https://www.stlouisfed.org/publications/regional-economist/third-quarter-2018/rising-rates-borrowing-government
Posted on 04/29/2019 10:51:27 AM PDT by deplorableindc
White House chief economic adviser Larry Kudlow told reporters Monday that President Trump is unlikely to pay off any of the national debt, currently at $22 trillion.
"Whoa, whoa, it doubled under the prior eight years," Kudlow said on the White House driveway, downplaying Trump's responsibility for the current level of debt.
"Yes, it's gone up a bit," Kudlow conceded, but he argued that "growth is the solution to any debt issues that might be on the table — and so far, so good. Let's just keep the policies in place."
(Excerpt) Read more at washingtonexaminer.com ...
US is in far worse shape than many EU countries,
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Germany dominates the EU and is doing the best. Their growth rate is one third of ours, but at least they have a budget surplus.
President Trump is right.
Larry Kudlow is right.
Moonman62 is right.
Borrowing money = raising taxes (in the future).
Keep tons of cash...the house of cards is going to collapse in 2020 if Trump loses, latest by Nov 2022. Don’t say I did not warn you.
“He’s right. Now if the Federal Reserve stopped manipulating interest rates, the interest payments on Obama’s debt would be a lot lower.”
The one rate that the Fed can control is the Fed Funds Rate. It is currently 2.5%, at the bottom of the Fed’s target range.
During the entire Reagan administration the Fed Funds Rate was never below 5%.
But the Treasury borrows longer term anyway and those rates are determined by the traders in the bond market. The Fed couldn’t set long term rates if they tried, they don’t have the ability.
“To whom is the debt owed? The Fed I suspect is most of it.”
The interest that the Fed collects on its bond holdings reverts to the US Treasury. The Fed doesn’t get to keep it.
Their bond holdings are for monetary management within the banking system, the Fed doesn’t have ownership rights of its Treasury paper.
https://www.stlouisfed.org/publications/regional-economist/third-quarter-2018/rising-rates-borrowing-government
I love to see Republicans complaining about the budget deficit on one hand and totally ignoring the trade deficit on the other. HYPOCRITES.
“The interest paid on national debt will soon be larger than the military budget.”
Using the OMBs numbers for FY 2019, defense spending is 15% of the budget and interest on the debt is 7%.
https://www.cbpp.org/research/federal-budget/policy-basics-where-do-our-federal-tax-dollars-go
Budget numbers will be different than actual tax receipt numbers, since the budget includes deficit spending.
It looks to me like for FY 2018 interest on the national debt consumed around 9.75% of tax receipts.
That’s because rates are low. A few points on the national debt, and it changes pretty quickly. We have been paying almost nothing for ten years. That will rise pretty darned fast once rate start moving. And with the dollar liquidity going low—the only way to free up capital is to pay more for it.
That will hurt. A lot.
And dollar liquidity around the world is drying up. That will start the ball rolling. A ten year expansion is almost unheard of...this is timed to hurt Trump. Recession will start Q1 next year.
That graph illustrates that the Treasury isn’t borrowing short.
If they were then total payments would track those short rates.
But they don’t, the Treasury sells longer term debt and that rate gets determined at every auction by bond buyers.
There is no individual to blame. This has been going on for decades.
The Congress is responsible for spending. They call debt based on the President—But they have less to do with it than us! We kept voting these fools into office for the last 50 years.
That’s not what the article says.
apples/ doughnuts.
“We have been paying almost nothing for ten years. That will rise pretty darned fast once rate start moving.”
That depends upon how many 30 year bonds the Treasury has been selling at these low rates.
“And with the dollar liquidity going low”
Why do you think liquidity is going low?
By Jane Ihrig, Associate Director and Economist, Federal Reserve Board of Governors
Tuesday, March 5, 2019
The Federal Open Market Committee (FOMC) has stated that it would like to operate monetary policy in the longer run with an ample supply of reserves in the banking system. In recent weeks, market participants have been mentioning estimates of the level of ample reserves to be in a range of $1 trillion to $1.4 trillion, much larger than the pre-crisis level of less than $20 billion. This eye-popping increase in the projected level of reserves needed to implement monetary policy reflects, in large part, banks’ increased demand for reserves resulting from new liquidity regulations...
Then what do you think it says?
Did you miss this part?
Conclusion
While rising interest rates are associated with higher borrowing costs for the federal government, the relationship is not linear. It depends not only on the current stock of debt but also on its composition, in particular the maturity structure.
While the cost of issuing short-term debt securities, such as Treasury bills, closely tracks the policy rate, this is not necessarily true for longer-term securities, such as notes or bonds, whose cost also depends on the term premium. This is especially relevant because longer-term securities (with a term over five years) represent over 70 percent of marketable federal debt outstanding.
Longer expansions — with weaker growth — have become the norm over the last few decades. This very typical of fascist economies like ours where the business cycle has effectively been pushed aside by government fiat.
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“Yes, it’s gone up a bit,” Kudlow conceded, but he argued that “growth is the solution to any debt issues that might be on the table — and so far, so good. Let’s just keep the policies in place.”
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So by this logic, if I had a $5k spending per month average on my credit card and I cut it to $3k spending per month because I got a raise and pay cash for stuff,so far so good?...Why would we elect another Republican if we keep doing the same things over and over that Democraps do? Pay it down for gawd sakes....
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As as (L) I ask others the same question EVERY election...they just bleat back (As I caught Savage one afternoon saying, “(R) g-o-o-d, (D) b-a-a-a-a-d.” Ha! Loved it.).
Course, they are the, supposed, *BRAIN-TRUSTS* of the (R)N(C).
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The debt is important but don’t lose your mind over it. When push comes to shove, we will declare that, “We ain’t payen” and China can send over the missiles.
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Yep, we’ll just ‘forget’ the limits on govt and (economically) enslave We and our posterity: Damn the Constitution.
‘Cuz nobody, that I’ve heard, is even joking re: *defaulting*; but ALL sides, sure as s*, talk and HINT of taking every last thing we own, make, create and our Rights, freedom and liberty along w/ it.
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