link to original reddit post by /u/ExplodingWario
Hey, so I know this has been said for decades but we are at a critical point in American history. The government is about to default, and I want to present simple numbers to show why, the federal reserve has been lying about inflation. Teaser, it’s because they can’t do anything about it.
So, the US national debt is now at almost 30 Trillion Dollars, with interest rates being Zero, they can technically keep giving out bonds to the federal reserve and others to get more and more money without Increasing their interest expenditure.
However, since we are experiencing record high inflation, raising the interest rate would increase the Interest expenditure.
If the Debt is 30 Trillion Dollar, and Inflation is 10%, to stop the inflation they would need to raise interest rates to be higher than the inflation rate. So let’s say it’s 10% interest rate, that’s 3 Trillion Dollar in interest spending.
The current estimated tax revenue for 2021 is $3.863 Trillion.
So soon, I don’t know when, but if inflation gets out of hand and they have to raise interest rates. The US would simply default on its debt. 7 Trillion of US Debt is hold by foreign asset holders. It’s a disaster on the horizon.
I don’t think Powell is a bad guy, but he has to say inflation is transitory, the US is at play. That’s all.