patrick.net

Fueled by the 34% in additional debt, and now gradually further fueled by the higher interest rates spreading into the overall debt, total interest expense in Q3 spiked by 24% from a year ago and by 43% from two years ago.

And that is why many if you have seen this graph:




BUT many of you have not seen this one:




Tax receipts spiked by 21.5% year-over-year and by 52% from two years ago. This is what pays for the interest expense.

Government interest payments as percent of nominal GDP, a classic measure of the burden of government interest expenses on the overall economy, plunged to historic lows during the era of Easy Money after the Financial Crisis, and it’s still in that low range, but has risen to the upper end of that low range:

Don’t get me wrong: This amount of deficit spending is nuts, it’s very inflationary and contributed to the spike in inflation we have now. It’s a terrible policy that Congress pursued. And there are a lot of issues with that. But the burden of this interest expense is not one of them – thanks in part to surging inflation

https://wolfstreet.com/2023/01/14/will-the-government-be-able-to-pay-for-its-spiking-interest-expenses-time-to-look-at-interest-expense-against-tax-receipts/