Hanno Lustig

2024 may also be remembered as the year U.S. fiscal exuberance died. post-mortem 🧵 on how we got here. Right now, with the 10 year US Treasury yield trading well above 4.5% and the federal government spending roughly the equivalent of the defense budget just on interest…

As Argentina shows the power of smart free market policies, America's Democrat and Republican populists compete to drive up debt, spend like drunken sailiers, intimidate businesses, and block trade even with allies. What a world.

"The threat to central banks from ‘fiscal populism’. When monetary policy is set to meet government budgetary needs, these institutions become piggy banks" Andy Haldane in FT today. Great oped. ft.com/content/237226…

You can almostly perfectly predict a country's position on joint debt issuance in the Eurozone with one variable: their debt/gdp ratio. That's pretty telling.

Central bankers are going to have to get out of the way and stop saying the plumbing of the bond market is broken whenever the bond markets signals there is a fiscal problem. Their grandkids will thank them for it.👇

We all want fiscal responsibility. But that won't happen as long as central banks cap yields when they spike, as the Fed did in 2020. You can cap yields, but that inevitably incentivizes bad fiscal policy. Our fiscal mess is inextricably linked to the Fed. robinjbrooks.substack.com/p/fiscal-respo…

would have been worse next to HBS or the econ dept.

"Another explanation [for declining yields and rising deficits] cited a structural force that’s proved surprisingly durable: the American consumer’s seemingly endless demand for relatively cheap goods from abroad. That addiction meant that we would send dollars all around the…

when your buddy whom you love dearly but who is not great about reining in his spending asks you to use one single credit card for the both of you

Fascinating read from @Harpers on how the market for #treasuries, “on which the entire global financial system rests, has been cracking for years. @mdc includes insights from @HannoLustig, scholar at SIEPR and @StanfordGSB.

Twitter was launched 19 years ago. What is your favorite tweet ever?

It was probably a bit naive to think that Fed independence would be sufficient to keep monetary policy fully insulated from fiscal pressures when fiscal policymakers have put the US on an unsustainable trajectory and when central banks around the world were actively lowering the…