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The US Government is $30.5 trillion in debt. It currently pays $437 billion in interest on that debt per year. The US government takes in $4.37 trillion in tax

by 300bps 4y ago

The US Government is $30.5 trillion in debt. It currently pays $437 billion in interest on that debt per year. The US government takes in $4.37 trillion in tax revenue per year. https://www.usdebtclock.org/ https://www.usdebtclock.org/ So we pay 10% of our revenue each year in interest. Not too bad. But do some simple arithmetic… $437 billion is 1.43% of $30.5 trillion. As interest rates rise, that percentage rate will go up: 2.86% = $874 billion interest 5.72% = $1.78 trillion interest We are almost assuredly going to hit these rates across Treasury yield curve over the next year or two. Series I Treasury bonds are already paying 9.6%!! What’s going to happen when we’re paying almost half of revenue on interest on our debt?

jaredhallen 4y ago
moltar 4y ago
Easy! You “restructure” it /s
williadc 4y ago
That's all new debt. The old debt would be paid at the old rates
- 300bps 4y ago
  That’s not how bonds work. Bonds have an analytic property called duration. Most people interpret that to mean the amount of time until the bond matures. The true definition of duration though is a bond’s interest rate risk. “Old debt” interest rate can go up because of: 1. A bond matures and must be refinanced at current market rates 2. A bond has a variable interest rate and simply goes up at the next reset period A higher average interest rate on the “old debt” will be coming across the treasury curve, it’s simply a matter of time.
adamius 4y ago
Those billion dollar per day camping trips were fun though, right? The big sneeze involved some fancy face decorations as well. These things aren't cheap either.
pessimizer 4y ago
> What’s going to happen when we’re paying almost half of revenue on interest on our debt? Why would something happen? The important number is total debt, not government debt. It's the balance of payments that's killing us, and unloading government debt onto individuals is a no-op in relation to that.

by 300bps 4y ago

jaredhallen 4y ago

moltar 4y ago

Easy! You “restructure” it /s

williadc 4y ago

That's all new debt. The old debt would be paid at the old rates

300bps 4y ago
That’s not how bonds work. Bonds have an analytic property called duration. Most people interpret that to mean the amount of time until the bond matures. The true definition of duration though is a bond’s interest rate risk. “Old debt” interest rate can go up because of: 1. A bond matures and must be refinanced at current market rates 2. A bond has a variable interest rate and simply goes up at the next reset period A higher average interest rate on the “old debt” will be coming across the treasury curve, it’s simply a matter of time.

adamius 4y ago

Those billion dollar per day camping trips were fun though, right? The big sneeze involved some fancy face decorations as well. These things aren't cheap either.

pessimizer 4y ago

> What’s going to happen when we’re paying almost half of revenue on interest on our debt? Why would something happen? The important number is total debt, not government debt. It's the balance of payments that's killing us, and unloading government debt onto individuals is a no-op in relation to that.