The yields on Treasuries are soaring. Rates are higher across the yield curve, but mostly at the longer end of the yield curve. The increase has investors talking about the major economic changes. There are certainly some changes that wouldn't have been expected if Trump lost the election, but it is equally important to recognize that one party now controls the government. That makes it dramatically easier for bills to be pushed through. Consequently, when Trump talks about running an incredible deficit, there is little reason to think it can't be done.
Deficits
By definition, running a deficit is expansionary policy. However, the relative size of the deficit can still cause economists to treat it as being restrictive if the deficit is small in relative terms. The Federal Reserve has been establishing expansionary monetary policy by buying up bonds and having a low short-term rate, but they also have been…
