For every percentage point rise the US government will be on the hook for a further 150 thousand million dollars annually.(150 billion)
The US government is finding it hard to agree upon spending cuts of one million five hundred thousand million dollars (1.5 trillion) over 10 years. (yes 10) That is a total of 150 thousand million dollars (150 billion) annually. So if the FED raise interest rates a mere 1% the US government would be back to square 1 even if somehow they found a way to cut spending by their stated amount.
The average interest rate from 1980 to 1985 was circa 15%. Let's play make believe and pretend the FED raises interest rates from 2012 to these levels. This would cost the US government an additional two million two hundred and fifty thousand million dollars (2.25 trillion) annually.
Skol can you please tell me where this money would come from? Take a look at the chart above and tell me if you see a trend. I do and I think it is fairly obvious that the USA is drowning in debt and are stuck.
