The Fed has signaled it will dial back the rate increases, but is the damage already baked in? Or have they judged it just right?
Many people talk about the rate increases increasing the likelihood and severity of a recession.
Many people also talk about the rate increases creating unemployment.
What few people have talked about much yet is the impact of rising interest rates on the national debt.
The more of the budget you have to spend to cover interest on the debt, the less you have to spend on the normal, already-approved functions of government.
What should we do?
Here are a couple of good links from highly-rated sources and a chart.
Many people talk about the rate increases increasing the likelihood and severity of a recession.
Many people also talk about the rate increases creating unemployment.
What few people have talked about much yet is the impact of rising interest rates on the national debt.
The more of the budget you have to spend to cover interest on the debt, the less you have to spend on the normal, already-approved functions of government.
What should we do?
Here are a couple of good links from highly-rated sources and a chart.
US is spending record amounts servicing its national debt – interest rate hikes add billions to the cost
The US spent $213 billion paying interest on the national debt in the fourth quarter of 2022 as the Fed jacked up borrowing costs at an unprecedented pace.
theconversation.com
How Does Inflation Affect the Federal Budget?
Rising inflation usually prompts higher interest rates, which in turn boost interest paid on the federal debt and thereby increase annual deficits, making the nation’s fiscal outlook worse.
www.pgpf.org