During the Volcker era (early 1980s), the US Treasury was issuing 30-year bonds at 12-14% coupon rates; if inflation came down to single digits as intended, these bondholders would realize 12% real returns, which no country could sustainably finance and would require either inflation to stay high or fiscal primary surpluses that would be impossible to achieve
factualpending
Speaker
Peter StellaEvidence Quote
“I was an intern at the Federal Reserve in 1983. and at that time uh Paul volcker wasn't in power uh and the U.S treasury was issuing data I think 12 or 14 percent”
Source
Debt Death Spirals, Fed's Losses, & Fiscal Theory Of Price Level | Peter Stella & Joseph Wang— Forward GuidanceCreated: 8/10/2026, 10:58:24 PM
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