{"id":22564,"date":"2017-01-25T11:57:36","date_gmt":"2017-01-25T16:57:36","guid":{"rendered":"http:\/\/olduvai.ca\/?p=22564"},"modified":"2017-01-25T11:57:36","modified_gmt":"2017-01-25T16:57:36","slug":"2017s-real-milestone-or-why-interest-rates-can-never-go-back-to-normal","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=22564","title":{"rendered":"2017\u2019s Real Milestone (Or Why Interest Rates Can Never Go Back To Normal)"},"content":{"rendered":"
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2017\u2019s Real Milestone (Or Why Interest Rates Can Never Go Back To Normal)<\/a><\/h3>\n

Forget about NAFTA or OPEC or TPP or crowd size or hand size or any other acronym or stat or concept that obsesses the financial press these days. Only two numbers actually matter.<\/p>\n<\/header>\n

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The first is $20 trillion, which is the level the US federal debt will exceed sometime around June of this year. Here\u2019s the current total as measured by the US Debt Clock:<\/p>\n

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To put $20 trillion into perspective, it\u2019s about $160,000 per US taxpayer, and exists in addition to the mortgage, credit card, auto, and student debt that our hypothetical taxpayer probably carries. It is in short, way too much for the average wage slave to manage without some kind of existential crisis.<\/p>\n

It\u2019s also way more than it used to be. During his tenure, president George W. Bush (2000 \u2013 2008) nearly doubled the government\u2019s debt, which is to say his administration borrowed as much as all its predecessors from Washington through Clinton combined. At the time this seemed like a never-to-be-duplicated feat of governmental profligacy. But the very next administration topped it, taking the federal debt from $10 trillion to the soon-to-be-achieved $20 trillion. And the incoming administration apparently sees no problem with continuing the pattern.<\/p>\n

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The other meaningful number is 6.620. That\u2019s the average interest rate the US government paid on its various debts in 2000, the year before the great monetary experiment of QE, ZIRP and all the rest began. When talking heads at the Fed and elsewhere refer to \u201cnormalizing\u201d interest rates they\u2019re proposing a return to this 6% average rate.<\/p>\n

But of course the last time that rate prevailed our debts were just a little lower. Run the numbers on today\u2019s obligations and you get, well, let\u2019s see:<\/p>\n

$20 trillion x 6% = $1.2 trillion a year in interest expense. To put that in perspective\u2026<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

2017\u2019s Real Milestone (Or Why Interest Rates Can Never Go Back To Normal) Forget about NAFTA or OPEC or TPP or crowd size or hand size or any other acronym or stat or concept that obsesses the financial press these days. Only two numbers actually matter. The first is $20 trillion, which is the level […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[11370,213,431,7544,661,1939],"class_list":["post-22564","post","type-post","status-publish","format-standard","hentry","category-economics","tag-11370","tag-dollar-collapse","tag-interest-rates","tag-john-rubino","tag-qe","tag-zirp"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22564","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=22564"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22564\/revisions"}],"predecessor-version":[{"id":22565,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/22564\/revisions\/22565"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=22564"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=22564"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=22564"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}