Skip to comments.Trump's Right To Be Worried About Interest Rates
Posted on 07/22/2018 7:30:20 PM PDT by Pavegecko
Notice I didnt say Trump is right to say interest rates shouldnt be going up; I said he is right to be worried. And, for sure, interest rates will be going much higher. There are multiple factors at play...
(Excerpt) Read more at vanetikpost.com ...
Obama booby trapped the economy by printing trillions of dollars. Now, we’re left with potential massive inflation if the economy continues to flourish and more interest on the debt or raising interest rates and slowing the economy down.
Rates were kept abnormally low during the Bush years, too. The housing market went from simmer to boiling over during those years. Home prices skyrocketed leaving many homebuyers behind. Then lenders started introducing wild and crazy stuff to continue putting homebuyers in houses.
Then came 2007/08.
It’s the interest on the debt ... stupid. If the fed allows rates to return to average the government is screwed and it will require a huge chunk of the budget just to service the interest on the debt. Most of us here have known this but much of the public may be clueless about this point.
Trump tried to reduce spending by cutting just little chunks that were not to be spent anyway and Congress refused. Congress is incapable of even slowing down the rate of growth much less real spending cuts.
This is one thing that I think is much bigger than Obama. He played his part but many others wrote the script and it started long before he took office.
What about import tariffs on all products from non reciprocal free trade countries equal to national debt payments? Its hooters night so Im maybe 8 beers in but that sounds like a starter to me. Maybe Im way off.
And it’s not just the government that’s in a potential bind...many private companies took advantage of declining/flat interest rates to borrow massively. They’ve been able to service their debt (likely maxed out) at rate X...what happens when the rate suddenly becomes X+1, or higher?
We need reduced spending not more taxes or tariffs. Trump is using tariffs as a negotiating tactic in order to get equitable trade deals. This is different than deliberately using tariffs as a long term measure to help pay interest on the debt ... which just encourages even more spending. The best answer is reduced spending.
Exactly. What is the annual debt service on $20 Trillion at 5% interest?
Good point .. but with a rebounding economy I think businesses will come out OK and hopefully increased business activity and profits will offset increased rates for borrowing.
Interest rates were held artificially low for too long. 3 - 5% interest rates are healthy. I remember the late 1970s and early 1980s when house mortgage rates were 17% and higher. I bought my first house in a special offer with a 13% mortgage rate and I thought I was lucky. :-)
It's 1/20 of the debt which means the interest alone would be $1T. In 2017 the whole budget was $4.2T. That would mean interest on the debt would absorb 1/4 of the budget before even getting to entitlements, military and the rest of it.
At 3% rates the interest would be $600B. These people in Congress are in big trouble. Trump is trying to get ahead of this freight train but Congress is clueless and gutless.
Notice I didnt say Trump is right to say interest rates shouldnt be going up;
But he is right. The yield curve is indicating that the Fed is manipulating the market.
Deport the illegal aliens and our spending would easily drop $1T.
I like the ideal of both. Actually I see it as a motivator too. it really boils down to free trade without hindrance or no trade. Lets be honest what country could afford a significant portion of our debt? I wouldnt have considered a sarcasm tag.
Nothing is stopping you from sending in more money to government. Go for it.
Congress wants Trump and us to fail.
It is all good eating for them if the economy tanks.
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