Yesterday, the US released their Budget Deficit Report.
To see how much interest the US has paid on Federal debt, you have to scroll to page 9 of the report. Then, go to the bottom of the table to the small line item below. Finally, you’ll see that the US has paid an alarming $652 BILLION in interest YTD, up 25% since last year.
As rates rise, we will soon see the first ever year with $1 TRILLION+ in annual interest expense. Interest expense will soon be the US government’s biggest expense, even more than social security.
The debt ceiling crisis wasn’t the real crisis.
It was simply a distraction.
Meanwhile, US tax receipts fell by nearly 10% over the same time period. The drop is the biggest since June 2020 when the US went into a full lockdown.
We have a spending problem and a revenue problem. A solution is needed.
“…the US has paid an alarming $652 BILLION in interest YTD, up 25% since last year.”
Anyone still wondering why they loved zero interest rates so much? Anyone want to bet they won’t go back to zero interest rates Real Soon?
And if the USA is this bad, Canada is guaranteed to be so much worse. Also of note, the Liberal members of cabinet are BIG into real estate. Can they really maintain 5% rates? I’m thinking not for long.
If we had useful government, they would be release monthly data on what the breakdown of their bond auctions are by duration, and them have that data available for study. $421 billion comes up for renewal this year, some of that will be debt with 10, 20 and 30 year time frames, the question becomes does the government roll those over into short term bonds of 1, 2, 3 or 6 month bonds at 5%+ in the hope that the interest rate goes down, or just wing it, and take the 30 year hit.
The government sets the interest rate, they don’t have to hope. That said, does it make any difference to them if they have to print another $400 billion to cover their marker?
The whole point of this is them inflating the currency so they can skate on their debts and keep borrowing more. That’s what inflation is. A tax.
well, yes, but by their behaviour, it’ll tell you a lot about how long interest rates will be at 5% or higher
“We have a spending problem and a revenue problem. A solution is needed”
Indeed! So put a rush on those printing presses!
Jamie – A National Post article today said that Polievre would not increase defense spending because he would be more focused on reducing the national debt. They failed to mention that if we didn’t have to pay $44B in interest in the federal debt this year we could meet our NATO commitments.
An even bigger issue might be Canada’s record household debt, the worst in the G7 and it exceeds our nation’s GDP.
https://www.bbc.com/news/world-us-canada-65688460.amp
Paul.
All I can say is that @ 70, still In decent shape/health, a great carreer (ongoing – Oil Sands), I have ZERO debt.
No mortgage, paid off reliable transportation, a great woman and soon to be, a 4 season 36′ RV that if need be could be used to house the 2 of us….somewhere in NA.
I call that Freedom.
I feel (somewhat), for those who are in a 2% 750k Mortgage and renewal dates coming ever closer. Get ready for multi generational mortgages….just like Europe.
“a solution is needed”
You mean like world war three?
Happens every time!
Yes. It does. But I don’t quite get how wars can solve a financial crisis. Surely, it’s just more spending, and destructive spending at that!
Look to the inflationary cycle globally prior to WW1 and WW2 for an indicator of what that looks like.
Kleptocracies all end this way.
The “Silver Coins” of the realm are pure lead.
The bureaucracies all corrupt cesspits.
And the thieves engage in ever more savage theft,on any pools of wealth.
Eventually consuming all the lesser fools and bandits..
We call these folks by their chosen label..”Progressives”.
Modern Banking is a complete fraud.
Money that never existed,is loaned out top build unneeded structures and interest is collected..
Brilliant scheme.
Where in the taxpayers are excluded from the profit and held responsible for the losses.
There is no solution.
Big Government exists to become Bigger Government.
Its a waste of energy to even discuss it with the majority of voters.
They’re stupid and ignorant and they always want the government to Do Something.
Indeed. Governments are like gluttonous binge eaters. Left to their own devices, with no checks or controls, they will consume everything … with no thought about their inevitable starvation.
So, they’re a good reflection of the public that serves, sustains, and sucks from them.
“We have a spending problem and a revenue problem. A solution is needed.”
So its war, then….as ever it was/is.
And I’ve got news for the Uni-Party LOOTERS of American productivity … your tax receipts are gonna CRATER far greater than 10% when the recession finally hits home. The Fed is poised to crank-up interest rates another 2-3 times before years end. Then … they will have finally achieved their goal … of crushing the American economy. Dead. Possibly a Depression.
As the leftists like to say … this amount of government spending – read: transfer of wealth into leftist causes … is “unsustainable”. America is hurtling toward a brick wall … reinforced with steel and concrete … *SPLAT*
Irresistible force meets immovable object. Basic physics; actual physics, not the “new age” variety.
The pretend government has raided the Social Security trust fund for years.
Hussein obama added more disabled and illegal aliens as beneficiarys who never paid in.
Now with interest and propping up Ukraine, the USA is f’d
As soon as we can finish provoking Russia to use nuclear weapons, the problem will be solved. Our government will be reduced in size to a few large dumpsters of smoking ash. This will immediately end our excess spending. And anyone we still owe interest or principal payments to will soon die from radiation sickness. Problem solved!
Our government will be reduced in size to a few large dumpsters of smoking ash.
A terrible loss, indeed.
They could fix this or they could get elected, That’s the choice. You know what the choice is. They will default, or inflate (if they can control it, a big if).
Its a Ponzi scheme.. Who loans this money to our government and where did they get the money from?.. Santa Clause? a Troll under a bridge?..
We dropped the gold standard so we can play around with socialism.. Things women want to vote for with endless war slipped in for good measure.. We are not better off..
Before the United Nations Ponzi Scheme we had the gold standard.. It kept nations in line.. No need for the UN when nobody is willing to float you a loan to fund your unjust war or idiot schemes.. Leaders had to be careful to maintain THEIR credit rating.. Read that again..
The USA pissed all over that.. Nobody has to be careful anymore with magic piles of Troll money supporting the system.. Unjust wars and idiot schemes all over the place..
One contributor to the collapse of Rome was the debasement of the currency. We are seeing a modern equivalent in Canada and the US with the rampant printing and borrowing of money.
Empires collapse. This will not end well.
We already know the answer. They will address the revenue shortfall.
Sob stories of granny dumpster diving because taxes have not kept up with spending.
The media will show crying kids because the school drag queen story hour has been canceled.
Warren & Bill will scream tax me tax me!
In the end the hated blue collar, former bud light drinker, will get to pay the bill.
Rinse & repeat.
This where all democracies go to die – bankruptcy from an electorate that knows it can vote for spoils of the treasury and prefers the party that delivers such.
And the Republicans in The Congress signed on to every “infrastructure” bullschitt Bill. The same UNIPARTY GOPe who are trying to destroy Trump … i.e. destroy YOU.
Ditto the “Blue Tie” Uni-Party members in Can Ahh Duh.