[ Continued from: Endgame (Part 1) ]
As interest rates skyrocket and the United States careens towards a debt tsunami, shocking evidence reveals an alarming reality. With a record-breaking $652 billion in gross debt interest already accumulated in just nine months, the nation grapples with a 25% surge compared to the previous year. The Federal Reserve’s frantic attempts to rectify its past mistakes have only fueled the deficit, with interest rates soaring and borrowing costs escalating. Brace yourself for the catastrophic consequences as interest payments on the staggering $32.3 trillion debt threaten to surpass major government expenditures. The United States stands at the precipice of financial ruin, demanding immediate action to save the sinking ship.
What You Will Learn Here in Part 2
- The United States is already accumulating a record-breaking $652 billion in gross debt interest in the first nine months of the current fiscal year.
- This figure represents a staggering 25% increase compared to the interest expense payment in the same period a year ago, reaching $521 billion.
- Soaring interest rates, driven by the Federal Reserve’s attempt to rectify its policy failure of keeping rates at zero for too long while injecting trillions into asset bubbles, have been a key driver of the deficit.
- The Federal Reserve has raised its benchmark rate by 5% since March last year, resulting in higher borrowing costs for the US government.
- As lower-yielding securities mature, the Treasury faces steady increases in the rates it pays on newly issued debt obligations.
- The weighted average interest for total outstanding debt has risen from 1.80% to 2.76% within a year, and it could surpass 4% in one year if rates continue to rise.
- If interest rates continue to climb, interest payments on the total US debt of $32.3 trillion could reach $1.3 trillion within 12 months, potentially surpassing other major government expenditures such as social security.
The United States is facing an imminent financial debt disaster, as evidenced by alarming figures in the latest Treasury Monthly Statement. This article delves into the definitive evidence that highlights the severity of the situation. The key factors contributing to the crisis include soaring interest rates, escalating interest payments, and the potential for interest on the debt to surpass other major government expenditures.
Record Accumulation of Gross Debt Interest
In the first nine months of the current fiscal year, the United States has accumulated a record $652 billion in gross debt interest. This figure represents a staggering 25% increase compared to the interest expense payment in the same period a year ago, which amounted to $521 billion. The escalating interest payments indicate the growing burden of servicing the national debt.
Soaring Interest Rates and Federal Reserve Actions
The Federal Reserve’s attempt to reverse its policy failure of 2020 and 2021 has led to soaring interest rates. The Fed’s decision to keep rates at zero for too long while injecting trillions into asset bubbles has contributed to the current crisis. The Federal Reserve has raised its benchmark rate by 5% since March last year, resulting in higher borrowing costs for the US government.
Impact on Deficit and Debt
Soaring interest rates have become a key driver of the budget deficit. As lower-yielding securities mature, the Treasury faces steady increases in the rates it pays on outstanding debt. The weighted average interest for total outstanding debt has risen from 1.80% to 2.76% within a year, and if rates continue to rise, it could surpass 4% in one year.
Implications of Rising Interest Payments
If interest rates continue to climb, interest payments on the total US debt of $32.3 trillion could reach $1.3 trillion within 12 months. This would potentially make interest on the debt the largest government expenditure, surpassing social security payments. The escalating interest payments will have significant implications for the US economy and the federal budget.
Concerns and Arguments
Treasury Secretary Janet Yellen has downplayed concerns about higher rates, highlighting the historically low ratio of interest payments to GDP after adjusting for inflation. However, this argument overlooks the potential decline in GDP after the next recession, while US debt remains high and continues to grow. The statements made by Yellen fail to acknowledge the gravity of the situation and the long-term consequences of the escalating debt burden.
The Only Way Out is Our GCR
The United States is on the brink of a financial debt disaster, with soaring interest rates, escalating interest payments, and the potential for interest on the debt to surpass other major government expenditures. The record accumulation of gross debt interest and the implications for the federal budget are clear signs of the severity of the crisis. It is crucial for the US to address the escalating debt burden and explore sustainable solutions to ensure the stability of the economy and the country’s financial future.
Our GCR is coming straight at us.
