The magnitude and speed of the ratio’s 2-year spike is unprecedented in modern US history. It does not look good.
By Wolf Richter for WOLF STREET.
What matters the most in terms of the horribly spiking interest payments on the national debt that has exploded to $36.1 trillion by now is their relationship to the tax receipts to pay for those interest payments.
This ratio of “interest payments to tax receipts” jumped to 37.8% in Q3, the highest since 1996, when this ratio was on the downtrend from the scary times in the 1980s, based on a measure of tax receipts released on Wednesday by the Bureau of Economic Analysis as part of its second estimate of Q3 GDP.
The ratio illustrates to what extent the national income that is available to pay for general budget items is being eaten up by interest payments. The magnitude and speed of this spike is unprecedented in modern US history. It does not look good:
Interest payments by the government on its gigantic and ballooning pile of debt surged by $37 billion year-over-year, or by 15%, to $279 billion in Q3 (red in the chart below).
Tax receipts by the federal government in Q3 rose by $29 billion year-over-year, or by 4.1%, to $740 billion (blue).
Tax receipts can spike and plunge with capital gains taxes. Surging financial markets trigger a tsunami of capital gains, and therefore capital gains taxes to be paid the following year by April 15 – which means that those capital-gains tax receipts occur in Q1 and Q2.
- The surge in tax receipts in Q1 and Q2 2022 was driven by capital gains taxes paid on the phenomenal Fed-money-printer year 2021.
- The year 2022 was crummy for markets, and so tax receipts in Q1 and Q2 2023 plunged.
- The start of the recovery of the markets in 2023 caused tax receipts to be higher in early 2024 than in 2023.
- The massive gains in the markets so far in 2024 will trigger big capital gains receipts in Q1 and Q2 2025 (and Trump’s policies will get credit for it, but that’s how it goes).
Tax receipts over the longer term increase through growing incomes, growing employment and wages (more workers earning higher taxable wages), growing profits by businesses, and bubbly financial markets. Inflation is a big factor in inflating tax receipts by inflating taxable incomes and profits of all sorts.
This measure of tax receipts from the BEA tracks what’s available to pay for regular government expenditures, such as interest payments. Excluded are tax receipts that are not available to pay for general expenditures, primarily tax receipts from Social Security and other social insurance programs that are paid for by participants in the systems and are distributed to beneficiaries of the systems.
Interest payments have surged because…
The debt has ballooned at an astounding pace year after year, for many years, including by $2.1 trillion so far in 2024 even during this strong economy. At the end of Q3, the time frame here, the debt had reached $35.5 trillion (now already at $36.1 trillion).
The higher interest rates are entering the debt as new securities are issued to fund the additional new debt, and as old lower-interest-rate Treasury notes and bonds mature and are replaced with new Treasury notes and bonds that carry a higher coupon interest rate. Short-term interest rates enter into the debt very quickly as Treasury bills (terms of one year or less) mature quickly and are replaced with new T-bills at the new rates. There are now over $6 trillion in T-bills outstanding.
The ugly Debt-to-GDP ratio: Total debt as percent of GDP rose to 120.8% in Q3, based on the second estimate of Q3 GDP released by the BEA on Wednesday, after the slight dip in Q2.
The spike in Q2 2020 was the result of the collapse of GDP during the lockdown while the national debt to pay for the stimulus programs exploded. From Q3 2020 through Q1 2023, GDP recovered faster than the debt rose, and the debt-to-GDP ratio declined. But in Q2 2023, the trend reversed as the debt surged faster than GDP rose.
For your amusement, also check out the Debt-to-GDP chart going back to 1966 that we duct-taped into the comments below this article.
The fiscal mess the US has been wallowing in for many years that caused the national debt to explode to $36.1 trillion by now is a long-term problem – encouraged and enabled by the Fed’s free-money policies from 2008 through 2021. It’s called “unsustainable,” even by Powell, because over the long term, it cannot be sustained. Something will happen to address it. Either Congress addresses it. Or inflation addresses it. or both. The US, which controls its own currency, cannot default on its debt, but it can get embroiled in higher inflation, and in higher long-term interest rates that result from this higher inflation. And the US is already well on its way, embroiled in inflation that has now become stubborn.
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As promised in the article, here is the super-ugly debt-to-GDP ratio going back to 1966:
So during the massive spike interest rates of the early 80’s, the debt-to-GDP ratio was 1/4 of what it is today?
People, Congress, Fed, it’s time to wake up. We literally might not be able to afford the next recession.
OMG!
Remember: the debt is cumulative. All the sins accumulate and are never forgiven. So the debt gets worse every year. But GDP is a flow of economic activity in a specific time period. And that flow has to get larger and larger every year to deal with the accumulated debt.
The “early 1980s” so 1981 and 1982 was the massive spike of INFLATION, which inflated the flow of economic activity and helped lower the Debt-to-GDP ratio. After inflation started coming down in 1983 and on, and the debt surged after Reagan’s tax cuts, the Debt-to-GDP ratio began to worsen dramatically.
Context. Yes, tax rates were cut. The result was tax receipts increased. The problem was spending increased faster than tax receipts. Congress, and Reagan, spent too much.
Tbp,
The same stupid lies and propaganda get cited over and over again, decade after decade. Just idiotic BS.
Tax receipts rose DESPITE the tax cuts. But tax receipts would have increased FAR FASTER WITHOUT the tax cuts, and there might have been a balanced budget under Reagan if taxes had not been cut.
Tax receipts increased by 39% during Reagan’s 8 years in office because:
1. CPI inflation increased by 40%. Inflation inflates wages and incomes and profits of all kinds, and thereby tax receipts. So inflation alone is responsible for 40% growth in tax receipts. So all of the growth in tax receipts was attributed to inflation.
2. Employment rose by 13% as the overall population rose by 6.5% and as woman continued entering the work force on a large scale, a huge demographic shift that started in the 1960s. The employment-to-population ratio for women soared from 35% in 1960 to 58% in 2000. During these four decades, the two-earner household became standard. Nothing to do with tax cuts, but the resulting increase in household incomes from two-earner households generated a lot of tax receipts.
Without the tax cuts, tax receipts attributed to the 13% growth in employment (due to population growth and women entering the workforce) would have likely come close to balancing the budget.
