patrick.net

If the Fed raises the rate to 3.25%, that would be an increase of 300 basis points within a 1 year span. With the federal debt at about $31 trillion that means an increase in expenses of about $900 billion per year. Since the federal government ain't gonna raise taxes no $900 billion per year and it sure ain't gonna reign in spending no $900 billion per year, that means it's gotta borrow another about $900 billion per year, It currently had a budget of about $4trillion per year with about $1trillion of that being issued with new debt. While there is always room for more treasuries on investors balance sheets it will come at the cost of something else. Non-financial corporate debt is about $11 trillion, the extra interest required on this debt and the inability to roll it over will cause massive amount of bankruptcies. With foreign dollar denominated debt at about $15 trillion, this will push many of those foolish enough to have borrowed in dollars to default. This will lead us to become the most hated country on the planet.

It is just a matter of time until things start breaking.

However bad it gets in the US, in Europe it is worse. They have hit the event horizon. They can have the European governments default thus destroying the Euro or they can have the ECB print the money the governments need. They are taking the cowards way with just printing the money, but not making any plans for when this ends. The European leaders know they cannot just print forever, but they are going to string this out for as long as they can.

S&P 500 companies derive about 14% of their sales from Europe. Eventually Europe will have to go through hyperinflation or the governments nationalize everything.

ad says

The Federal Reserve can't do much while we are in a Stagflation environment

That implies that at some other point they can do much? I assume you're thinking of positive doings, which is not their job. In fact, they're doing plenty right this minute by printing us all into hyperinflation, and keeping the bubble blowing to prevent the needed free market corrections that will finally rid of us their existence.

Misc says

With the federal debt at about $31 trillion that means an increase in expenses of about $900 billion per year.

I would think most of the new debt would be 10 Year Treasuries which is now at 2.9% compared to the current Fed Funds Rate of 2.5%.

If the Fed raises the funds rate from 2.5% to 3.5% then it applies to new debt that is issued. It would not apply to the existing debt ($31 trillion ???).

But I agree as it would be more expensive for the government to borrow money, but hopefully tax receipts have significantly increased to compensate for this.

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Debt to GDP ratio is now 123%. It peaked back around 2020 at 135%. Granted it was around 100% from 2012 to 2020, and it bottomed about 53% in 2000.

I think they are trying to inflate themselves out of this debt crisis. They should put more emphasis on economic growth to grow out of this crisis. Also hold spending steady for a few years at least so as to not force major spending cuts in the future.

https://www.usdebtclock.org/index.html

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ad says

Debt to GDP ratio is now 123%. It peaked back around 2020 at 135%. Granted it was around 100% from 2012 to 2020, and it bottomed about 53% in 2000.

I think they are trying to inflate themselves out of this debt crisis. They should put more emphasis on economic growth to grow out of this crisis. Also hold spending steady for a few years at least so as to not force major spending cuts in the future.

https://www.usdebtclock.org/index.html

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Have you ever considered that our "leaders" are intentionally trying to destroy this nation?

They are just criminals stealing what they can, for selling out the nation. That's all it is. They don't represent us.

HunterTits says

Misc says

With the federal debt at about $31 trillion that means an increase in expenses of about $900 billion per year.

Interest earned by T-Bills held by the Fed get remitted to Congress. So, only the interest paid on debt not held by the Fed need to be funded.

The Fed also pays interest now on reserves held by the banks. It is sorta a wash there.