People say “they can’t” and I, frankly, think that is a stupid thing to say.
Stepping away from interest rates for a minute, take a look at our enormous debt:
They could drastically raise taxes so that we can pay off the debt. But they can’t do that.
They could default on the debt and simply refuse to pay $30T. But they can’t do that.
They could keep on spending like a drunken sailor and build a debt measured in quadrillions. But they can’t do that.
One of these impossible options is inevitable.
Interest rates:
Raise the rates like Reagan/Volcker did and watch our debt explode. They can’t do that.
Keep the rates super low and watch inflation skyrocket so that we carry billion dollar bills in our pocket. They can’t do that.
One of these impossible options is inevitable.
My guess is that we will eventually default on our debt (”Let’s screw the bankers that have been screwing us”) and then raise interest rates to control inflation.
That is a terrible solution. In my opinion, it’s the best one we have.
But Biden will limp along with no solution at all, and the Fall elections (if at all honest) will devastate the Democrats.
This would be correct 30 years ago, but that’s not how the debt works anymore. The government borrows from itself, so federal borrowing has no need to reflect market rates.
“But Biden will limp along with no solution at all, and the Fall elections (if at all honest) will devastate the Democrats.”
And then they’ll blame the Republicans for it all.
(Another variation of keynes’ “In the long run we are all dead”)
“the Fall elections (if at all honest) will devastate the Democrats”
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And bring in the Republicans appeasers. They like spending too.