It’s one thing to cut taxes for x,y, and z reasons – and we can quibble over that – but it’s another thing to blatantly lie about the fiscal effects of the tax cuts.
“Remember: the debt is cumulative. All the sins accumulate and are never forgiven. So the debt gets worse every year.”
Not necessarily, the dip in 2000 was I believe due to the Clinton Administartion balancing the budget and running surpluses.
Oh, if we could only go back to those years!
So there was a dip in Q2, Q3, and Q4 2000, followed by a big jump in Q1 2001 that wiped out those three dips in one fell swoop, and it was back to where it had been in Q1 2000. That was the historic moment. And throughout, the debt was cumulative, and no sins were forgiven. But the debt did get paid down by a tiny bit for three quarters in a row, before it jumped again.
FWIW, that phrase was a generic description of debt versus income. Debt is a cumulative stock; income is a flow. But in the private sector, debt can be forgiven, such as in bankruptcy court or other debt restructuring where investors lose their shirts. But there is no bankruptcy court for countries. And US federal debt cannot be forgiven.
President elect Trump just recently was in an interview and said Tariffs will take care of everything. President Trump referred to some late 1800s time before income tax when a committee had to be formed to figure out how to spend all the Tariff money. That apparently is the plan and according to President Trump used to work great; the country did survive and grow without income tax only tariffs.
Gary: I can’t decide whether yr comment suggesting ‘no income tax just tariffs’; is sarcasm possibly borrowed from one of the late nite talk show comedians who are having a field day.
Is there a guarantee tax receipts would have rose more without the tax cuts, at least looking out more than a few years? And can one definitely say the policy did not increase hiring (women in the workforce…)?
Lower taxes can spur more economic activity, which increases available money to tax.
Higher taxes can have the opposite effect.
“Can” being the key word for both. Even economists can’t agree on what a long term optimal tax rate is
Gaston,
You’re twisting the point. The point was the Reagan tax cuts did NOT increase tax revenues. Tax revenues didn’t even keep up with inflation. And they decoupled from economic growth.
I see your point, but GDP is cumulative as well, except when we have recessions as it’s knocked backed temporarily. However, we haven’t had a real recession for going on 14 years. COVID was ~8 weeks of contraction or “a blip”.
I guess my general point is that 120% debt-to-GDP is really starting to look scary. I like how you ended your reply:
“worsened dramatically”
That seems to summarize our situation quite well.
Nonononono, GDP is NOT cumulative. It’s the amount that gets spent and invested in a specific time period, such as in one quarter or in one year. It’s an ongoing FLOW of spending and investment, and when the flow slows during x time period, that’s when there is a recession, and when that flow increases in y time period, the economy grows. With water flowing through a pipe, the flow rate can be expressed as gallon of water per minute. GDP measures the flow rate of spending and investment in trillions of dollars per quarter or per year.
“Financialization is a term sometimes used to describe the development of financial capitalism during the period from 1980 to present, in which debt-to-equity ratios increased and financial services accounted for an increasing share of national income relative to other sectors.”
“OMG”
Conservatives have been screaming warnings about this for *decades* (whereas Republican politicians may have screamed too – but never *acted* if it got in the way of their own policy delusions/graft).
But only *now* after the ntl debt damage has been done…do some people act shocked! Shocked!
There is a lot of ruin in a country, but not an infinite amount.
Notably, only under a Democrat, Bill Clinton (1992-2000), did the debt decrease.
So there was a dip in Q2, Q3, and Q4 2000, followed by a big jump in Q1 2001 that wiped out those three dips in one fell swoop, and it was back to where it had been in Q1 2000. That was the historic moment of declining debt.
The debt increased every fiscal year throughout Clinton’s presidency. But much more slowly. The slowest increase was in fiscal 2000 when it increased from $5.605 trillion to $5.629 trillion.
https://fred.stlouisfed.org/series/FYGFD
quit calling it ‘inflation’
IT’S THE DEVALUATION OF FIAT $DOLLAR
and a loss of buying power/value
govt theft
I notice looking at Wolf’s graph that the trouble really started in 2009, when deficits jumped up big-time, pushing the debt into stratospheric levels. What was new in 2009?
A DEMOCRATIC GOVERNMENT. The left wing has shown a chronic inability to tackle difficult spending issues. It always has a new *bete noire* to champion and preen in front of its adherents in the box office seats of the electorate. This is not accidental. It is the policy of the left to redistribute wealth — even wealth that has not yet been created. Woe to thee, Babylon.
You do realize that the budget you are complaining about was done under a REPUBLICAN government seeing it was approved during the Bush administration.
Further spending issues aren’t the problem balancing issues are. And that is where the right wing (AKA republicans) have shown chronic inability to handle said issue.
It has been the republicans that have been championing to lay the blame at the feet of the Democrats who, despite deliberate sabotage by the Republicans, who have been trying to salvage a more balanced budget.
This is not accidental since wealth distribution from the people who have barely anything to the people who have so much that they can buy the best government they can is modern Republican policy. And this deliberately extends to wealth to be earned in the future.
I’m still learning so correct me where needed. So I’m going to make the assumption that US political system lacks the fortitude to do anything about it, so higher yields will be required by the market, which will drive up inflation. In addition, since more debt will be issued, economic growth will be starved. So we will become Japan. And if so, how long will it take us to get there? Sure hope DOGE can cut 2 trillion from the government. And sure hope Trump can actually leverage the threat of tariffs without going through with them. And I sure hope they will just go after the criminal illegals and leave the rest to pick and process our food and build houses and provide other services. I didn’t vote for Trump, but I’d love for it to all work out and I would be happy to admit I was wrong. But all that is a tall order that’s short on some specifics. We will find out.
Your initial assumption — “US political system lacks the fortitude to do anything about it” – may end up about right though there’s a lot of talk to the contrary right now. But ultimately, the big stuff will have to be decided by Congress, and Representatives are unlikely to cut the bacon they were expected by their constituents to bring home.
But you got your first three points backwards.
1. “so higher yields will be required by the market, which will drive up inflation.”
No, but higher inflation will drive up yields required by the market.
2. “since more debt will be issued, economic growth will be starved”
No, deficit spending contributes to economic growth. To what extent has been heatedly debated here in the comments.
