Impact of rising interest rates on mounting government debt


IT SOMETIMES HAPPENS, RIGHT? IN CORPORATE AMERICA. ALL RIGHT. LET’S GET THE READ ON WHAT’S HAPPENING WITH THE FEDERAL RESERVE, BECAUSE THIS SELL-OFF AT ITS CORE HAS EVERYTHING DODD WITH RISING INTEREST RATES. A LOT OF PEOPLE, WE WERE TALKING ABOUT THIS EARLIER, LOOK AT THIS BACKUP IN RATES AND SAY GOSH, WE CAN REMEMBER WHEN RATES WERE CERTAINLY A LOT HIGHER BUT IT’S WHAT YOU GET USED TO. TEN-YEAR TREASURY NOW DOES REPRESENT THE HIGHEST WE HAVE SEEN ON THAT IN ABOUT SEVEN YEARS AND IT JARS A LOT OF FOLKS WHO HAVE GOTTEN USED TO SORT OF NOTHING LIKE IT. TO TERRY JEFFREY JOINING THE ESTEEMED PANEL. WHAT DO YOU MAKE OF THAT? I CAN REMEMBER, I JOKE ABOUT IT ENOUGH HERE THAT MY CREW IS TIRED OF HEARING IT, THAT WAS KIND OF WHAT MY WIFE AND I WERE PAYING PER DAY FOR OUR FIRST MORTGAGE. WE WERE MARRIED BACK IN THE 1880s. IT’S A LONG TIME. BUT YOU KNOW, IT’S WHAT WE GET USED TO. A LOT OF PEOPLE ARE NOT USED TO THAT AND IT DOES FORCE A LOT OF PEOPLE WHO HERETOFOR MIGHT HAVE QUALIFIED FOR A MORTGAGE OUT OF THE RUNNING. IS IT A BIG DEAL? WILL IT GET WORSE OF A DEAL?>>I REMEMBER THAT ERA, TOO. THIS MORNING I WENT BACK AND DID A LITTLE RESEARCH LOOKING AT THE AVERAGE INTEREST RATES ON TREASURY SECURITIES. IF YOU LOOK AT THE END OF FISCAL 2007, SEPTEMBER 30th, 2007, JUST A FEW MONTHS BEFORE THE GREAT RECESSION STARTED IN DECEMBER 2008, THE AVERAGE INTEREST ON TREASURIES THEN WAS 5%. AT THE END OF THIS FISCAL YEAR IT WAS 2.494%. BUT THE DIFFERENCE IS THE AMOUNT OF DEBT THE GOVERNMENT HAS ACCUMULATED IN THE INTERVENING YEARS, 8 OF THE LAST 11 YEARS THE GOVERNMENT HAS BORROWED $1 TRILLION OR MORE. FISCAL 2018, WE BORROWED $1.27 TRILLION. WE NOW HAVE $15.7 TRILLION IN DEBT HELD BY THE PUBLIC. IF WE SEE INTEREST RATES GO BACK UP TO 5% OVER THE NEXT FOUR YEARS, AND THE GOVERNMENT KEEPS BORROWING AT THIS RATE, WE ARE GOING TO HAVE $20 TRILLION IN PUBLICLY HELD DEBT. THE GOVERNMENT IS GOING TO HAVE TO SPEND $1 TRILLION ON INTEREST AND WE COULD BE IN A SITUATION WHERE THE FEDERAL GOVERNMENT IS RUNNING A TRILLION DOLLAR ANNUAL DEBT, BORROWING A TRILLION DOLLARS, TURNING AROUND AND HANDING THE TRILLION DOLLARS OUT IN INTEREST TO THE PEOPLE IT BORROWED MONEY FROM BEFORE. NEIL: WE HAVEN’T EVEN GOTTEN THERE. ALL THE STATES AND MUNICIPALITIES, IF YOU ADD UP THEIR LIABILITIES, WOULD DOUBLE THAT $15 TRILLION, $16 TRILLION. DOESN’T TAKE MUCH OF AN UPTICK IN RATES TO DO THAT. I WAS RAISING THIS WITH DAVID AND THE GANG DURING THE BREAK HERE ABOUT HOW MUCH COULD BE RENEGOTIATED. HOW MUCH YOU CAN SORT OF REFINANCE IT, DOES THE FEDERAL GOVERNMENT TAKE LONGER TERM MATURITY MATURIIE MATURITIES, VICE VERSA. DO WE HAVE ANY WIGGLE ROOM ON THAT?