So, the safety of the huge budget and Congress was never in need of saving by the Central Bank. The interest costs on the DC budget have bounds, from 15% to 8%. The banks insure the government costs never exceeds its bounds. The method is disinflation, and possibly deflation.
How close are we to hitting the band limits? That blue line is jumping about 12%, and has small variance. That thing is well controlled, except for the latest spike, a bipartison pre-election spiking of the expenses.
So, as a percent of the budget it has gotten smaller; so the ten year and inflation rate dropped. All that is happening is that principal goes to neutral at equilibrium. What we have is a loop, taxes to interest to the economy, and back again. in fact, an eight year loop as it looks.
So in other words, unless DC runs a surplus, about 10% of the budget back there will always be pre-allocated. Taxpayers are stuck with a permanent tax equal to 10% of our federal taxes. That loop is a reduction in degrees of freedom, or Schramm-Loewner reduction in dimension. The economy has thie permanent tax and its motion must avoid that tax.
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