A DEBT BOMB
Written by Peter Boykin on September 13, 2022
Shared By Peter Boykin – American Political Commentator / Citizen Journalist
A DEBT BOMB
Unfortunately, you don’t always know how close you are to the edge of the cliff until you’re in freefall.
Everyone understands that the United States is drowning in our national debt. We also understand that we’re being crushed under the pressure of inflation. What we don’t talk about is how one negatively affects the other and is lighting the fuse on a massive debt bomb.
First, let’s set the table with a few facts everyone should know:
Today the U.S. holds over $30 trillion dollars in debt.
In 2021, when interest rates were at a very low 1.5%, the U.S. paid $562 billion in interest on that debt.
Total U.S. revenue in 2021 was roughly $4 trillion.
So 1/8 of our revenue was going to pay off the interest on our massive debt.
What happens when interest rates rise?
In order to fight off inflation (which was 8.5% last month), the Federal Reserve is raising interest rates – aiming to end the year at 3.5% and then to rise even further to 4% in 2023 – a massive increase from their 2021 levels.
The debt bomb:
As the Fed raises rates and our debt matures, we will be paying $1.5 trillion every year just to pay the interest on our massive debt. That means 37.5% of all government revenue will go towards interest.
For perspective: Imagine you make $50,000 a year and have to use $18,750 of that just to pay the interest on your credit card debt.
Right now, our annual budgets are always in a deficit – in other words, the government spends more than it makes – increasing our debt every year. Now add to that larger annual interest payments. More borrowing, higher interest payments.
It’s an untenable cycle. And it’s accelerating.
Our elected “leaders” have to act soon. But considering Joe Biden just committed $1 trillion to cancel student loan debt [that will add to our national debt], plus $740 billion to fund Green New Deal programs, and $54 billion to fund the war in Ukraine… I don’t see them slowing spending anytime soon.
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