How High Can Uncle Sam Afford Interest Rates to Rise?

Source: Independent Institute
by Craig Eyermann

“The Federal Reserve has been hiking interest rates to fight that inflation. Since March 2021, the Federal Funds Rate has risen from 0.07% in March 2021 to 1.21% in June 2021, with another .07 increase recently announced. That increase is forcing the interest rates the U.S. government pays on the trillions it borrows to rise as well. With rising interest rates, the amount of interest the government pays to its creditors is rising as well. That’s a bill the U.S. government cannot afford to miss paying. … A rising cost for paying the interest it owes means the government has less money to spend on everything else. How high can the cost of paying interest on borrowed money rise before politicians have to do something about it?” (07/28/22)