Tuesday, August 8, 2017

The federales are not solvent

Some claim the debt hike is trivial, check some numbers.

Currently, since 2015, interest charges to the Secretary have risen 10% a year, about 40 billion/yr.  The economy is 16 trillion, real dollars. So, in four years new interest charges are a point of GDP.  Get a break on inflation, and it is half a point.

That rise in debt service drops potential GDP down to 1.5%, and we have been seeing that lately.   Taxes fall behind at 1.5%growth.

The secretary of interest payments will find a moment when he is nearly short of cash but cannot get to market soon enough.  That becomes a quick over the counter loan with Janet, insolvency.

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