We have two charts, one from the CBO predicting deficits and one from Fred depicting deficit ratios and interest costs. If we run the deficit ratio up, then we will force our interest costs, as a percentage of the budget, up faster. That ratio has a hard limit. At 13 % of the federal budget, we crashed in 2008. The effect a crash in 2014 will be to pull that huge spike in debt on the CBO, the Medicare spike,chart forward.
In other words, that dip in the CBO chart represents our excess liquidity, time for us to figure out what's gone wrong. If we spend that dip to get out of a short term problem, then it is gone, the market will make us pay in 2014 for the Medicare spike.
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