"We have $1.3 trillion combined Governments' debt at say 2%...that's $26 billion a year in interest rates without paying down any capital
If that shoots up to say 6% then we would have real problems staying afloat economically businesses and individuals simply can't stand any higher tax rates. If that shoots up to say 6% then we would have real problems staying afloat"
In 1988 gdp was growing at 5.74% in part due to inflation and in part due to real growth, and with everything else being the same,gov receipts would have also experienced a similar growth. With inflation the real burden of debt also goes down. In short, what is required is GDP growth. Interest rates tend to go up in response to higher economic activity.
