Wednesday, May 21, 2014

When it's too late, it'll be too late

From MNI News
MONDAY, APRIL 14, 2014 - 14:48

US CBO Report Highlights Coming Surge in Debt Service Payments

By John Shaw

--Congressional Budget Office: Growing Debt, Rising Rates Will Ignite Interest Payments
--CBO: Annual Debt Service Costs To Approach $700 Billion By FY2021
--CBO: Debt Service Costs Will Exceed $5.8 Trillion Over FY2015-FY2024 Period

WASHINGTON (MNI) - While the Congressional Budget Office's most recent update of its economic and budget baseline does not offer any startling new insights into U.S. fiscal policy, it paints into even bolder relief one profound fact: the enormous impact that growing debt service costs will have on U.S. fiscal policy in the next decade - and beyond.

The article continues on, and, it turns out, it's all about the Federal debt. At least, I'm pretty sure. They talk about "our debt", but in the same paragraph they compare it to the defense budget and "other domestic agencies". And it's a CBO report. They've gotta be talking about the Federal debt.

But the private sector owes more debt than the Federal government, and pays higher interest rates. So if rising rates are a problem for the government, rising rates are a bigger problem for the private sector.

The article also says this:

The CBO says that as the economy strengthens interest rates will rise considerably.

Know what? That's a good reason to go with the Arthurian plan to accelerate the repayment of private sector debt: Keep interest rates low, and use tax incentives instead to nudge a little more money into debt repayment.

Policy has to change.

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