Treasury Secretary Janet Yellen stated in an interview with Bloomberg on Monday that” we can probably manage and have a financially responsible path with]a notably higher ratio of debt to GDP because interest rates are lower than they were in previous decades yet with rate increases.”
According to Yellen, President Joe Biden’s proposed budget “would keep ] what I believe to be ] the important metric that reflects the problem of deficits as its interest expense, and the President’s plan would maintain interest expenses at historic levels and prevent them from rising above that level.”
Bloomberg host and Chief Political Correspondent Annmarie Hordern then asked,” The federal deficit, though, now, is at a level we really do n’t see outside of recessions. Is there a genuine need for dialogue in Washington about returning debt to a green course?
Yellen answered,” Well, as I said, the fascination charge of the loan is a good way to determine its problem. Normally, interest rates have been lower, in spite of current increases, they have been lower than they were in past years. And that implies that we can definitely control and had a financially responsible way with a slightly higher ratio of debt to GDP, such as GDP. However, it’s crucial to ensure that the debt’s real interest burden, which is a gauge of the strain it is putting on our sector, stays at a historically normal level.
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