Sunday, August 12, 2018

Buckle Your Seat Belts: US Spending On Interest Hits All Time High

The U.S. government financial situation is getting precarious.

The amount the government is paying in interest on its debt is exploding.

The latest data released by the Treasury shows
that US government interest payments just hit an all time high of $538 billion in Q2 2018.

Federal Government Current Expenditures: Interest Payments

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And interest rates are only starting to climb with no indication they will stop climbing anytime soon.

It has not been widely reported in the media but interest rates have been on a steady climb since October 2015.

Three Month Treasury Bill Rates

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The three-month Treasury bill rate is currently 2.02%.  In the EPJ Daily Alert, I am forecasting a climb in price inflation to the 5% range. There is no way interest rates stay at the current level with that kind of price inflation.

Meanwhile, U.S. government spending is on a rocket ship.

All presidents boost federal government spending. There is no reason to expect the trend to stop under President Trump. He wrote a book called, "The Art of the Deal," but if you examine his career closely, you realize he should have written a book called "The Art of the Borrow."

The most important question becomes the one of how much of the new debt that will be issued by the U.S. Treasury in tiger by the tail fashion (chasing higher interest rates) will end up being monetized by the Federal Reserve. The more monetization, the higher the price inflation

Robert Wenzel is Editor & Publisher of

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