From the article: With U.S. debt now at $35.3 trillion, the cost of paying the interest on all that borrowing has soared recently and now averages out to $3 billion a day, according to Apollo Global Management’s chief economist, Torsten Sløk.
And that includes Saturdays and Sundays, he pointed out in a note on Tuesday.
The daily interest expense has doubled since 2020 and is up from $2 billion about two years ago. That’s when the Federal Reserve began its campaign of aggressive rate hikes to rein in inflation.
In the process, that made servicing U.S. debt more costly as Treasury bonds paid out higher yields. But with the Fed now poised to start cutting rates later this month, the reverse can happen.
“If the Fed cuts interest rates by 1%-point and the entire yield curve declines by 1%-point, then daily interest expenses will decline from $3 billion per day to $2.5 billion per day,” Sløk estimated.
MorningHerald on
Peter Zeihan recently made a video on why this is a problem but probably isn’t going to be a serious problem for another 30-40 years or so.
The US has no intention or means of repaying the debt. It will be forgotten.
Keybricks666 on
If we’ve learned anything so far it’s that debt isn’t real assets are
SerodD on
It’s just pretend money, people are really thinking too much about this. The debt can raise even more and nothing will happen, inflation will eventually take care of it and make it payable.
Evange31 on
Doesn’t really matter if most of the global economy is traded in USD
6 Comments
From the article: With U.S. debt now at $35.3 trillion, the cost of paying the interest on all that borrowing has soared recently and now averages out to $3 billion a day, according to Apollo Global Management’s chief economist, Torsten Sløk.
And that includes Saturdays and Sundays, he pointed out in a note on Tuesday.
The daily interest expense has doubled since 2020 and is up from $2 billion about two years ago. That’s when the Federal Reserve began its campaign of aggressive rate hikes to rein in inflation.
In the process, that made servicing U.S. debt more costly as Treasury bonds paid out higher yields. But with the Fed now poised to start cutting rates later this month, the reverse can happen.
“If the Fed cuts interest rates by 1%-point and the entire yield curve declines by 1%-point, then daily interest expenses will decline from $3 billion per day to $2.5 billion per day,” Sløk estimated.
Peter Zeihan recently made a video on why this is a problem but probably isn’t going to be a serious problem for another 30-40 years or so.
https://youtu.be/SZ3ij6fVJmk?si=vZ8wyfmEft6SVUYG
The US has no intention or means of repaying the debt. It will be forgotten.
If we’ve learned anything so far it’s that debt isn’t real assets are
It’s just pretend money, people are really thinking too much about this. The debt can raise even more and nothing will happen, inflation will eventually take care of it and make it payable.
Doesn’t really matter if most of the global economy is traded in USD