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Government Vol
Remember: The US government isn't a corporation.
Stan Druckenmiller may not understand (or appreciate) that, and neither, apparently, do a lot of other market participants who insisted last year that Janet Yellen should've "taken advantage" of low rates by deftly shifting Treasury's term structure (tactically extending America's WAM).
That sounds intuitive (and Druckenmiller grabbed all kinds of media attention when he derided Yellen for not "locking in" low, long-term borrowing costs), but as
Let start by taxing billionaires/millionaires (as many billionaires/millionaires in Davos just suggested). The federal government doesn’t have a spending problem as most of the brainwashed morons on financial television would have you think. The government has a (lack of) taxing billionaires problem.
We should also create a wealth tax solely for Elon Musk. 90% off the top. Would make the world a far better place.
Ungovernable. I hate to say it but as a people we have become morally bankrupt. We no longer care about the good of the people. We have gone the way of other great civilizations; Rome springs to mind. I doubt we will make it another 100 years.
I’m betting the under, though I won’t be alive to collect.
Corporate interest rates over the last 50 years seem unusually low in that first figure. And I’m surprised they’ve always been lower than rates at which the government can borrow.
To be totally honest with you, I can’t explain that chart. It’s not spreads and it’s obviously not all-in borrowing costs. The good thing about sell-side research, though, is that you can be reasonably confident it’s explainable (as opposed to, you know, just some random person’s charts on social media which might just be totally wrong). But, again, I can’t answer the question you’re implicitly asking. I’m not sure what series they’re using for that chart. I’ll ask.
Ok, so the corporate interest cost in the chart is Corporate Net Interest & Miscellaneous Payments from the NIPA data. The BBG ticker is: INCONINI
The government interest cost is interest payments minus receipts. On BBG, payments is FGCRINPY and receipts is FGCRINRC
Then you have to divide all of it by nominal GDP
Good clarification. It’s interesting to see NIPA data rather than S&P 500 or other publicly traded company data.
This is a really interesting topic. Little by little we are finding new relationships between different asset classes. I’ve always been interested in this, because frequently one asset class has little understanding of the other and vice a versa. It’s always good to have a theoretical value in mind when trading something. It helps to build confidence when trading….Frequently these are not crowded trades…Thanks for presenting this…