presuming interest rates do not remain zero or negative forever
Slightly off topic but I don't believe US interest rates can go up without creating a massive issue for the US economy. From the link below: "a 5% increase in interest payments for the federal government would cause the level of federal debt to rise to $85 trillion over the next 20 year". So should the Fed reserve return interest rates to a historically normal level before the government significantly reduces debt (which seems unlikely) they would likely crash the US economy.
a 5% increase in interest payments for the federal government would cause the level of federal debt to rise to $85 trillion over the next 20 year"
So if interest rates suddenly rise to 5% and the US didn't make a single debt payment for twenty years, total debt would explode? What insight! Then again, if nobody cares that no debt payment was made for 20 years, who cares what the total debt is!
The article says at 5% the debt payment is $900BB annually, which is 5% of GDP. High, but hardly debilitating. First you need to explain what purpose the would be served by the Fed raising rates to 5% tomorrow, though.
Comments
Slightly off topic but I don't believe US interest rates can go up without creating a massive issue for the US economy. From the link below: "a 5% increase in interest payments for the federal government would cause the level of federal debt to rise to $85 trillion over the next 20 year". So should the Fed reserve return interest rates to a historically normal level before the government significantly reduces debt (which seems unlikely) they would likely crash the US economy.
http://danielamerman.com/va/Conflict.html
So if interest rates suddenly rise to 5% and the US didn't make a single debt payment for twenty years, total debt would explode? What insight! Then again, if nobody cares that no debt payment was made for 20 years, who cares what the total debt is!
The article says at 5% the debt payment is $900BB annually, which is 5% of GDP. High, but hardly debilitating. First you need to explain what purpose the would be served by the Fed raising rates to 5% tomorrow, though.