3. “So we will become Japan.”
Never. Japan is a very unique country and culture, including its insular immigration culture (you cannot just walk across the border unless you can walk on water). The US is the opposite, an immigrant culture.
I’m not going to address your “hopes.” Except, I will note that Trump got the votes of Latino voters (American citizens) whose livelihoods in construction, other trades, and services are threatened by the arrival of 9 million immigrants in 2022, 2023, and 2024 (data from the CBO), who will work for less and undercut them. The only people who are for this explosion of immigration are the wealthy who get cheap labor and therefore higher profits. And Latino-Americans have figured it out and voted against it.
“The only people who are for this explosion of immigration are the wealthy who get cheap labor and therefore higher profits. And Latino-Americans have figured it out and voted against it.”
The young urbanites are maybe the most pro-immigration part of the population there is, and most are far from wealthy and the same ones complaining about the high prices of everything. Most are simply naive humanist/one-worldists, rather than craven economic rationalists, and they will likely prove to be on the right side of history when we look back in 100 years from a post-scarcity perspective.
Likewise, spend much time in the kind of Latino communities that have drifted rightward and you’ll find economic rationalism is far less plausible than simple racism from Mexicans (“Spanish”, they often like to imagine) against recent Central American waves and pure rural/conservative values. The largest group of second-gen US Latinos are from the equivalent of Alabama and think trans people are the devil and Donald Trump is a successful business magnate from watching the Apprentice. The economic argument is mostly a just-so story explaining simpler motivators.
Wolf, this might be your best comment ever, thanks.
post scarcity? do you really believe that? lol.
Bravo Wolf, agree one of your best comments. Hey about your love of electric vehicles. Could you please do a story on or explain the need for a $7000 million (7billion) loan from the US government to Rivian electric car company? Unless they’re going to copy the 15K decent quality Chinese version and sell it to Americans for 20K, which is what an electric car should cost, it is nothing but massive corruption.
James@58
LOL. It’s only when it’s an EV maker that gets a loan that you get riled up?? Not even a grant?
How about the CHIPS Act that authorized $280 billion in GRANTS and loans to semiconductor makers in the US, of which $53 billion were appropriated? GRANTS don’t ever have to be paid back, they’re just gifts. Loans have to be paid back with interest.
Intel: $23 billion in GRANTS and loans, plus up to $25 billion in tax credits.
TSMC, Taiwan: $6 billion in GRANTS
Samsung: $6 billion in GRANTS
Micron: $6 billion in GRANTS
Global Foundries: $1.5 billion in GRANTS
etc. etc.
That doesn’t get you riled up, only when it’s an EV maker that gets a loan that it has to pay back with interest?
Almost makes me think the unthinkable.
A humanistic economic investment to our neighbors to the south.
Maybe the magic of capitalism can provide family jobs at home. I’m sure they would prefer that.
Imagine, John Lennon
except they buy stuff too and enjoy in many of the advantages of immigration legal and illegal (cheaper goods and services) which goes under they wont miss there water till there well runs dry. So i think the vote is more of a frustration with the actions or non actions of the political class from an electorate that wants it all and wants it now. and if past is prologue they will be cutting incumbent bait in 2 and 4 years.
Maybe this applies to all, if not most democracies. The US is not unique in using profligate spending to buy votes and prop up elites. The floundering Canadian Govt is now trying to use a short term Christmas tax cut and a $250 refund cheque to remain in power as citizens seem more and more angry, mad enough to toss them out asap. And Trudeau is down kissing the ring….today. Tariffs will really really hurt Canada. Hopefully the threat of them will force our politicians to clean up their act, especially at our ports where they are run by organised crime and only 1-3% of shipping containers are inspected after ‘the govt’ phased out the Port Police in 1997, and then failed to replace them with meaningful assets.
The Hells Angels run the port of Vancouver.
quick internet search:
According to the National Post’s coverage of the story, Isnor, who works for the Ontario Provincial Police (OPP), has testified at several major B.C. cases involving the biker gang.
Isnor said the Hells Angels have maintained a foothold in Canada’s three largest ports — Vancouver, Montreal and Halifax — for the past 30 years.
“So, as far as the ports are concerned, it’s the whole success of the Hells Angels,” he said.
While airports have tightened security in the post-9/11 world, Metro Vancouver docks remain relatively porous, wrote the Sun, allowing people linked to organized crime, and even some convicted of international drug smuggling, to work on the waterfront.
If Tariffs (or their threat) forces my country to clean up its act around drug smuggling and defense spending commitments that would be a good thing. However, it won’t be good for tourism, relationships, or for vulnerable families and will most likely produce enduring bitterness and maybe new alliances going forward. Rough times ahead here, imho.
Since you mentioned them, I find Canadians an odd breed. Having grown up near the interface of the two countries, I had copious interactions with Canadians. Most of which occurred while I was listening to the Guess Who, Young, Mitchell, Lightfoot, Twain, etc
They play the aggressive form of hockey which is an indication of their underlying understanding of the world
Japan was destroyed by endless decades of zero interest rate policy. The end result was a destroyed currency and no one could afford to leave the country for a much better life because the local currency is now worthless.
Many Japanese can hardly contemplate leaving Japan permanently. A Western expert, when asked about religion in Japan, replied: ‘the religion of Japan is Japan.’
My Sis just got back from there visiting her son and wife who pick up houses in way north for next to nothing. One time sis has left purse in car and says they better go back to lock car. Son just waves this off as pointless. Property crime is almost unknown.
As for ‘packing heat’ in case someone ‘gets the drop on you’, this is considered even more insane there than in Canada, where it’s considered insane.
How many Americans talking about their Fourth Amendment rights can quote the first three words?
It begins: ‘A well ordered militia…’
It WAS all about the 13 colonies wanting protection from natives and foreign powers but not wanting a standing army. It had nothing to do with a personal right to hold arms against each other, which would have been considered insane.
I doubt many can vote the first 3 words of the 4th amendment but it wouldn’t matter because it’s the 2nd you are referencing ;)
True, now having addressed a typo, next…?
Last time I looked, Japan was being Japanese. Prosperous according to their set of rules.
