SS has been in the red since 2010, i.e., payments exceed revenue, and Medicare has been in the red since 2008. SS and Medicare are pay as you go programs with today's workers paying for today's retirees. In order to make up the shortfall, the General Fund must redeem T-bills from the SS and Medicare Trust Funds. Since the General Fund must borrow about 40% of what it spends, we must borrow money to redeem the T-bills. The SS and Medicare Trust Funds are part of the national debt and held under "Intragovernmental Holdings."
The reason that the “Debt Ceiling” has to be raised (in the eyes of the Fed Res) is because the Federal Gov’t has to be able to borrow “MORE” in order to pay off its previous debts.
The debt limit must be raised because the entitlement programs keep growing in terms of numbers. By 2030 one out of five in this country will be 65 or older, about twice what it is now. And SS benefits are increased due to COLAs, which are not linked to revenue.
Rates can NEVER go back to “normal” (5%) because that would mean an automatic Federal Gov’t default....again:
Says who? The Fed may not be able to control the rates if we have rampant inflation. What happens in China, now the world's economic engine, will have an impact here.
The “real” canary in the coal mind will be Japan! It has been able to pull off this scheme (through endless QEs- they invented it) and see that their interest rates have not gone up, significantly, in nearly 25 years! I do believe the end game is near in that the FED will finally be exposed ,as the fraud they are, when the Dollar eventually tanks due to an alternative. The only reason it’s held up (relatively speaking) is because EVERYONE else has been racing to the bottom in devaluing their own fiat currencies! Keep your eye on the JP 10yr (see link below) currently yielding a pitiful 0.36%! Yes, Japan with a 240% debt to GDP ratio and with an even BIGGER QE scam than ours has their 10 year bonds yielding 0.36%! If, and when you see this spike (sic) to over 1% you’ll then watch the Nikkei tank by 5%- then you’ll know the jig is finally up with this Keynesian Madness! BTW- about 90% of the Republicans are NOW Keynesians! The Democrats are simply 50% Socialist/50% Marxist (iBTW- they’re not one and the same)!
http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=BX%3ATMBMKJP-10Y&insttype=Bond