Wouldn’t raising interest rates immediately make our government insolvent?
Is the Fed holding off raising rates until the Republicans retake the Senate so that they can poison the victory by causing the crash on their watch?
It won’t make us any more insolvent than we are now. If we were to return to normal, historic interest rates, our debt servicing costs would approach $1 trillion a year. We would have to drastically reduce the size of government, including the entitlement programs, or we could raise taxes or some combination thereof. It would be a disaster for our economy. The only thing that holds us afloat is that the dollar is the world’s reserve currency. If that changes, the whole house of cards collapses.