As long as the minute by minute valuation of the Japanese currency is insured by the cartel of Western central banks balancing the negotiated relative currency values as specified by the Bretton Woods agreements. Everything is cool.
Unless I’m mistaken.
The value of the yen has more to do with the US Fed raising interest rates than anything and in turn is a major reason for the blip in inflation in Japan.
I know there’s a Chinese wall (ha politicians don’t know the concept) between transfers aka social security et all but I’ve never really understood the interplay.
I know the surplus wasn’t “spent” as it seems to have been to from a layperson’s perspective and it’s invested in T-bills etc.
The transfer numbers seem much more solvable than the disconnect on tax and federal outlays.. but it looks like after trust fund goes bust in 2032 (ish) this will leave the government on the hook for the the maybe $250B delta (?). Or they actually cut benefits by 25% (gasp) or remove the income limits on SSI taxes etc (I’ve read a few scenarios from the Peterson Foundation that true up Soc Security that seem vastly more doable than the current federal spend/tax equation).
I guess if they throw another $250B on the pile if deficit spending in 2032 it is sorta the least of our $ sins?
In the fiscal year ended Sep 30, the Social Security deficit was $91 billion, which was paid out of the Trust Fund, which reduced the Trust Fund to $2.6 trillion.
https://wolfstreet.com/2024/11/04/social-security-update-fiscal-2024-trust-fund-income-outgo-and-deficit/
A big contributor to the deficit was the Fed’s interest rate repression from 2008 – 2021, which caused the Trust Funds interest income to collapse.
Relatively minor modifications to the SS system would bring it back into surplus: a combination of raising the income cap a little and raising the full retirement age a little (they did that to us a few decades ago) would fix what is a relatively small deficit (3.4% of income last fiscal year).
I also get a little annoyed with the “sky is falling” view on the Social Security system. A very simple fix is to have everyone pay Social Security tax on all income over $168,600. It is called “maximum taxable earnings”. Any earnings over $168,600 are currently exempt from Social Security tax. Seems strange, but then nearly all members of Congress have earnings exceeding $168,600.
Thanks Wolf!
As can be clearly seen, things really went off the rails when wall street was BAILED OUT! Call it what it really was, the great financial FRAUD of 2007/2008. Instead of letting the bad actors suffer the consequences of their creation (MBS) and prosecuting the bad actors, we abandoned capitalism.
Interesting times.
Capitalism has never been abandoned in the United States. It was only tricked out in a dress (New Deal) and made to dance.
Bullshit. Capitalism requires a respect for capital. NO BAILOUTS.
Capitalism is a normally distributed variable which makes it valuable as a micro-economic tool.
Declaring Capitalism as a totem is exactly what capitalism isn’t.
Ph.D. gobbly-gook. The only steadfast rule in a capitalist system is that you reap what you sow. If you behave badly, you suffer bad consequences, if you provide value, you thrive.
“normally distributed variable”… LMFAO! You exemplify everything that is WRONG with the current system, you must be a lawyer.
1982 was the year Pres. Reagan and Congress slashed taxes, causing a Federal budget deficit that has become structural. There is no longer the political will to return to taxation sufficient to fund government operations. Instead of looking to restoring revenue, budget hawks complain of spending with the exception of the military sacred cow. That the debt grew by 2.1T this year should be causing alarm. Instead, the Biden Administration and Congress just keep writing checks to fund wars in the middle east and Ukraine.
The Coalition for a National Infrastructure Bank observes that debt to GDP ratio cannot be solved by debt reduction alone but could be greatly reduced by growing the GDP through non-appropriative infradtructure development.
Federal tax receipts as a percent of GDP have remained in the 16-18% range since 1950.
Spending is the problem.
Americans are living way beyond their means. The fact that interest payments are now 1 in 3 dollars collected by the government (exclusive of SS and Medicare) is a manifestation of this.
We have been in worse shape as the graph shows. This gives me hope that we can course correct. Keeping our heads up our ass will only allow us to see the real enemy. Ourselves.
Time to pull out.
Great comment, thanks.
I can’t disagree with any of your citations of the embarrassing proclivity of the Federal Government to become wasteful when the monetary spigots are wide open.
The next President has the rare opportunity to eat his own cooking.
Remember to pay your taxes, tax donkeys.
Those bombs don’t pay for themselves.
What a disgusting government, disgusting people.
If you ever wondered why such elaborate torture devices were created in the middle ages, wonder no more.
Echoes of the brilliant Kurt Vonnegut. RIP, Kurt.
“They” don’t call it the Great Reset for nothin!
What is this Great Reset of which you spake as if it was a passage in
the Bible that was revealed.
The GFC the great financial crisis, when the American Eagle was plucked
Earlier someone was discussing something that I can’t remember but I thought at the time was outrageous. But I can’t remember what it was.
Probably just as well.
The piper must be paid –eventually.
But when? May not be in my lifetime, but I do ponder reincarnation. Not sure on how that all works, but odds are, I may end up affected by this anyway. As you said, as I believe with all things, debts must be paid-eventually. So be as good of human that you can possibly be. lol
If you are reincarnated into a dung Beatles you won’t be lacking anything to eat, if you are fortunate enough to be a flying dung Beatle, all the better.
A “bad” human or government doesn’t give a crap about paying their debt….the most vile and loathed….definitely dung Beatle dinner.
This is picky, but I have a feeling you’re gonna use this analogy again, so:
Beetles = bugs, some of which eat poop
Beatles = a band from Liverpool
fullbellyemptymind,
So, ok, I absolutely had to google this. Turns out the Dung Beatles is actually a band in the UK. From their website:
“Described by The British Beatles Fan club as “definitely not your average Beatles band”, since 2013 The Dung Beatles have carved out a unique reputation for performing the music of The Beatles with authenticity, passion and raw energy to sell-out audiences around the UK. Today, live shows draw on an incredible repertoire of over a hundred songs, including both hits and rarely heard album tracks, that have also made the band popular guests on BBC. “
Of course I had to hear these Dung Beatles. The guys you cite have lots of stuff on the youtubes, and they’re a right serviceable Beatles cover band. They look like they’re having a good time doing it too. As they say over there, good on ’em.
