I predict that states will, to the extent possible, issue bonds to get the cash to balalnce their budgets.
How these bond issues are received in the financial marekts is another story. But it will be politically difficult to impose big tax increases. So the path of least resistance will.be to sell bonds, and kick the can down the road.
“I predict that states will, to the extent possible, issue bonds to get the cash to balalnce their budgets.
How these bond issues are received in the financial markets is another story. But it will be politically difficult to impose big tax increases. So the path of least resistance will.be to sell bonds, and kick the can down the road.”
The Fed has already announced that it will buy state government bonds. This is essentially monetizing any new California debt.