dim-0s have put us in a very bad situation. INFLATION!!! The only way to stop inflation is to raise interest rates, making spending money more expensive. HOWEVER, the national debt is tied to interest rates. IF they go up, the national debt SKYROCKETS without even being able to spend the money!
As I understand it, INTEREST is the biggest part of national debt. IF interest rates double, so does the debt.
We’re SCREWED.
When we got the Volcker medicine the national debt was less than $1T. Today we are raising the debt $1T a month! 30 times as painful, interest wise, today.
https://www.nytimes.com/2022/03/14/business/economy/powell-fed-inflation-volcker.html
Most of the debt is at fixed rates of interest that do not change until the bonds mature and are reissued at new interest rates. The current bout of inflation is expected to be of relatively short duration since the Fed is finally starting to act. A recession will kill the inflation, and remove the need for further high rates. In fact the Fed might reduce rates if the recession lasts longer than a couple of quarters.
Doesn’t the US govt finance its debt at fixed rates? Or a large portion of it? Why would rising rates increase payments?