Hell to Pay. By Adam Mill.
The U.S. national debt now exceeds $31.5 trillion. On the day Joe Biden took office, the average interest rate on this debt was around 1.61 percent and interest payments were a mere $549 billion a year. …
As older bonds with the historic low interest rates mature and disappear, they are replaced with the higher interest rate bonds now being issued. According to the St. Louis Federal Reserve, the annualized interest rate cost in December reached an eye-popping $853 billion. …
Econofact.org estimates that “most of the current government debt will mature within the next three years,” which means that the federal government will soon be financing most of its $31.5 trillion debt at market rates-which are approaching 4 to 5 percent. We’re looking at a total annual interest bill of over $1 trillion in the very near future.
By comparison, the total tax revenue collected by the U.S. government in 2023 is projected to be $4.6 trillion. As soon as next year, interest will consume approximately one-fifth or even a quarter of all government revenue. …
The bad news is that we’re fast approaching the point at which we have to accelerate borrowing just to keep up with the interest payments. …
Until recently, the dollar’s resilience made it possible for the government to effectively fund operations with money from the printing press. But inflation, the offspring of deficit spending, has begun to collect its due from the public. As interest payments claim increasingly more and more of the budget, the government must borrow more to make up the difference, thus accelerating the growth of the debt and inflation. This leads to still higher interest rates which lead to higher interest payments requiring even more borrowing …
It’s hard to say exactly when or how the federal budget will hit some sort of wall. …
For the Left, the go-to tools never work but will always be tried because of political ideology. These include wage and price controls, tax increases, and criminalizing market pricing as “price gouging” or “hoarding.” As taxes go up and the government attempts to regulate its way out of inflation, economic output falls. If the fall is drastic enough, it can have a counterinflationary effect. But only after inflicting extreme misery on working Americans. … The dirty little secret of leftist economic theories is that they benefit powerful people who are in a position to influence economic meddling. Who do you think got most of the COVID relief money?
Rich people have an undue influence due to political donations and banking, and end up largely determining economic policy. They choose policies that surreptitiously assist them the most — anyone surprised? They prefer policies that boost asset prices, which in our banking system enables more “money” to be created (money is created by the act of bank lending). Hence low interest rates and massive debts.
In 1919, the German Government felt it simply had to subsidize food and transport and create enough jobs — because the circumstances were fairly dire. They started by spending about 20% more than their tax income, and printed the difference. By 1922 a wheelbarrow of cash couldn’t buy dinner. Oddly enough, the US is almost at the same take-off point, now approaching a 20% shortfall in tax revenue. MMT anyone?
