Bond yields now are the inflation rate plus 1-2%. ..around 4.6%. Below that investor appetite wanes.
Spending a half trillion a year more than what we take in means we have to sell that much in additional bonds each year.
Our debt is getting so high and the interest we have to pay to service that debt is getting so high that we are at the point where we are borrowing some money to pay that interest.
What does that mean? Well, if we stopped overspending right now we could stop the growth and begin to pay it down a little at a time which would be healthy and promote growth and strength. But, that clearly is not going to happen. What is going to happen, and this is what everyone should know, is that given the present rate of debt growth, our expense to service that debt, paying interest annually and paying out principle as bonds mature, will quickly accelerate.
This will be a worldwide event. When the U.S. sneezes the world catches a cold. Remember, without credit economic activity slams on the brakes. Credit freezes up. Bankers cry on television. The stock market crashes. The government can't create money to support credit because there are no investors. Jobs vanish. It means a big recession, a huge contraction, layoffs as corporations close their doors.
WW2 came as the world struggled to grow out of the Great Depression. Hitler blamed the Jews among others and used that hate to fuel his war. It worked. We can see that hate right now over Israel defending against Hamas. People starved in cities then. Remember pictures of people standing in long lines at soup kitchens because they were hungry. This depression will probably be much worse. Children will die.
Republicans want to reduce spending. We should listen to them if you want your children to have a decent standard of living as adults. Not spending more than we make is important.
