For the old timers in here, it seems like just yesterday that the US national debt was “only” pushing $6 trillion. Then, between the ‘war on terror’ and QE which made a mockery of moral hazard, America has now reached a grim financial milestone – as the national debt tops $31 trillion for the first time, according to a new Treasury Department report.
The record-high debt comes as historically low interest rates have turned into higher borrowing costs, as the Fed attempts to tame the inflation they, the banks, and the ‘blank check’ dinosaurs leading the country – have caused.
And, of course, the only reason they’ve been able to pull this off without (until recently) massive, consumer-scorching inflation is because the dollar is still the global reserve currency.
“The rich rule over the poor, and the borrower is slave to the lender.” Proverbs 22:7
“So many of the concerns we’ve had about our growing debt path are starting to show themselves as we both grow our debt and grow our rates of interest,” said Michael Peterson, CEO of the Peter G. Peterson Foundation, in a statement to the NY Times. “Too many people were complacent about our debt path in part because rates were so low.”
Higher rates could add an additional $1 trillion to what the federal government spends on interest payments this decade, according to Peterson Foundation estimates. That is on top of the record $8.1 trillion in debt costs that the Congressional Budget Office projected in May. Expenditures on interest could exceed what the United States spends on national defense by 2029, if interest rates on public debt rise to be just one percentage point higher than what the C.B.O. estimated over the next few years.
The Fed, which slashed rates to near zero during the pandemic, has since begun raising them to try to tame the most rapid inflation in 40 years. Rates are now set in a range between 3 and 3.25 percent, and the central bank’s most recent projections saw them climbing to 4.6 percent by the end of next year — up from 3.8 percent in an earlier forecast. -NYT
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