In 2008 the debt of the United States excluding inter government obligations was less than 10 trillion dollars. Now it’s over 20 trillion. Who is bearing the cost you ask....why investors. Here’s what’s happened to debt service:
2008 $451 billion
2020 $ 524 billion.
In other words while debt has doubled, interest payments are up less than 20%. The massive decline in the cost of borrowing, the rate paid to the holders of US debt has funded the whole binge. In fact debt service has moved more or less in line with GNP, despite the vast increase in debt.
The same thing is true of the price of oil over the last few years ....a massive drop disguised increased usage.
So with this happy circumstance Democrats, Republicans and now Jolting Joe are happy to spend like Bulgarian tourists in an airport. But it’s all going to end in tears if and when the interest rates go up to more historical levels.
This drop in rates could have been an opportunity for massive investments in the future....expenditures which had a return, which ensured US leadership for the next 50 years. Instead we have wasted it on a series of pipe dreams that have only locked in social costs for the future, while encouraging large segments of the population to live off hand outs, rather than engage in the dignity of work.
Here endeth today’s lesson on socialism and government folly.