Nov 14, 2023
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.
current level of government spending and increased
interest cost is unsustainable.
Interest rates are likely to remain high for
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
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.