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Edited on Thu Jul-21-11 09:12 AM by ThomWV
The one thing we know with certainty will happen is the price paid at auction for the next set of bonds we try to sell to the world will drop. It is the price of the bond and its duration that are used to calculate its yield and the relationship is inverse. That means that the lower the auction price the higher the effective interest paid.
So, how much does it cost us if the interest rate raises just 1% (the actual increase will be much larger if we default)?
Well, the debt is fourteen trillion. I hope I get the number of zeros right.
$14,000,000,000,000
and we multiply that by 0.01
$14,000,000,000,000 X 0.01 = $140,000,000,000, which is $140 Billion I believe.
So that's roughly the price, unless I got it wrong and if I did please let me know so I can edit this and fix it. That's the annual price of Republican obstruction at 1% increase. What actual increase we will see? Who knows, 5%, 10%, higher? Who knows? The end result will certainly be expensive though, hundreds of billions of dollars added to the debt for no reason what so ever.
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