| Science Forum Index » Economy Forum » Is Federal debt being financed by state and local govts? |
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| Guest |
 Posted: Wed Nov 02, 2005 11:44 am |
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Can someone help explain the explosion in State and Local Government
Series (SLGS) financing over the last three quarters? Are the Feds
laying their debts off on the states?
Thanks,
Peter |
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| William F Hummel |
| Posted: Wed Nov 02, 2005 3:29 pm |
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Guest
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On 2 Nov 2005 08:44:55 -0800, sduraybito@go.com wrote:
[quote:5c8339d61f]Can someone help explain the explosion in State and Local Government
Series (SLGS) financing over the last three quarters? Are the Feds
laying their debts off on the states?
[/quote:5c8339d61f]
SLGS Treasury bonds are bought by state and local governments to earn
interest on their unspent tax revenues. The purchases are entirely
voluntary. In selling them, the Treasury increases its debt, quite
the opposite of "laying off its debts." |
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| Guest |
| Posted: Fri Nov 04, 2005 12:44 pm |
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Thanks. Yes, I understand SLGS purchases increase the Federal debt. I
wanted to make sure my understanding is correct.
Now what does this mean? Essentially I read this as the Fed leaning on
the states for financing in a rather unprecedented way. Take a look at
the chart at
http://www.treas.gov/offices/domestic-finance/debt-management/qrc/2005/2005-q4-charts.pdf.
[quote:fe5143d18c]From 2000-2004, SLGS financing bumped along pretty much net even and
now its exploded to over $50 billion this year. I've seen nothing about[/quote:fe5143d18c]
it in the press.
Any thoughts?
Peter |
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| William F Hummel |
| Posted: Fri Nov 04, 2005 1:03 pm |
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Guest
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On 4 Nov 2005 09:44:27 -0800, sduraybito@go.com wrote:
[quote:ad366bedca]Thanks. Yes, I understand SLGS purchases increase the Federal debt. I
wanted to make sure my understanding is correct.
Now what does this mean? Essentially I read this as the Fed leaning on
the states for financing in a rather unprecedented way. Take a look at
the chart at
http://www.treas.gov/offices/domestic-finance/debt-management/qrc/2005/2005-q4-charts.pdf.
From 2000-2004, SLGS financing bumped along pretty much net even and
now its exploded to over $50 billion this year. I've seen nothing about
it in the press.
Any thoughts?
State and local governments can't "print money" and have no source of[/quote:ad366bedca]
funds other than what they borrow or collect in taxes. They are
certainly not going to borrow in order to buy what would be lower
interest-earning SLGS securities. So the funds they use to buy those
securities are coming from tax revenues in excess of current spending.
The economy has improved a lot this year which implies increased tax
revenues in most states. I don't think there is anything more to the
picture than that. |
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| Guest |
| Posted: Sat Nov 05, 2005 12:18 pm |
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State and local economies have barely inched into surplus (maybe $15B,
NIPA) after several years of modest (compared to Fed) deficits. Now all
of a sudden they have all this excess revenue? I don't want to make a
"Federal" case of it but my "something-strange-is-gong-on" antenna has
been activated.
Peter |
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