Posted on 12/27/2022 8:59:57 AM PST by tired&retired
The US Debt is very interest rate sensitive. While the average outstanding maturity of the US Debt is 5 to 6 years, this data reveals much more.
Two Year Interval Debt (as of 2021)
Treasury Debt. $22.584 trillion
Mortgage Backed Securities. $12.202 trillion
These are Fannie Mae, Ginnie Mac, ...
WHAT HAPPENS WHEN THE AGENCY DEBT COST (OFF THE BOOKS DEBT) EXCEEDS THE 30 YEAR MORTGAGES AT 3% AND 4% ?
We could easily default on all the agency debt as the short term interest rate we must pay is many times the fixed rate long term mortgages receivable rate. This debt is not included in our US Debt as it is considered "Agency Debt."
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USA is way past bankrupt. We are nearing the point where the non Social Security tax revenue will not pay the interest on the debt.
The current Federal Reserve interest rate, or federal funds rate, is 4.25% to 4.50% as of Dec. 14, 2022. On Dec. 14, the Fed raised interest rates by 0.50%, the seventh rate hike this year. The Fed decided to raise interest rates by 50 basis points, a step down from the 75-basis point pace seen over the previous four meetings. The Fed’s rate hikes of 4.25% this year is the fastest cycle in history, pushing borrowing costs to a 15-year high. According to its recent statement, the Fed’s overarching goal is to return inflation to its 2% objective.
All I know is that the occupation junta government in DC is spending exactly like a person that has made up their mind they are filing for bankruptcy next month. Trip to Vegas, cash for a big screen TV, new clothes and boots, etc. Max out that credit card cause you know you’re walking away.
The current Bank of America, N.A. prime rate is 7.50% (rate effective as of December 15, 2022). The prime rate is set by Bank of America
Treasury Yield Curve
1 Month Treasury Rate 3.80%
1 Year Treasury Rate 4.66%
10 Year Treasury Rate 3.75%
10 Year-3 Month Treasury Yield Spread -0.59%
10-2 Year Treasury Yield Spread -0.56%
20 Year Treasury Rate 3.99%
3 Month Treasury Rate 4.34%
3 Year Treasury Rate 4.09%
30 Year Treasury Rate 3.82%
30-10 Year Treasury Yield Spread 0.07%
5 Year Treasury Rate 3.86%
6 Month Treasury Rate 4.67%
The prime rate is correlated with the federal funds rate and tends to move along with it. The bank prime loan rate reached as high as 20% in 1981, when the federal reserve was led by Paul Volcker, and the interest rate environment was extremely inflated.
Obama showed that the money from taxes is not important.
The Democrats can just print money.
We only pay income tax so that the government has some control on us.
Realtor.com’s noteworthy housing market predictions for 2023: Fixed 30-year mortgage rates will average 7.4%, modestly retreating to 7.1% by year-end.
If we lose the Petro Dollar, we are toast.
This is why Bush went after Sadam Hussain as he was selling oil for Euro’s and Chinese Yuan, undermining the Petro Dollar that Nixon and Kissenger set up to save us from the crash after taking us off the gold standard.
Obama showed that the money from taxes is not important.
The Democrats can just print money.
We only pay income tax so that the government has some control on us.
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Yep...taxes are becoming a way to have some control over inflation. From a Revenue standpoint, it’s clear your Central Bank could purchase all your debt if it wished...forever. Does anyone think that The Fed would ever say “no” to Federal borrowing? You’d never get to even be Fed Chairman if the gov. thought you’d pull that kind of stunt.
You get that most of the debt is owned by the fed. And they give the US government the interest back. So that debt is zero.
The 30 Year Fixed Rate Mortgage Rate October 30, 1981 was 18.44%
Back in 1980, America was the worlds biggest creditor nation. Now we’re the biggest debtor in all of human history. 20% prime today would collapse our economy as bad as the Great Depression.
On the other hand, if we don’t raise rights, the economy will collapse in hyper inflation. So do you want to be bitten by a rattlesnake? Or mauled by a mountain lion? Those are Americans choices
When you look at the Money Supply, it is evident the Fed is COUNTERFEITING! That’s the primary cause of inflation.
Those two would be kind in comparison to what lies ahead for USA.
The Fed buys debt by printing money.
I just don’t think there is a soft landing. Except for the Nomenklatura in the DC and Wall Street junta. I think it behooves the regular guy to have his debt paid off, and have a little piece of property and other preparations for a couple of rough years… until whatever the new financial system is going to be takes shape.
I agree with your analysis.
The only question is how fast and how far will be the fall.
We are between a rock and a hard place. Need more money, print it and cause inflation.
$32 trillion at 10% interest is $3.2 trillion. That’s more than all revenues combined except for Social Security taxes.
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