Because if I did my math right, Federal Government interest payments are at a long-term low relative to GDP. [Update, after looking more closely, I see that the source of the data--the US Treasury--includes state and local interest payments as well]. Consider the chart below:
Federal Government Interest Expense on Debt Outstanding Relative to GDP
The numerator is annualFederal Government interest payments, which come from here. I am pretty sure these numbers are in nominal dollars. The denominator comes from the BEA, and is in nominal dollars. Years are fiscal years.
Note that interest rates would have to double for us to be in the situation we were in the late 1980s, the end of the (ahem) Reagan Administration. Do we ultimately need a steady state in which debt to GDP doesn't rise? Absolutely. Just not tomorrow.
The numerator is annual
Note that interest rates would have to double for us to be in the situation we were in the late 1980s, the end of the (ahem) Reagan Administration. Do we ultimately need a steady state in which debt to GDP doesn't rise? Absolutely. Just not tomorrow.
No comments:
Post a Comment