Let’s Say It Again: Normal Interest Rates Would be a Disaster for U.S. Debt

Zero Hedge“The Magic Of Compounding” – The Impact Of 1% Change In Rates On Total 2022 US Debt:

The bottom line: going from just 2% to 3% interest, will result in total 2022 debt rising from $31.4 trillion to $34.1 trillion; while “jumping” from 2% to just the long term historical average of 5%, would push total 2022 debt to increase by a whopping $9 trillion over the 2% interest rate base case to over $40 trillion in total debt!

And for those more curious about that other critical economic indicator, debt/GDP, the three scenarios result in the following 2022 debt/GDP ratios:

  • 2% interest – 169%;
  • 3% interest – 183.5%; and
  • 5% interest – 217%, or just shy of where Japan is now.

PreviouslyNormal Interest Rates Would be a Disaster for U.S. Debt

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