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dkf

(37,305 posts)
Wed Sep 25, 2013, 01:39 PM Sep 2013

The 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

14 replies = new reply since forum marked as read
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geek tragedy

(68,868 posts)
1. Wow, straight out of Ron Paul world.
Wed Sep 25, 2013, 01:43 PM
Sep 2013

Inflation is not what's lurking around the corner. Check out the job market if you don't believe me.

beerandjesus

(1,301 posts)
3. Let the flame war begin!
Wed Sep 25, 2013, 02:02 PM
Sep 2013

The irony is, I completely agree with you on the substance, just not on the ad hominem tactic.

 

geek tragedy

(68,868 posts)
4. The article is straight out the Ron Paul world of economics and the fed.
Wed Sep 25, 2013, 02:03 PM
Sep 2013

I have no idea what dkf believes on the Fed.

DanTex

(20,709 posts)
14. The attack is justified in this case.
Wed Sep 25, 2013, 03:04 PM
Sep 2013

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)
2. You'd think that being after being wrong for 5 years in a row these inflation alarmists
Wed Sep 25, 2013, 01:54 PM
Sep 2013

would eventually square their views with reality...

DanTex

(20,709 posts)
8. Actually, rates are artificially high.
Wed Sep 25, 2013, 02:59 PM
Sep 2013

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...

DanTex

(20,709 posts)
12. No, if the Fed stopped buying, rates would go higher and the economy would suffer even more.
Wed Sep 25, 2013, 03:02 PM
Sep 2013

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)
5. "Some economists" are crazy, stupid or dishonest.
Wed Sep 25, 2013, 02:20 PM
Sep 2013
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.


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.

DanTex

(20,709 posts)
10. The real question is, when rates don't go up to 5.7%, will "some economists" admit being wrong.
Wed Sep 25, 2013, 03:00 PM
Sep 2013

And given that they've been making the same predictions and being wrong for years now, the answer to that question is probably no.

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