I saw a comment about the drop in the U.S. Federal debt-to-GDP ratio, which reminded me that I wanted to discuss it once the data started to settle down. As can be seen in the above chart, the public debt-to-GDP ratio went from 135% in 2020Q2 to 120% in 2022Q3 (latest figure on FRED). A drop of (roughly) 15% in the ratio without some kind of “austerity” policies might seem surprising — but it is only surprising if you look at debt dynamics the wrong way. That wrong way is relying on “real” variables — real GDP growth, real interest rates — as well as thinking too much about long-term “steady state” or “equilibrium” values.
JPOW has proven himself an astute political animal over decades now. I can't believe based on what we've seen so far that he doesn't take into careful consideration the needs of whoever he anticipates having sway over his next appointment process. The next Presidential election will soon be upon us. It seems his current boss and the man he owes his last reappointment to is going to be in great need of JPOW's help massaging the numbers and statistics and lobbying his case, in ways that only JPOW, as The Chairman, has the power, position, and prestige to do, lest they become gist for his boss's opponents. Using your "6" years as hypothetical max window of operating room before the interest payments become truly frightening enough to threaten the ambitions of incumbents and encourage the ambitions of 'usurpers', JPOW can keep dithering or walking the tightrope depending on one's world-view biases, until, after the election. But, if the bugbear inflation isn't whipped back into it's cage by then, he'll have to go full-Volcker, as I presume we'll be perilously near the end of the fuse burning on the interest-payment bomb if all this "lag" talk is to be believed. Sometimes we lament term-limits, but, sometimes term-limits are the only thing that we can hope will stiffen the spines of the creatures our 'modern' political system breeds to tell the truth rather than what they think the voters want to hear. Who knows. The only thing I can be sure of, is Politics & Politicians will drop many a spanner into the gears of JPOW's formulas and models before this fine mess is cleaned up.
JPOW has proven himself an astute political animal over decades now. I can't believe based on what we've seen so far that he doesn't take into careful consideration the needs of whoever he anticipates having sway over his next appointment process. The next Presidential election will soon be upon us. It seems his current boss and the man he owes his last reappointment to is going to be in great need of JPOW's help massaging the numbers and statistics and lobbying his case, in ways that only JPOW, as The Chairman, has the power, position, and prestige to do, lest they become gist for his boss's opponents. Using your "6" years as hypothetical max window of operating room before the interest payments become truly frightening enough to threaten the ambitions of incumbents and encourage the ambitions of 'usurpers', JPOW can keep dithering or walking the tightrope depending on one's world-view biases, until, after the election. But, if the bugbear inflation isn't whipped back into it's cage by then, he'll have to go full-Volcker, as I presume we'll be perilously near the end of the fuse burning on the interest-payment bomb if all this "lag" talk is to be believed. Sometimes we lament term-limits, but, sometimes term-limits are the only thing that we can hope will stiffen the spines of the creatures our 'modern' political system breeds to tell the truth rather than what they think the voters want to hear. Who knows. The only thing I can be sure of, is Politics & Politicians will drop many a spanner into the gears of JPOW's formulas and models before this fine mess is cleaned up.