But then I scrolled further down. Turns out this Dung Beatles moniker graces a lot of ill advised passion projects with descriptions ranging from: “an eclectic group of musicians from the Pacific Northwest” to “Horribly offensive band from Rochester, NY”.
My favorite so far – a delightfully multi-ethnic crew of British schoolboys banging out a terrible original song that includes the lyric, “I was looking at a cloud shaped just like a cloud.”
damn bug music I been spelling it wrong for 60 years
Better to run hotter and deflate debts than end up with deflation and have debts equally or even more unserviceable.
This is why I am positioned for higher rates & inflation.
We’re going to have much higher interest rates and deflation.
Under this guy?? Check his reaction in 2018 when Powell tried baby steps to raise rates by .25. ‘Worse than Xi!” he thundered.
Check his response when then Head Economic adviser Gary Cohn raised budget concerns and T replied ‘just print the money’
Source Bob Woodward.
Have you read that T has expressly said it’s time for the Pres to have influence over the FED? And this influence will be to raise rates, during his reign?
Deflation? LOL! In what exactly? The only way this planet sees any deflation in things needed for a decent standard of living will be if the population (demand) is cut in half.
YLT
Check! Me Too!!
!980s inflation is what began my investing life.
I’d that short term gov debt?
Or…?
Prob for me is yield over inflation. Equities seem to achieve that while they keep going up but PE for many is now a century long pay-off in practical terms.
equities keep going up because investors believe the fed will come to their rescue and drop rates to 0 and print again if necessary.
it’s that simple.
it doesn’t have to be true, but if enough people believe it, they invest as though it is.
Hey there Wolf, please let me know where I might be out of line with this analogy:
A) Most folks have a credit card, and they are carrying balance
B) They can keep on carrying a balance, as long as they make their minimum payment each month
C) If you fail to make those minimum payments long enough, bad things will happen. At the very least, they’ll freeze your card, and good luck getting another one
D) The US government also has a credit card. They’ve racked up 35 trillion dollars in charges
E) Net interest on the debt is their “minimum payment”
F) Bad things will happen to that government if they fail to make that minimum payment.
G)So, being the tax fattened debt addled vampires they are, they’ll somehow try to get the money out of all of us
I’m by no means an expert, Wolf. YOU are. Did I miss anything? Misconstrue anything ? Get it wrong in some way?
“A) Most folks have a credit card, and they are carrying balance”
No, “most folks” are definitely NOT carrying a balance. That’s total BS.
Read this first:
https://wolfstreet.com/2024/11/19/credit-card-delinquency-rates-balances-burden-and-available-credit-in-q3-2024/
“D) The US government also has a credit card. ”
Nope, it doesn’t. It issues bonds and pays investors relatively low interest on those bonds, compared with credit card debt.
“E) Net interest on the debt is their “minimum payment””
BS. The government pays interest in cash on the full amount of the security, and on the maturity date, it pays off the entire security in full.
“F) Bad things will happen to that government if they fail to make that minimum payment.”
The entire sentence is BS. You’re completely in intellectual no-man’s land here.
“G)So, being the tax fattened debt addled vampires they are, they’ll somehow try to get the money out of all of us”
That’s precisely what they should have been doing, by collecting taxes, but instead they passed tax cuts, which is precisely why this debt is so out of control, LOL
Watching the long Treasuries rates can be informative. Rates jumped massively after Powell dropped the 50 point bombshell, probably because long-term bond buyers figured this would spur inflation. In the last week or so, long-term rates have dropped substantially, probably because they now believe Powell’s rate-cutting program will be curtailed.
It is always difficult to find convincing reasons behind market moves, but the long-term bond rates recent ups and downs are unusual, and therefore interesting. I prefer to watch movements in the bond market. Not only is the bond market larger than the stock market, but its movements seem a lot less psychotic.
The bond market is also a lot more important than the stock market.
What do you mean by ‘important?’ To whom?
Hi ShortTLT,
The foreign exchange, also known as FX or the forex market, is the largest financial market in the world with a daily volume of $6.6 trillion.
Replying to both SCBD and O&T:
The Fed’s #1 mandate, which comes before stable prices/employment, is to ensure the smooth functioning of the Treasury market; and specifically, to ensure there’s always a buyer for US Gov debt.
Contrary to other comments here, the Fed can and will let stocks/housing/etc decline significantly, as neither is critical to the existence of the gov’t. It’s probably not their preference, but they can let those things go.
But the Fed will always maneuver to keep a bid under Treasuries because they are the single most important asset class to the gov’t. And in times of crisis, the Fed will step in to keep the market functioning in ways they wouldn’t for stocks or housing.
Forex trading is of course a huge market, but it isn’t critical to the existence of the USG. That said, the Fed promotes worldwide demand for dollars and Treasuries via FX swap lines and it’s FIMA repo facility.
The LT rate is the riskiest not only because of the duration risk. They are also one of the most over valued assets.
Monetary policy can’t paper over the foolishness required too inflate at least three financial bubbles without inflation any longer.
The government will not cut back spending.
So I guess high inflation it is. Better hope the companies and consumers who were banking on a rate cut are prepared.
My opinion is stagflation is on the way
Markets today have reacted to this distressing news:
Dow, S&P close at all time highs
Mortgage rates move slightly down, lowest in a month
MND reports purchase mortgage applications highest since February (admittedly not a high bar to clear)
Minuscule volume during a shortened trading day = meaningless.
Thanks for bringing your perspective on these items 😊
Happy holidays to all
The Fed might cont to cut rates to ease debt payment. If SPY and QQQ
will be in distribution tax collection will rise. The spread between tax receipts and interest payment will rise. Next year tariffs will fill gov coffer.
if the Fed cuts its short-term rates too far, long-term yields will blow out on inflation fears.
The long duration aren’t stand alone mountain. Gravity with Germany pulls the long duration down. DET10Y @2.08%. 1M TNX BB: Feb/Apr 1966, 5.02%/4.66%. 5.02% is resistance.
Since Oct 23 2023 @4.997 it’s all lower highs/lower lows.
But higher yields in the US makes US debt far more attractive than German debt, and so investors might lose interest in Germany debt, which would pull up German Bund yields, no?
Assuming no new rate manipulations intercede, it looks like a set-up for a “vicious cycle” between rising (federal debt) rates and declining US Treasuries security ratings.
