donald Trump’s Big Beautiful Bill, which will add, by some accounts, $4 trillion to the US budget deficit over the next decade. Steve Keen says it’s not a problem. Banks buy up the bonds and the central bank ensures they have the liquidity to do so.  In which case, why are people ditching US bonds in favour of other sovereign debt elsewhere? And isn’t there a risk that higher treasury yields will reduce the differential with corporate bonds, which could discourage investment in the real economy? As Phil and Steve nut it out, they both agree, Trump’s bill is a bad one when it comes to income distribution. It assumes trickle down economics. When has that ever worked?

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