Deficits, Debt, and Markets
As government spending hits record levels around the globe, some politicians, economists, and pundits are warning that rising indebtedness may drag down economies and financial markets. This issue has raised concern among investors who assume that a government’s fiscal policy is closely linked to the country’s economic growth and market returns.
Financing the Federal Debt
The United States government is financing its more than trillion dollar a year borrowing with IOUs on terms that seem too good to be true. The New York Times article, Payback Time; Wave of Debt Pyaments Facing US Government, takes a deeper look at the situation.