(I assume, of course, that this debt service ratio spike is important to the credit analysts.)
Clarification:
Vicious cycle: rising INTEREST rate and falling credit ratings
I thought AI would have already fired everyone . I Probably would have as the correct choice.
For my money Wolf, you provide the most complete and accurate information on the internet. I might add, the most unbiased delivery of information day after day. Once in a while a little slips in but then again nobody’s perfect. I anxiously open your website everyday to find out what’s new that I’m going to learn from your hard work.
That’s because he just looks at data, and ignores all the propaganda. It’s a super power. Almost nobody else does it, even people in the government who are supposed to be well-versed in the subject. An example would be incoming Treasury Secretary Bessent whose comments on Social Security versus Medicare/Medicaid prove that he can’t read the MTS.
You say a super power? It’s all in the beer he drinks, take away his beer and he’s screwed.
It’s his “vision” that is his power. His perspective is why his website still remains after all these years.
Its a blessing that this information is provided for free by the artist.
1:04 PM 11/29/2024
Dow 44,910.65 188.59 0.42%
S&P 500 6,032.38 33.64 0.56%
Nasdaq 19,218.17 157.69 0.83%
VIX 13.51 -0.59 -4.18%
Gold 2,673.90 9.10 0.34%
Oil 68.15 -0.57 -0.83%
The compounding will turn into exponential.
Seems as if it will only matter if a) Foreigners stop buying US Debt and/or b) Foreign producers of the goods we consume stop accepting USD in payment for those goods. A and B are related to each other in some way. Both events seem far off for now so it’s very unlikely that anyone will work to hard to tell the voting public “No”.
Don’t disagree but an alternative would have to arise and that seems very unlikely. Worst case yields go up.
Wolf, will the national debt ever matter so long as foreign central banks continue buying our debt? I’ve heard the phrase “bond vigilantes” who would collectively control USG spending (like what happened in the UK temporarily?)…but foreign central banks are there to buy and so is the Fed Reserve as “last” resort of our debt. Isn’t the USG debt sustainable so long as there’s always central bank buying our debt? If sustainable due to central bank buyers, what’s the long term impact on foreign central banks buying our debt?
Read the article all the way down where it says this:
“It’s called “unsustainable,” even by Powell, because over the long term, it cannot be sustained. Something will happen to address it. Either Congress addresses it. Or inflation addresses it. or both. The US, which controls its own currency, cannot default on its debt, but it can get embroiled in higher inflation, and in higher long-term interest rates that result from this higher inflation. And the US is already well on its way, embroiled in inflation that has now become stubborn.”
All fiscal sins lead to inflation,
What you are saying is my axe and hammer handles are coming into play.
Had a few too many but the old Oklahoma Joke is coming full circle!
I know it is often written that the US can’t default but isn’t that at least somewhat dependent on Fed intervening in a way that isn’t explicitly part of its mandate? Bailing out reckless Congress by allowing higher inflation goes directly against the Fed’s mandates. On some level isn’t it the job of the Fed to allow the debt to get painful enough (and resist the temptation to allow runaway inflation) so that Congress must face the decision of cutting spending or defaulting? If the Fed can always be assumed to be willing to step in and bail out Congress and the Treasury doesn’t that create moral hazard and call into question the independence of the Fed?
you only have to listen to powell speak once and realize that he’s a weak, spineless man. he doesn’t project confidence. he projects cowardice.
he’s the type in high school that does bad things to be liked. most people grow up from that, but he never did.
Mr. Richter,
“All fiscal sins lead to inflation”
Any chance you could get a law passed that would force all incoming elected officials to have this statement tatooed somewhere publicly on thier bodies? Better yet, how about having it branded on them?
My forefathers, even on this continent, once did such things. The way things are going, with the rollback of the 20th century, maybe the 19th too, some form of this may make a comeback?
Wolf-
First, thank you for forcefully linking the federal debt problem to the Fed’s actions.
I’m trying to connect the dots:
– Higher debt leads to higher inflation
– Higher inflation leads to higher interest rates
– Higher interest rates lead to larger fiscal deficits
– Big deficits lead BACK to higher debt
Has the role and actions of the Fed been complicit in allowing this unhealthy and vicious cycle of debt to continue?
As an aside, but related, Judy Shelton asks some pertinent questions in yesterday’s WSJournal about limits to the Fed’s powers…
The federal debt in the US has nothing whatsoever to do with the Federal Reserve which has told Congress repeatedly to cut its reckless spending and to raise taxes which are the reasons for the federal debt now at $36 trillion and headed higher.
@scbd if the federal reserve hadn’t “bought” trillions of us govt debt, the debt wouldnt be nearly so high because rates/yields would have had to spike a lot higher to attract the fewer dollars available for the debt to be bought by real bond buyers with a lot less money available, and those appropriately and naturally higher rates would be a deterrant to govt overspending.
Thanks for pointing out the fallacy (Earlier in comments) about tax cuts increasing Guv receipts. Trump wants to cut taxes or at least hold the line thru 2026. I think that would be very irresponsible.
Wasn’t it George H. W. (“no new taxes, read my lips”) Bush’s concession allowing tax rises, that partly set the stage (along with Clinton’s accommodations of the mid 90’s GOP House policies), for the federal surplus late in the Clinton years?
i agree it will be irresponsible to cut taxes, but let’s not pretend that the other side is responsible either. they don’t want the types of tax increases we need, like a national vat paid by everyone.
they want the “rich,” and only the “rich” to pay more taxes.
the problem is, they don’t want their billionaire friends to pay many. so they snag the upper middle income couple making all of their money as employees, but leave the capital class alone.
so when they say “tax the rich,” they mean the couple making $500,000 a year, not the zuckerbergs and musks of the world.
What is needed in the US is for Congress and Trump to raises the federal taxes significantly and cut spending and this is likely what will be done well before 2026.
I hope this results in a paradigm shift but very much doubt it. It’s almost impossible to envision a plan that would address the issue of becoming more unstainable and that assumes there is any will. The will that exists is to win the next election cycle, without concern for the big picture, and to award the donors that made that happen.
And while illegal entries are down relative to recent years, it is unlikely a lot can be done there, but even if that was possible it reduces companies favorite commodity, surplus labor. With a decline in surplus labor that puts pressure to raise wages and create a tighter job market, thus just contributing more to inflation.
