Rubinomics

DEFINITION of 'Rubinomics'

A combination of the words "Rubin" and "economics" that focuses on the impact of a balanced budget on long-term rates of interest. Rubinomics is named after Robert Rubin, the Secretary of the Treasury under former President Bill Clinton. This approach tends be concerned with the effect that deficits have on inflation over the long term.

BREAKING DOWN 'Rubinomics'

Rubinomics gained traction during the 1990s as long-term interest rates remained high despite the actions of the Federal Reserve to lower the Federal Funds Rate. Greenspan and other experts attributed this to an inflation premium that was built into bond prices. Rubin suggested that the government concentrate on reducing the deficit instead of spending money on infrastructure, which displeased some of his more liberal economic advisors.

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