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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe Fed's 'hidden agenda' behind money-printing
Do the math: If we were to pay an average interest rate on our debt of 5.7 percent, rather than the 2.4 percent we pay today, in 2020 our debt service cost will be about $930 billion.
Now compare that to the amount the Internal Revenue Service collects from us in personal income taxes.
In 2012, that amount was $1.1 trillion, meaning that if interest rates went back to a more normal level of, say, 5.7 percent, 85 percent of all personal income taxes collected would go to servicing the debt. No wonder the Fed is worried.
Some economists will also suggest that interest rates may go much higher than 5.7 percent largely as a result of the massive QE exercise of printing money at an unprecedented rate. We just don't know what the effect of all this will be but many economists warn that it can only result in inflation down the road.
http://www.cnbc.com/id/101062461
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geek tragedy
(68,868 posts)Inflation is not what's lurking around the corner. Check out the job market if you don't believe me.
beerandjesus
(1,301 posts)The irony is, I completely agree with you on the substance, just not on the ad hominem tactic.
geek tragedy
(68,868 posts)I have no idea what dkf believes on the Fed.
DanTex
(20,709 posts)Posting Ron Paul/austerian economic BS is just as bad as posting global warming denial BS. There needs to be a limit to the level of right-wing stupidity posted on DU.
DanTex
(20,709 posts)would eventually square their views with reality...
dkf
(37,305 posts)Geez Louise.
DanTex
(20,709 posts)Given the unemployment rate and the loss of aggregate demand in the economy, the rate that the fed should actually be targeting would be negative, but that's impossible. So the interest rate is held artificially high by the zero lower bound.
People like the guy who wrote this article have been complaining about the fed keeping rates low and have been predicting runaway inflation for years, but it hasn't happened. At some point, you'd think they would abandon a theory which keeps on making false predictions...
dkf
(37,305 posts)Funny.
DanTex
(20,709 posts)So now I have a question for you. For how many years have you believed that QE was going to cause runaway inflation? And how many more years are you going to be wrong before you decide to revise your predictions?
cthulu2016
(10,960 posts)No serious person thinks that.
There is no even halfway legitimate economist who think US bond rates can go to 5.7% without an underlying strong rebound in the US economy driving such a move.
geek tragedy
(68,868 posts)Interest rates are low because the economy is sluggish.
dkf
(37,305 posts)geek tragedy
(68,868 posts)and inflation?
DanTex
(20,709 posts)And given that they've been making the same predictions and being wrong for years now, the answer to that question is probably no.