From my personal perspective I consider all of this a good thing as clearly some fundamental dynamics need to change, which might present new opportunities, perhaps even additional political parties who could win representation that would break from the same/same but marginally different we are currently swinging back and forth on.
Going to get a lot uglier when the recession hits next year.
That ballooning debt is gonna be out the wazoo human centipede style when they start panic spending.
Tanking equity markets will make that tax receipt chart look parabolic.
Hold on tight 🎢
You seem to be foretelling another round of QE, which has been more than kind to equity markets in appearance.
If “they” start panic spending without QE, I would share your outlook. You’re going to need a bigger roller coaster.
You’ll be correct on time or eventually because institutional efforts to deny historical (and likely future) recessions and thwart business cycles and the net-QE balance in consequence entail epochal risk.
More people jerking themselves off for a recession.
Have you heard of AI?
We could have a stagsession?
Or a stag recession, it’s where the recession remains stagnant and eventually leads to stagflation.
It’s a bird, it’s a plane, no it’s AI to the rescue. Soon crime, illness, debt, every ailment to mankind will disappear….Vanessa my personal AI assistant has told me so.
I’m thinking of changing my name to ShortNVDA.
If you want to be the Zeitgeist of the comments section on WS.com, maybe you should do it.
We all know not even one dollar of the debt will ever be repaid.
The only path is inflation on a grand scale.
People talk all the time about GDP, but what is that. Machine parts or adult diapers and wrinkle cream for old people.
The dollar is king for now and cannot default, but how much will if be worth?
Despite all the bs, it has never been easier to make money than it is today. When I was young it took years of saving to start my first tiny business. Now you can start one for nothing using marketplace etc.
The only real question is where will your wealth be safe and grow.
“We all know not even one dollar of the debt will ever be repaid.”
Corporate debt doesn’t get “repaid” either. It gets refinanced, just like government debt, no difference.
There are only two types of capital: equity capital and debt capital.
Both are essential in the business world. But they’re different:
Equity capital NEVER has to be paid back, and it doesn’t cost interest, and dividends can be cut to zero no problem. So for investors, equity capital is higher risk investment. If they want to get their money out, they have to sell it. And it might and often does become worthless. For companies, it’s the cheapest capital.
Debt capital has a maturity date, at which time the investors get their money back, and they don’t have to sell it to get their money back. Along the way, they get interest payments. All this is spelled out in a contract between the company and investors (covenant). Companies will sell new debt to raise the funds to pay off the maturing debt, and so it rolls over permanently.
Governments don’t raise equity capital, they raise debt capital. And it gets rolled over permanently, like corporate debt capital. So that’s not the issue. The issue is the amount in relationship to the government’s income to pay the interest on it. Companies can file for bankruptcy, have some of their debts forgiven, and go on, or be liquidated, and either way, investors usually lose their shirts. Governments cannot.
The Gov needs to get an account with Experian. I have no debt and have used my CCs to pay for nearly everything that I used to pay cash for and pay it off monthly. Yet, I get daily emails from Experian warning about my increased use of credit. I keep checking and it is this use of CCs that is causing these dire warnings. (Along with offers for more CCs). Seems like the US Gov should produce thousands of credit card warnings daily!! Sorry, all of this has become such a horrible joke it is hard to avoid a stab at some dark humor. Please forgive me.
What you got from Experian is just a generic blog post sent to everyone who signed up for Experian’s newsletter. It’s not personal. Lots of companies have newsletters that you can sign up for. If you don’t want to receive the Experian newsletter, just unsubscribe.
Aaackshullly… these are “Experian Alerts” and I get two or three a week (that go in a different folder).
For example:
“Change in Credit Balance.
The balance on one of your accounts decreased.
Sign in for details.”
It’s mildly interesting, but they’re really trying to get you to sign up for continuous access. $$$
Imposter, I too do the same and credit rating changes 12 points lower when my credit cards have balances, then rides for my good behavior of paying them off monthly. I don’t consider it Russian roulette as I’m older and have a sound footing of income vs. expense.
The kicker for me is when my credit card companies increase the monthly loan amount available which I don’t use and increased my credit rating because of my available credit balance becoming larger, without my approvals.
It looks like the Country’s “debt” works the same way. Interesting isn’t it?
If the problem is the size of the debt relative to GDP (it is) then the answer is to reduce the debt/GDP ratio. First, that means reducing the deficit to zero. Stop increasing the debt pile.
The deficit can be reduced by cutting federal spending by 35-40% (extreme pain) or by raising revenue. Or some combination of the two.
Tariffs on the massive volume of goods sold into the US is one way to raise revenue. It will change consumer behavior in time but first a lot of revenue will be raised.
There’s no other way out of this – spend less and raise more revenue. Some people only want direct tax increases on US taxpayers and there may be some of that. But in order to raise $1-1.5T quickly you need to find a better, broader source. Sorry everyone, that imported stuff you buy is going to cost 10-25% more. Maybe buy less, or buy American if you want to avoid the tariffs.
Not much different than losing weight. You can go on a diet or exercise more or ideally a combination of the two. The choices are obvious, the will much more difficult.
they’re very analogous in that people like to pretend there’s a miracle drug, or a door number three.
there’s not, not for weight loss, and not for government fiscal sustainability.
Yes there is and its called cutting spending and raising taxes to whatever extent is required.
SoCalBeachDude,
I think my point is while the answers are entirely obvious, albeit perhaps painful, our political system is not built to make these decisions. Congress is going to be hampered to not spend more as social security and Medicare benefit cuts as well as increasing retirement age are exactly policies that get you reelected.
I honestly don’t see a path where this ends well and while not a likely concern for me it certainly is for my teenage son.
The least painful approach is to make tax rates more progressive. Worst case, some people will have to step down to a $60k automobile from a $100k automobile, to a $2M house from a $3M house. I don’t think anyone would have to take their kids out of private school, God forbid.
Jamie Dimon might have to scrape by with less than $80M per year, after tax.
The Dow reached 45,000. SPX closed > 6,000. Can SPX rise to 7,000 ?
