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Well, getting back to the original question -- what happens to the budget when the interest rates rise -- the answer is clear: We will not be able to service all those debt payments without getting more tax revenue. I see only three possibilities:
1. A Democrat-controlled White House and Congress enacts Draconian tax increases. The economy goes into a tailspin, and a major recession, from which there is no exit, engulfs the country.
1. A tight-fisted Republican is elected and, together with Congress institutes a severe program of budget cutting. The leadership realizes that we cannot continue to spend more than we earn (receive in taxes). A constitutional balanced-budget amendment is adopted. Over a 10-year period the budget deficit is expected to be greatly reduced but not eliminated. As the entitlements are actually reduced for the first time, major social upheaval engulfs the country.
2. The Gov't prints the dollars like crazy, which drives a double-digit inflation. The huge debt is being repaid in cheaper dollars, making the problem appear palatable. But the long-term runaway inflation corrodes the social fabric, and a major social upheaval engulfs the country.
The fed (and nation by extension) is stuck between a rock and a hard place, having to choose between runaway inflation or economy.
We've dug ourselves into a huge hole and I don't see any way out of it.
Well, getting back to the original question -- what happens to the budget when the interest rates rise -- the answer is clear: We will not be able to service all those debt payments without getting more tax revenue. I see only three possibilities:
1. A Democrat-controlled White House and Congress enacts Draconian tax increases. The economy goes into a tailspin, and a major recession, from which there is no exit, engulfs the country.
1. A tight-fisted Republican is elected and, together with Congress institutes a severe program of budget cutting. The leadership realizes that we cannot continue to spend more than we earn (receive in taxes). A constitutional balanced-budget amendment is adopted. Over a 10-year period the budget deficit is expected to be greatly reduced but not eliminated. As the entitlements are actually reduced for the first time, major social upheaval engulfs the country.
2. The Gov't prints the dollars like crazy, which drives a double-digit inflation. The huge debt is being repaid in cheaper dollars, making the problem appear palatable. But the long-term runaway inflation corrodes the social fabric, and a major social upheaval engulfs the country.
And the problem is, we haven't even met the REAL Chinese virus, just a dry run. What will we spend then?
We will spend USD's. In times of national emergency, as proven by WW2, USD's are not our limit. Our limits are in productivity. And of course inflation. But if we are all dead, inflation is of course moot.
Americans have a net worth of 130 trillion with 30 trillion of that debt .
If one had a mortgage that took up 20% of their worth we would say that is not bad at all
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