One thing that concerns me is the impact of the price of debt servicing if the interest rates return to anything like normal. The debt has increased so much at artificially low interest rates that going from this to historically average rates would immediately add about $800 Billion to the annual deficit - shocking the economy, and especially the markets - which will also be taking a beating by there being alternate investment opportunities for the first time in a decade.
It has to be dealt with, but there’s going to be a lot of grief for that.
There are a lot of things like this that concern me. The treasury has been used repeatedly to buy votes, and the self-interested self-promoting selfish group of people who have populated public office over the past several decades have created a horrible mess. Things that could have been fixed with standard remedies previously are going to be much harder to fix now. I look at this like a localized malignancy that would have been easily surgically resected early on, but was let go to the point at which it metastasized to multiple places and is now only treatable with very toxic chemotherapy. I'm not sure there are any easy fixes at this point, or whether those things that have worked previously are going to work sufficiently well now.
Along those lines, I heard Greenspan speaking yesterday about the debt, the fact the population is aging, and that we have more and more people partaking of entitlements - while our productivity is not rising. He contributed to this, IMHO, but that's another story.
If a debt can't be paid, it won't be paid.