Roubini Confuses Yellen’s Pragmatism for Treasury Activism
A new paper has fanned the conspiracy theory that the US government is manipulating debt issuance to foster looser financial conditions in an election year. It is not.
US Treasury Secretary Janet Yellen.
Photographer: Kevin Dietsch/Getty Images North AmericaEconomists Stephen Miran and Nouriel Roubini are making waves by suggesting in a paper published last week that the Treasury Department has actively engineered easier financial conditions by increasing the issuance of short-term bills and, consequently, reducing the share of longer-term notes and bonds, thereby keeping yields lower than they would otherwise be. The paper suggests that this amounts to a form of “stealth quantitative easing,” working at cross-purposes with the Federal Reserve’s inflation-fighting efforts and supporting the economy in an election year.
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