Money Financed Deficits Have the Same Future Tax Obligations As Bond Financed Deficits

Over at Worthwhile Canadian Initiative, Nick Rowe wonders how much of a deficit would need to be money-financed as opposed to bond-financed. I say it doesn’t matter how you finance the deficit, what matters is the time path of interest rates (which is independent of how the deficit is financed).

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Money Financed Deficits Have the Same Future Tax Obligations As Bond Financed Deficits