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RE: Huh? Are you assuming we keep borrowing huge sums when interest rates go up?

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In Reply to: RE: Huh? Are you assuming we keep borrowing huge sums when interest rates go up? posted by Rick W on June 09, 2021 at 13:27:02

The GDP has about doubled since 2000; however, this chart show it in todays dollars, so you get 2% inflation and about 2% growth. Considering just real growth of 2%, GDP grew from $10.3T to $15.6T over 20 years.

I realize that T-Bills mature at different times. Some mature tomorrow and the latest in 10 years though a lot of people are buying shorter term bonds. In any case, new debt will pay the new rate and likely, around 5 years out, most bonds will get adjusted to new rates. At some point, historical interest rates will come back at typically 4%. Since 2010, the debt gone from $13,562 to to 28,234, more than double. At 4%, it's $1.13 trillion if we stop borrowing. If we double the debt again in 10 years, that total is $2.26T per year. Our current budget was about $4.7T.

If we do 2% a year, GDP would be maybe $26T in ten years with the debt at $56T if the current pattern continues. Do the math and pray we don't see 70s inflation.

-Rod

Follow Ups:

RE: Huh? Are you assuming we keep borrowing huge sums when interest rates go up? - tweaker456 19:54:38 06/09/21 (3)
That's why we need to tax the rich WAY more, just like war hero, patriot, and 8 year POTUS, my main man Dwight D. Eisenhower. Not to mention ending or drastically curtailing the military-industrial complex. RIP IKE

Speak out, you got to speak out against
The madness, you got to speak your mind,
If you dare. - David Crosby

Edits: 06/09/21
- RE: Huh? Are you assuming we keep borrowing huge sums when interest rates go up? - Rod M 20:26:07 06/09/21 (2)
  If you want to go to Fantasy Land, go to Disney Land.
  
  Do you really think the politicians will do what they should? They haven't for last 60 or more years. How many times have they balanced a budget?
  
  Seriously, you be hard pressed to tax the rich enough. You have to broaden the base, AKA, the middle class. Given our consumer economy, GDP would also suffer.
  
  How many entitlements would need to be cut to pay for the debt?
  
  -Rod
  - RE: Huh? Are you assuming we keep borrowing huge sums when interest rates go up? - tweaker456 20:52:13 06/09/21 (1)
    Well I'm glad to see you agree with IKE. There in no need in general to balance the budget, it just should not get out of hand. My guess is if and when it really gets out of hand I won't be around to pick up the pieces. There's a lot of moving parts to what is going on in the US and many don't look to good to either of us.
    
    Speak out, you got to speak out against
    The madness, you got to speak your mind,
    If you dare. - David Crosby
    - The debt is the least of my worries about the U.S. nt - Rick W 22:26:25 06/09/21 (0)
      nt

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