The total “revenue” of the US government is $3 trillion. Therefore, more than 30% of tax “revenue” would go to pay interest on the debt alone. Obviously, interest rates rising to 10% would see well more than half of all tax “revenue” going towards interest payments on the debt alone. And at 16% the entire tax “revenue” of the US government would go to make interest payments alone. Of course, if you consider that most of the government’s debt is at the 5-10 year duration, and that typically the yield curve is positively shaped, the numbers get a bit worse.
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The Magic Number Seven: Fed May Raise Rates Seven Years to the Day of Rate-Drop to 0% | The Dollar Vigilante.7 trillion, a 123% rise!
With a debt of $18.7 trillion, if interest rates were allowed to rise to where they last peaked in 2006, at 5.25%, that would mean nearly $1 trillion per year in interest payments owed alone on the national debt.
<span>The total “revenue” of the US government is $3 trillion. Therefore, more than 30% of tax “revenue” would go to pay interest on the debt alone. Obviously, interest rates rising to 10% would see well more than half of all tax “revenue” going towards interest payments on the debt alone. And at 16% the entire tax “revenue” of the US government would go to make interest payments alone. Of course, if you consider that most of the government’s debt is at the 5-10 year duration, and that typically the yield curve is positively shaped, the numbers get a bit worse. And if we assumed the debt grew more – as interest rates rose – or that tax revenues fell owing to a slump in production they get worse still.
For these reasons, as well as where we pr Summary
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