JAN 30, 2018
Don’t you love paying interest? Isn’t is rewarding to see hard-earned cash fly out the window for things you previously bought when you couldn’t afford them at the time? Things you may well not even remember at this point? No?
Well, the federal government sure seems to enjoy it. Government interest payments on debt soared to an all-time record in Q4 2017:
Ad nauseum debt spending continues to contribute, of course, but the most alarming part of this is that interest rates are still near zero. The tiny recent increases by the Fed, combined with the titanic US debt load, caused this spike. What will happen when interest rates return levels even remotely resembling historical normalcy?
The world is so indebted courtesy of artificial low rates that rising rates will present a clear and present danger to the sustainability of economic growth in the long term.