Wednesday, June 10, 2015

Rock and a hard place.

Once again for the math challenged dreamers.

Interest payments on the national debt at Zero is running about 270 billion

at a mere 1 percent this becomes a 550 billion

at 2 percent 1.1 trillion a year with a tax base of about 3.1 trillion or 33% of Govt Income just to pay interest.

Comment by cowdiddly on "Peter Schiff Warns This May Be The First Bubble To Burst Without A Pin." By Peter Schiff, 6/10/15.

Given the arithmetic, cowdiddly implies it's unlikely that rates will be raised. Apparently that might threaten the Treason Class, that class of people who thought there would never be any tomorrow, only party, party, party.

Alas, a zero interest rate creates major distortions: misallocation of capital, asset bubbles, and punishment of savers.

What to do? What to do?

It's a clean sweep in all areas of life seems to me. But all those smart people who think they can control reality have to be right. What are common sense, history, custom, and tradition when smart people can call the shots?


Reg T said...

Col. Bunny,

I'm expecting that, instead of a bubble bursting, it will end up being more like what happens when you are trying to seat the bead on a large truck tire and over-inflate it.

Col. B. Bunny said...

You're right. The bursting of a bubble sounds far too harmless and insignificant. I saw a staged demo of inflating one of the old truck tires with a steel retaining band close to the rim. The tire was overinflated and the rim hit the head of the dummy with lethal force.