Joe Anderson

Econ AP @Macalester. Aggregate resource constraints, Pepsi Zero, college 🏈 . Inflation is only somewhat a monetary phenomenon.

[Joe Anderson @JoeReedAnderson]

US debt/GDP returned to 2025Q2 levels (100.5%) in 2026Q2.

Primary deficits (+8.0%) and returns on reserves and rev. repos (+0.1%) were financed by returns on Treasuries (-0.1%), inflation (-4.9%), and real growth (-3.1%).

Percentages interpreted as contributions to debt/GDP.

[Milton Friedman Quotes @MiltonFriedmanW]

“The central principle is that nobody takes care of somebody else’s property as well as he takes care of his own.”

— Milton Friedman

[Joe Anderson @JoeReedAnderson]

Imagine the message the ECB would send to EU members. "You may borrow without limit, we'll buy your debt and cancel it later when it comes due."

It's a helicopter drop with more steps. Fiscally-driven. Plus incentive for future irresponsible borrowing.

[John Cochrane @JohnHCochrane]

The new MMT. Default on public debt to the central bank. Costless! Print money during covid to buy government debt. Costless! Inflation? Oh, that was all war and supply chain shocks. (Too many good economists pass that one along too.)

[John Cochrane @JohnHCochrane]

More unpleasant arithmetic for monetary policy acting on the shadow of debt.

[Joe Anderson @JoeReedAnderson]

I, Pencil, Adapted (2026)

https://t.co/SlcaoSJD0Y

[Joe Anderson @JoeReedAnderson]

Clinton's surpluses were eight years in the making, beginning with the "pay as you go" rule in 1990's Budget Enforcement Act. @grok, would you describe PAYGO, it's political success, and it's impact on fiscal budgets in the 90s?

[Amunet @VintageSitcoms]

In 1998, Bill Clinton ended 30 years of deficits, bringing the federal budget to zero deficit.

He went on to deliver record surpluses, 22.7M jobs, 4% unemployment, and the longest peacetime expansion.

[John Cochrane @JohnHCochrane]

Wealth Tax 2.0. Some comments on the new Sanders - Khanna bill and Saez and Zucman analysis.

https://t.co/fAAx4MhYSm

[Joe Anderson @JoeReedAnderson]

@40yoap The full list of Fed liabilities is in the H.4.1 release, but the big ones are reserves, notes in circulation, and reverse repo agreements. Yes, reserves are zero maturity.

[Joe Anderson @JoeReedAnderson]

Given today's Treasury announcement:

For those interested in how the privately-held US liabilities' (the relevent debt metric in theory) average maturity has looked recently, here is a figure from my working paper. Avg. maturity up about 12 months since COVID.

[Joe Anderson @JoeReedAnderson]

@40yoap Not including outstanding Fed liabilities inflates WAM. I'm combining Fed liabilities and Treasuries here

[Joe Anderson @JoeReedAnderson]

@40yoap Are you treating outstanding Fed liabilities as zero-maturity objects? MD = Macaulay duration. Medical discussions are too scientific for X 😉

[Joe Anderson @JoeReedAnderson]

@40yoap Yes, WAM. Don't have MD. Need to bring price data or make yield assumptions to calculate which I haven't done

[Joe Anderson @JoeReedAnderson]

@heresyfinancial Short debt is an imperfect substitute for (interest-paying) reserves. The shorter the term, the more reserve-like (to see this, take the limit of a Treasury's maturity as it approaches zero). Ergo, while not QE, it is not an absurd comparison. MV of govt. liabs. constant in both.

[Joe Anderson @JoeReedAnderson]

@40yoap Even given current debt levels and political climate, it's difficult to imagine an imminent US debt crisis. Though with every fiscally irresponsible politician we vote into office we take another step on that path.

[Joe Anderson @JoeReedAnderson]

@40yoap my take: we're in a US debt crisis when the government becomes unable to roll over its debt. Failed auctions. Binding statutory constraints.

If we ever hit an actual debt ceiling, then that's that.

What may lead to failed Treasury auctions?

1/6

[Gabriel @40yoap]

People who worry about debt crises in the US or other advanced economies need to spell out what they mean by "crisis." High inflation for a couple of decades? Haircuts? Buyers not showing up to primary market auctions? What qualifies as crisis?

[Joe Anderson @JoeReedAnderson]

@40yoap Monetary policy can shift inflation into the future which temporarily allows rollover. But fiscal policy is the ultimate disinflator. The expected present value of primary surpluses is king.

[Joe Anderson @JoeReedAnderson]

@Seanfrank Never is a long time

[Milton Friedman Quotes @MiltonFriedmanW]

This Milton Friedman insight is brilliant:

“When you hear people objecting to the market or capitalism, you’ll find that most of those objections are objections to freedom itself.”

“What most people are objecting to is that the market gives people what the people want, instead of what the person talking thinks the people ought to want.”