by Michael Maharrey at Schiff Gold
Federal Reserve rate hikes will add trillions to the national debt, according to an analysis by the Committee for a Responsible Federal Budget.
The Fed is expected to deliver another 75-basis point rate hike during its September FOMC meeting. Some speculate the central bank could even raise rates a full 1 percent to fight persistently high inflation. According to the Committee for a Responsible Budget (CFRB), rate hikes will add another $2.1 trillion to the national debt over the next decade.
The debt current stands at $30.9 trillion.
Every increase in interest rate raises the federal government’s interest expense. So far in fiscal 2022, the US Treasury has forked out $471 billion just to fund the government’s interest payments.
To put that number into context, at this point in fiscal 2021 the Treasury’s interest expense stood at $356 billion. That represents a 30% year-on-year increase. Interest expense ranks as the sixth largest budget expense category, about $250 billion below Medicare. If interest rates remain elevated or continue rising, interest expenses could climb rapidly into the top three federal expenses. (You can read a more in-depth analysis of the national debt HERE.
According to the Congressional Budget Office, this is exactly what will happen. It projects interest payments will triple from nearly $400 billion in fiscal 2022 to $1.2 trillion in 2032. And it’s worse than that. The CBO made this estimate in May. Interest rates are already higher than those used in its analysis.
In a statement to Fox Business, the CFRB concedes that rate hikes are necessary in this inflationary environment. It places the onus on the federal government to get its spending under control:…
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