>>HERE’S THE OTHER THING THAT IF YOU LOOK AT THE STRUCTURE OF THE DEBT, YOU ARE TALKING ABOUT THE SHORT TERM TREASURY BILLS EARLIER, WE HAVE $2.2 TRILLION ROUGHLY IN SHORT TERM TREASURY BILLS, MATURITY YEAR OR LESS AND THERE’S ONLY ABOUT 1.37 IN LONG TERM BONDS. SO MOST OF THE PUBLICLY HELD DEBT IS IN BILLS AND TREASURY NOTES. IT’S LIKE AN ADJUSTABLE RATE MORTGAGE ON THE FEDERAL GOVERNMENT. WHEN THE INTEREST RATES START TO SPIKE, THE IMPACT ON THE AVERAGE INTEREST RATE THE FEDERAL GOVERNMENT IS PAYING WILL RISE FASTER BECAUSE SO MUCH OF THAT DEBT WAS SOLD FOR SHORT PERIODS OF TIME IN ORDER TO KEEP THE INTEREST RATE DOWN. NEIL: YOU HAVE TO DIFFERENTIATE SHORT TERM RATES OVER WHICH THE FEDERAL RESERVE HAS SOME CONTROL AND LONGER TERM RATES THAT ARE REALLY IN THE HANDS OF THE MARKET. THE MARKETS SEEM TO BE SAYING THEY ANTICIPATE SHORT TERM RATES GOING STILL HIGHER AND THE ECONOMIC ACTIVITY ALONE WILL JUSTIFY RATES GOING HIGHER. DO YOU SUBSCRIBE TO THAT, BECAUSE THAT’S A TREND THAT COULD GO ON FOR AWHILE AND TAKE RATES PROHIBITIVELY HIGHER.>>WELL, I THINK THE BIGGER WORRY IS THE STRUCTURE OF THE FISCAL ACTIONS OF THE FEDERAL GOVERNMENT ON A YEAR TO YEAR BASIS. WE HAVE A GOVERNMENT THAT IS SPENDING FAR MORE THAN IT CAN BRING IN IN REVENUE. IF YOU TRIED TO BALANCE THE BUDGET THIS LAST YEAR, FOR EXAMPLE, WE HAVE A LITTLE BIT OVER $4 TRILLION IN SPENDING. WE WILL PROBABLY HAVE A LITTLE BIT OVER $3 TRILLION IN REVENUE. YOU WOULD HAVE TO INCREASE TAX REVENUE BY A THIRD TO BALANCE THE BUDGET. WE HAVE AN ALL REPUBLICAN GOVERNMENT. THEY’RE NOT TALKING ABOUT BALANCING THE BUDGET. SO WHAT’S GOING TO HAPPEN IS THE ACTUAL, THE LEVEL OF DEBT IS GOING TO INCREASE SO IF WE GET TO A POINT WHERE INTEREST RATES REALLY SPIKE, QUITE FRANKLY, WE WILL HAVE A FINANCIAL CRISIS, THE GOVERNMENT’S NOT GOING TO BE ABLE TO DEAL WITH IT. BY THE WAY, THE FEDERAL RESERVE IS STILL THE NUMBER ONE OWNER OF DEBT. THEY BOUGHT UP ALL THAT DEBT DURING QUANTITATIVE EASING. THEY STILL HOLD THAT DEBT. THE FEDERAL RESERVE HAS MORE DEBT THAN CHINA. CHINA HAS ESSENTIALLY STOPPED INCREASING ITS DEBT HOLDINGS. WE HAVE TWO ENTITIES OUT THERE, CHINA AND THE FEDERAL RESERVE, THAT ARE THE BIGGEST CREDITORS OF A GOVERNMENT THAT IS RUNNING

