'In 2012, that amount was $1.1 trillion, meaning that if interest rates went back to a more normal level of, say, 5.7 percent, 85 percent of all personal income taxes collected would go to servicing the debt. No wonder the Fed is worried.'<blockquote>'With all the talk of tapering and expected hikes in interest rates by the Fed, inquiring minds are likely interested in what happens to interest on the national debt if the Fed ever does hike.
..
<blockquote>'..isn't it fair to ask what the interest cost of our debt would be if interest rates returned to a more normal level? What's a normal level? How about the average interest rate the Treasury paid on U.S. debt over the last 20 years?
That rate is 5.7 percent, not extravagantly high at all by historic standards.
Do the math: If we were to pay an average interest rate on our debt of 5.7 percent, rather than the 2.4 percent we pay today, in 2020 our debt service cost will be about $930 billion.
Now compare that to the amount the Internal Revenue Service collects from us in personal income taxes.
In 2012, that amount was $1.1 trillion, meaning that if interest rates went back to a more normal level of, say, 5.7 percent, 85 percent of all personal income taxes collected would go to servicing the debt. No wonder the Fed is worried.'</blockquote>
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the Fed is in a box of its own making and it has no freaking idea how to get out of the box.- Mish,
When Will Interest on US National Debt Exceed $1 Trillion? When Will the Fed Hike Rates? January 12, 2014</blockquote>
Context<blockquote>
'..it’s important to note that monetary inflation is generally an expansion of Credit..''Sweden’s success in riding out the present financial crisis.'Investors Most Bullish in Nearly 27 Years, January 10, 2014</blockquote>