“Economic Statistics for 21 Aug 13…and Commentary”
Dale Franks breaks down the numbers:
One might […] remark that rising mortgage rates may signal the inevitability of rising interest rates for Treasury bonds. Or, perhaps, vice versa. Whatever.
Either way, you should keep in mind that a rise of 1% in Treasury yields works out to an additional $160 billion or so in debt service payments per year. Right now we’re paying about $350 billion a year on debt service, with a low net interest rate a bit above 2%.
If the net interest rate goes back to the historical rate of 6%, we’re looking at interest payments of $950 billion or so per year. Keep in mind that the Federal government already isn’t taking in enough revenue to cover payments for Social Security, Medicare, and Debt Service. That means that we’re borrowing money to cover part of our debt service, and everything else the federal government does. There’s no way we can afford to pay $950 billion a year in interest payments.
And we certainly can’t borrow an additional $600 billion per year to pay for the additional interest payments. That would quickly result in a debt death spiral. But we could eliminate every single executive department -– including Defense -– and we’d still have a $1 trillion deficit.
— All true. And all terrifying. Concludes Franks,
You should be happy the economy is moribund, because that’s keeping interest rates low, and low interest rates are preventing the aforementioned fiscal death spiral right now.
Also true, but to me, a bit too fatalistic.
Because while I take Dale’s point as a matter of current economic situatedness, his conclusion is a lot like arguing that you should be happy your wife is a homely, well-stretched skank. If only because it’s precisely that repulsiveness that is keeping your friends and her co-workers, no matter drunk they get, from having a go at the wanton little slut.
Best to stop the rationalizing and just either divorce the whore or kill her off by slowly and carefully by poisoning her morning Cinnamon buns with trace amounts of arsenic.
If you’ll allow the metaphor.
(h/t Physics Geek)