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The total amount of interest paid by the government to all parties, domestic, foreign, private, and public sector was about $400 billion in 2021. Meanwhile, Am
by missedthecue 5y ago
The total amount of interest paid by the government to all parties, domestic, foreign, private, and public sector was about $400 billion in 2021.
Meanwhile, America borrowed $1 trillion in new debt in the same year. Lower rates contribute to a higher money supply far more than raising interest rates adds to the interest income paid to the private sector.
- bubbleRefuge 5y agoWhen considering non-government sector burrowing due to lower interest rates, these transactions net to zero for the private sector, because an asset and a liability is created to the private sector. In the case of government paying interest to the private sector, the private sector balance sheet nets positive.
- bubbleRefuge 5y agoPlease consider what your $400B number would be if the FFR were 5%. Here we are talking about perhaps 3 billion. Thats the point. Fed is trying to hit the brakes but actually is hitting the accelerator. MMT 101.
- missedthecue 5y agoWe are a long way from 5%. Fed is looking at raising rates a total of 0.75% over the next 12 months.