With Negative Yields, The Deficit Earns a Profit

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Karl Smith explains what negative yields on Treasuries means, and asks why the federal government is still collecting taxes right now:

Ezra’s points about roads, schools, water systems and teachers is exactly right. However, it can also lead people to believe that this is just some slight of hand way to expand the size of government.

Which is why I insist on pointing out that the US government is costing itself money by collecting taxes. That is, the more taxes the US government collects, the more money it loses.

This is not because of some dubious super supply side effect. Its because the deficit earns a profit. Lets say that again because its so counter to folks baseline intuition.


This entry was posted in Budget.

One Response to With Negative Yields, The Deficit Earns a Profit

  1. jiffy says:

    Please note that ZIRP is killing Social Security (which is ‘invested’ in Tbills) because it is dramatically lowering earnings on revenues everytime T bonds held for SS are turned over … remember the surplus? Well, that surplus is being drawn down but is still substantial but the return is being crushed on every flip. Once again, Wall Street cronies happy to screw working people.