CBS: The U.S.'s interest payments are about to skyrocket. Does it matter?
The Fed's interest rate hikes are doing more than hitting consumers in the credit cards. They're also making it much more expensive for the U.S. to carry its debt load.
While they're not currently a subject of President Trump's Twitter outrage, America's interest payments have become a point of concern for some on Wall Street. Those payments are projected to triple to more than $600 billion by 2023, reflecting rising interest rates as well as the exploding deficit. That figure approaches the amount the U.S. spends on national defense every year, and dwarfs what it spends on agriculture, Medicaid, income security and veterans' programs, to name just a few.
Read more ....
WNU Editor: When the government pays zero interest on the money that they borrow no one cares. But when it gets to 2 to 3 percent .... it starts to hurt. Five percent a growing panic. Anything above 7% becomes a potential disaster with real pain. Above ten .... think of Greece. I can spend all night explaining why the current FED policy of raising interest rates just when the economy is expanding is a recipe for disaster. Bottom line .... and President Trump is right on this one .... it is not going to end well if it continues.
Update: This is going to change nothing .... Embattled Federal Reserve chairman tells White House officials he'll meet face-to-face with Trump in bid to end feud that left stock markets reeling over fears president will fire him (Daily Mail)
Well, when the inflation is close to 2%, interest rate around to 2% is neutral. The problem is neither Trump or the FED, the problem is we are paying the consequences of the "Quantitative Easing". It could be necessary at first but it was too much long and the economy was addicted to this monetary drug. Now we are in instability for going back to the reality.
ReplyDeletePre-Bloomberg Business Week (Gold pages; back of the page) wrote that politicians like to have the FED print money (increase the money supply). That way they can raise tax rates and the ordinary Joes don't scream because they have (inflated) money in their backpocket.
ReplyDeleteThis passes for smarts among the political class.
The writer writing in the mid to late 1980s also said that this would not work in the future because with the growth of credit to would swamp any increase the government would make in money supply. Well, the author never saw QE1, QE2, QE3, or the twist. To be fair how could he.
https://tradingeconomics.com/united-states/interest-rate
Set the range of the graph to max and see the crap the FED pulled.
Training wheels?
"I can spend all night explaining..." So could I. It seems to me that the only reasons why someone would raise interst rates right now would be either because they are blinded by an ideology or they actively want to hurt somebody.
ReplyDeleteIt seems obvious to me that the establishment did not want Trump to be president and will stop at nothing to try and remove him from office. If this is the case, the thinking is hurt the economy and hurt Trump. If so, such people are perfectly willing to hurt millions of people in order to hurt a president they don't like.
It gets worse. If the American economy is adversely affected, the world as a whole gets hurt. Apparently these people are willing to inflict pain on untold numbers of people worldwide in order to hurt a president they don't like. If it comes to this, I just hope Americans and people around the world realize who did this to them and who tried to stop it.
All hype, interest rates are not going to rise that far that fast. Relax!
ReplyDelete