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Now how do you scale that to the USA as far as its +$25 trillion in debt and with calls for "haircuts"
And remember, the Social Security Trust Fund is the biggest of them.
Haircuts on sovereign debt have happened all over the world. He was merely suggesting that maybe it's our turn. He's not the first to suggest a haircut and I'm sure he won't be the last.
Or they can just cut back on entitlements slightly relative to inflation, as they have been doing for about 2 years as part of the "haircut".
The fund invests in US Treasuries and so should benefit from the rise in rates.
So, don't buy any Tbills, right?
zzyzzx says
It's 75
Too little to control inflation. Raising too high can’t be possible as well as the gov can’t pay interest payment on massive debt.
Is government owned debt mostly variable interest? Otherwise, rising rates would have no effect on current government debt.
Federal debt issued now is based on current rates
ad says
Federal debt issued now is based on current rates
So that is still only new debt that is affected?
Is government owned debt mostly variable interest? Otherwise, rising rates would have no effect on current government debt.
rate get reset to current level up on term maturity for every bond.
2-year Treasury yield surges above 4.1% after Fed hike, highest level since 2007
So, if I buy an I series bond now, it will likely go up in 6 months as far as interest payment because by then, the Fed Funds rate (which is now 3.25%) will be at least 4%.
The base rate is arbitrarily set by the Treasury Department. Lately they've been setting it at zero.
total rate is 4.81% for the I-Series bond
That's for six months. Annual rate is x2 = 9.62%, the rate that's often cited in the media.
https://finance.yahoo.com/news/fed-seen-aggressively-hiking-5-090000581.html
Fed Seen Aggressively Hiking to 5%
Goldman Sachs Boosts Rate Outlook to 5%
What happens if the November or December CPI are below 6% ?
The Fed Funds rate is now at 4%. I can see them increasing it to 4.25% this December unless inflation or CPI drops below 5.5%.
I would not be surprised if they decide to raise it to 4.5% this December if CPI for November remains above 7%.
They are not too far off from peak 2007 interest rate levels.
...
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Inflation will stop itself if Congress would just stop giving money
ad says
The Fed Funds rate is now at 4%. I can see them increasing it to 4.25% this December unless inflation or CPI drops below 5.5%.
I would not be surprised if they decide to raise it to 4.5% this December if CPI for November remains above 7%.
They are not too far off from peak 2007 interest rate levels.
...
I thought they make a decision every 3 months, not every month.
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"Historically, the US central bank has avoided surprising markets – say, by going 75bp when it is not priced in," Barclays economists led by Jonathan Millar said in a note to clients published Friday.
"But next week, we feel, is likely to be an exception."
https://finance.yahoo.com/news/inflation-puts-pressure-on-powell-what-to-know-this-week-162615319.html