Is there any limit in the economy to the fiscal irresponsibility of our rulers? The fiscal space, understood as the ability to increase public debt emissions Is it finite or infinite? If it’s finite How can we detect that the limit and its social consequences have been reached? With these questions begins your exhibition.
To respond to this data, it is important to look at the fiscal data on the US economy. «In two weeks the public debt in circulation has increased in a billion dollars, it has gone from 37 to 38 billion dollars. The public deficit, and we are in the tenth month of the twelve prosecutors, is already 1.6 million dollars. When one looks at the case, they are not the interests of the public debt, it is that the Trump government continues to spend as if there were no tomorrow. «Public spending is now more than 44% of the EUUU GDP and this figure is similar to the one incurred in World War II and in 2008 with the great financial crisis that is not the scenario we have now.» We are in full modern monetary theory. »
In this context, could a responsible politician arrive without fear of cutting public spending? «Not anymore. Because el that cut the public spending send the economy to the recession. But this is not only the case of the US, the strong growth of Spain is due to the increase in public spending as a result of the aids that come from Brussels. The public spending of Spain also represents 44% of GDP. They are all capitalist economies. Therefore there will be no solution. »
Is there any limit? «I think that They can continue issuing debt uncontrolled. The volatility index of the bonds is in minimal and, in addition, the interest rate of the American debt at 30 years – with 38 billion public debt – is at the same level as in 1998, when the public debt would not reach 6 billion. With what yes, they can continue issuing public debt because the US government will issue stable coins backed by the American bond, so the party will continue. »
When can we identify the end of the party? When people do not buy public debt and have to do the central banks and, above all, when we have social problems.
The good news comes after Powell’s intervention in Jackson Hole, which was favorable to interest rates. What happens when they cut the types and the S&P 500 is 0.5% below the historical maximums? The reaction in the markets was immediate: Type drop, dollar drop, fall in the profitability of the bonds and the number of shares that rose in the NYSE on Friday was 90% and the negotiated volume on the rise was 90% with what the S&P 500 will rise a lot until 2026.