WOLF STREET on Nostr: Curse of Easy Money: US Government Interest Payments on the Ballooning Debt v. Tax ...
Curse of Easy Money: US Government Interest Payments on the Ballooning Debt v. Tax Receipts, Higher Interest Rates, Inflation
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The article discusses the impact of the ballooning national debt, rising interest rates, and higher inflation on US government interest payments. In Q4 2023, interest payments spiked to $256 billion, while tax receipts jumped to $736 billion. However, interest payments as a percent of tax receipts dipped to 34.8% in Q4. The ratio of interest payments as a percent of tax receipts was 20.4% in Q1 2022, the lowest since 1969. Congress got serious about dealing with the deficit when interest payments hit 50% of tax receipts in the past. Interest payments barely rose in the 20 years between 1995 and 2015 due to falling average interest rates. The average interest rate on Treasury debt has been rising and reached 3.20% in February 2024. Interest payments as a percent of GDP rose to 3.6% in Q4, the highest since 2000. Inflation helps service the debt and devalues the purchasing power of the existing debt. The government is selling large amounts of new debt every week, and higher yields cause interest payments to rise. The article highlights the consequences of the Fed's easy-money policies and the massive debt problem faced by the US.
#UsGovernment #InterestPayments #NationalDebt #TaxReceipts #InterestRates #Inflation
https://wolfstreet.com/2024/03/31/curse-of-easy-money-us-government-interest-payments-on-the-ballooning-debt-v-tax-receipts-amid-higher-interest-rates-inflation/
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The article discusses the impact of the ballooning national debt, rising interest rates, and higher inflation on US government interest payments. In Q4 2023, interest payments spiked to $256 billion, while tax receipts jumped to $736 billion. However, interest payments as a percent of tax receipts dipped to 34.8% in Q4. The ratio of interest payments as a percent of tax receipts was 20.4% in Q1 2022, the lowest since 1969. Congress got serious about dealing with the deficit when interest payments hit 50% of tax receipts in the past. Interest payments barely rose in the 20 years between 1995 and 2015 due to falling average interest rates. The average interest rate on Treasury debt has been rising and reached 3.20% in February 2024. Interest payments as a percent of GDP rose to 3.6% in Q4, the highest since 2000. Inflation helps service the debt and devalues the purchasing power of the existing debt. The government is selling large amounts of new debt every week, and higher yields cause interest payments to rise. The article highlights the consequences of the Fed's easy-money policies and the massive debt problem faced by the US.
#UsGovernment #InterestPayments #NationalDebt #TaxReceipts #InterestRates #Inflation
https://wolfstreet.com/2024/03/31/curse-of-easy-money-us-government-interest-payments-on-the-ballooning-debt-v-tax-receipts-amid-higher-interest-rates-inflation/