Interest Rates High for Longer! Why? Debt Spiral Accelerating

Nov 14, 2023

 Expect Interest Rates Higher for Longer! Why? The Debt Spiral is Accelerating

 

Due to higher interest rates, the interest on the debt is increasing faster than expected. The interest on the debt now exceeds $1 trillion annually. The cost of interest has doubled in the past 19 months. 

 

According to the Congressional Budget Office (CBO), the deficit will be about $3 trillion for fiscal year 2024. This is 50% higher than the CBO estimates recently. This is known as a debt spiral. The interest increases at an increasing rate.

 

The current level of government spending and increased interest cost is unsustainable. 

 

Interest rates are likely to remain high for longer. 

 

As the government continues to spend more than they receive, bond buyers will demand higher interest rates due to the higher risk. This will push interest rates higher for longer. The Federal Reserve also has stated interest rates will have to remain higher for longer to tame inflation. 

 

If bond buyers start balking at buying bonds because the debt and interest payments are too high, the government will be forced to stop spending more than it receives. If the government is then unable to print money to spend more, increasing taxes will be more likely to increase revenues. Therefore, the risk of future higher tax rates has increased. 

 

Interest rate sensitive assets will thrive while asset values on most stocks and real estate will suffer. 

 

Your Personal Bank dividends are interest rate sensitive and will thrive in a higher interest rate environment. Dividends are likely to increase for the next several years due to higher interest rates. 

 

Your Personal Bank funds grow income tax-free and you can access tax-free. This shields you from likely higher future tax rates. You can grow your money safely, with guarantees, tax-free, and highly liquid.

 

Contact Ferenc at 866-268-4422 or yourpersonalbank.com for more info.