45 thoughts on “Impact of rising interest rates on mounting government debt

  1. Joselico gracias Dois ๐Ÿ™๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธJoselico ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ› ๐Ÿ”ฅโšพ๏ธ๐Ÿˆ๐Ÿ€โšฝ๏ธ๐ŸŒŽ๐Ÿ‘‘๐Ÿ’ช๐Ÿป

  2. Too much debt and rising interest rates will cost the economy. Especially the debt which has never been as high.

  3. The fed is going to everything in their power to keep the interest rate relatively low. The question is can they control long term interest rates or will it eventually get out of hand. I believe the later will happen.

  4. What interest? What debt? We pay foreign bankers masquerading as federal government which is federal in name only to print our money for 2 cents each no matter the denomination and then in return loan it back to us the tax payers at full face value plus interest. Hang the bankers equals antisemitism…equals the greatest lie and scam ever told and sold…..

  5. They are scared out of their wits. There is ten times more paper gold than physical. When the phones start ringing with clients wanting to sell their 'paper' gold, they will be told there is none!

  6. Abolish the FED . That's the answer. .but they won't . The money is system is a farce and robbery of the people.
    These fuckers these Jewish bankers create money out of nothing and charge us interest on NOTHING. THE FEDERAL RESERVE IS A PRIVATELY OWNED COMPANY RUN BY SATANISTS

  7. Legalize Weed 21 and Up can grow A Certin Amount off plants And with the taxes From Recreational Legil Store's can fix that budget Long-term Look At The other states We now it works Cannibis For the Win๐ŸOpen Your ๐Ÿ‘€ Legilise Fix your Budget๐Ÿ50 states.

  8. Medical Recreational Legal 50 States Fix The BUDGET ๐ŸHeadlines Cannibis For the Win๐ŸNo Side Effects No Overdoses๐Ÿ18 And Up Organic At the Store by The Vegetables Budget fixed Long term Wake up๐Ÿ

  9. Weed Would Be Saffer Than Cigarettes At A Young Age No cancer Should be offerd less Additive than Ciggrrets Give 18 year olds a Choice.weed Or Tobacco.

  10. It's cool, are kids can fix all this. What, my parents and so on said the same thing? Shit. Let's roll up some sleeves and fix it then. Pass a Ramen noodles style budget for a bit, especially if we win midterms.

  11. Debt is only a problem if you intend to pay it back, inflation will cure the problem because debt is not tied to inflation so they borrow it at a higher value then you pay it back at.

  12. Trump is the king of not paying it back only thing is USA cannot claim bankruptcy only devalue it's dollar to repay the debt holder China.

  13. A week after Trump was elected the feds started talking about raising interest rates, what does that tell you? Also midterms are coming up

  14. So treasury bond yields are going up and the value of the yuan is going down meaning 10% tariffs on Chinese goods have no net effect

  15. Thought is was the hurricane in Florida that was effecting my stocks. The fed could not wait till after the storm to raise rates. erase the US debt just write off a few hundred zeros as a loss or make all politicians pay it back they spent it go after them.

  16. The United States government needs to get out from under the Federal Reserve Bank banksters! RESET TIME! These crooks control America and it's people with money! We the people! ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ๐Ÿ‡บ๐Ÿ‡ธ

  17. Corporate tax evaders and Aging Demographics will force a debt crisis. I'd say we have less than 10 years. In 10 years virtually all baby boomers will be retired.

  18. Here's an idea: Why not recognize the U.S. Constitution and reclaim our government's right to print its own money, debt and interest free, as the founding fathers intended? Instead, we allow a private banking cartel to print the money, and lend it to the U.S. Taxpayer, at interest.

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