The Simple
Problems Of Too Much US DebtZero Hedge | In a succinct and chart-laden
presentation, Professor Antony Davies, of Duquesne, offers a simple perspective
on just how bad things are for the US (in terms of debt or obligations).
In a succinct and chart-laden presentation, Professor
Antony Davies, of Duquesne, offers a simple perspective on just how bad
things are for the US
(in terms of debt or obligations). Putting the interest cost in the context of
war-spending, his analysis is interesting given the recent and dramatic rise in
interest rates. Current interest
payments, given the US
Government's lowest ever 3% interest cost, are $440 billion, or three times the
annual operating expenses of the Iraq
and Afghanistan
wars. While his discussion of a market-set interest rate is
perhaps a little off-the-mark given the extent of QE programs and their
reach-around prime-dealer duration-reducing effects, it is nevertheless true
that the more money the government is
spending on interest, the less money is available to provide services and his punchline on what happens should rates rise even modestly
from here sums the real problem the US faces (even as a currency
issuer as opposed to a currency user - given the inherent instability that
making totalitarian use of the reserve status would incur).