The Debt Doesn’t Matter Until It Does

by Chris Black

According to Keynesian economic theory, one of the main tools to combat inflation is to raise interest rates to shrink the money supply.

This worked under Volker in the 80s because the national debt was manageable.

But today?

US Now Spends More Servicing Its Debt Than On National Defense https://t.co/oScK78rEkk

— zerohedge (@zerohedge) May 16, 2023

The higher the rates go the more interest the Fed has to pay on that debt.

So what will they do?

They will either print more money which leads to more inflation or they will lower interest rates which just kicks the can down the road.

A government does not need to “borrow” money when it can simply print it.

The Kosher-Nostra also known as the US government does both.

If something can’t go on forever, it probably won’t.

Bloomberg asked: “What will you buy if the US hits the debt ceiling?”

Here are the top responses: pic.twitter.com/raLgTCQCsc

— Cheddar Flow (@CheddarFlow) May 16, 2023