My view is that is not likely to work out in practice. It would have very significant implications if you do that because it takes away the risk-free rate of which most private assets are priced and have very significant implications for the broader functioning of the U.S. financial system. We know, unfortunately, that our politicians are not our best angels when it comes to spending and I don’t believe that they would be able to control themselves in the long run. This is why some years ago central banks were made nominally independent, because you wanted to take them out of the constant political back-and-forth. I do worry that if you go ahead with these kinds of policies it means that you end up with much, much larger deficits in the United States.

Source: National Post July 30, 2020 18:00 UTC