Why not : after a 1,500 correction in 2025 to 4,500 + [1,500 x 1.618] = 7,000. Can SPX reach 8,000 ?
Yes : a rd trip to 2020 , to 2,800 + [3,200 x 1,618] = 8,000. Can it happen.
Yes : a rotation from frivolous consumption to industries that we must have, protected by tariffs. Gov debt might drop by a 1/3 or 50%. The yield curve will normalized. TNX might pops up to 10% or above the. Without Fed hikes to prevent a new Hoover we might make a rd trip to the Great Depression.
very Funny!
Extremely Funny, Thk you
Good reporting, but what are the actions, if any, for the individual? Would any of this suggest a shift in asset allocation (that is not already baked into the market)?
Also there is a statement above “The US, which controls its own currency, cannot default on its debt…” Is this technically correct? Are you saying that the U.S. would choose to use inflation instead of defaulting? Or is it literally an impossibility? For example, instead of this whacky tariff jazz, couldn’t we just stop paying interest on foreign-owned debt? Or default altogether and not pay it back at all? “Sorry you are SOL. America First!” as a thought experiment. In theory we could cut our debt by ~$8T overnight with a 100% default. This seems a lot more efficient than tariffs to tax foreign governments (I think I heard that correctly during the campaign as a “policy”)—just default on our foreign debts.
if the u.s. defaults on its foreign debt, good luck getting anyone else to buy it going forward.
and the value of existing paper held out there will plummet, and yields skyrocket.
it’s not an option.
The US Dollar is very stable and rising and will continue to do so for the foreseeable future.
It’s not really any different than defaulting on “domestically-owned” debt. Treasuries are Treasuries and Uncle Sam cannot default on them whoever is the owner.
Stymie,
Your fantasies have left the realm of the real and are fluttering toward the wild blue yonder.
The US federal government will certainly not default on its federal debt but will cut spending and increase taxes significantly as required.
Spending is already decreasing from $7.71 trillion in 2021 to $6.73 trillion in 2022 to $6.16 trillion in 2023.
Still well above the $5.31 Trillion in 2019 before the pandemic.
We’ll see if the GOP and Trump can keep that going..
Increase taxes? When was the last century that happened? The only thing worth going back to the 50s for is their tax rates.
Cut spending? Who’s ox do you gore?
Should both be done? Well of course!!!
Tariffs are nothing more than another tax and will be viewed as inflation. If that mistake is made, we will have a new party leading in the next election.
If america could make a decent product at a decent price, we would not have a trade problem.
Four years is not enough time to make a dent in our trade needs.
What you cited is simplistic globalist copy-and-paste propaganda.
Tariffs have two roles:
1. a good way of raising taxes
2. changing the economic math for production in the US, and this included the construction of pipelines (which in itself is a powerful economic activity).
Tariffs are direct and immediate tax on the profit margins of foreign producers and US importers. They may or may not be able to pass them on. And tariffs don’t stop trade, but they change the math of where something is produced.
The Chinese have used heavy tariffs very successfully in building and protecting their manufacturing industries that now dominate the world. Other countries have too, including Canada.
Tariffs shift the economics to producing more in highly automated plants in the US than producing in factories overseas. This is not instant, but it’s high time that the US protect and build its manufacturing base in order to not be entirely overrun by heavily subsidized and protected manufacturers overseas.
Fulfilling role #1: If tariffs on a product (such as T-shirts) don’t change where the product is manufactured (such as in Bangladesh), they fulfill their role of raising tax revenues for the US, which the US needs more than anything, given the huge deficits. Role #1 is fulfilled.
And yes, someone has to pay for taxes. Tariffs are a direct tax on corporate and importer profit margins, including those overseas, which is why US companies HATE tariffs. Whether or not they can pass on the tariffs depends on a lot of things. Companies are already charging the maximum amount they can get away with and still accomplish their growth goals. If they raise prices, they might lose sales, and then have to roll back prices. So it’s not a direct hit to consumers, it’s a direct hit to corporate profit margins, and then it’s up to the market to spread it around.
Fulfilling role #2: If tariffs fulfill their role of changing where something is manufactured (motor vehicles, semiconductors, components, tech equipment, ships, etc.), then they don’t raise taxes, and don’t fulfill role #1, but vastly improve the overall economy and the labor market. Highly automated manufacturing plants provide great highly qualified jobs, including tech jobs. And they have huge secondary and tertiary effects.
………..
For example, in the auto industry, where a big part of the production takes place in the US — all major foreign automakers manufacture vehicles in the US — importers are unlikely to be able to pass on tariffs. Instead, they’re going to eat the tariffs because if they try to raise prices on imported vehicles, consumers are going to buy a US-produced vehicle for less.
Bear Hunter-
Free trade is a worthy goal, but we use tariffs now, as do most of our trade partners. Some trade partners utilize tariff and other trade practices that put US trade terms at an unfair disadvantage.
The US is already using tariffs. Always has. The question is whether or not the US is willing to “adjust” our practices to offset the anti-free trade effects of our trading partners. Trade regulation is not binary (yes or no) but variable and negotiable, In determining how much of a tariff should be applied, any country must determine what tools are at its disposal.
As with with national defense, a country that shows little willingness to retaliate with its full arsenal of options opens itself to abuse. This leads to a paradox of trade policy: free trade depends upon the threat of trade restrictions.
That’s geopolitics.
Respectfully.
DM: Trump threatens 100 PER CENT tariffs on BRICS countries
In a post to his Truth Social on Saturday, Trump issued a stark warning to the nine countries that make up the organization.
Key word: “threatens.”
Also, tariffs can be activated, and then at some future date, reduced or removed completely.
All part of the trade negotiation process…
The US federal government is now wasting more than $1 trillion a year paying interest on the more than $36 trillion of debt that Congress has already rung up and I would suggest they both raise taxes substantially and cut spending significantly to put an end to this utter idiocy.
Wolf, I found this article was copied at the link below and some charts slightly annotated.
Not sure if it was authorized or not.
Thank you!!! The site stole my content. I sent them a copyright violation notice and told them to take it down.
Just make sure you don’t ever go back to this slimeball thief.
The main difference between USA deficit plumbing — and that of Japan or Venezuela — is the political nature of how debt is used.
Venezuelan budgets are correlated to corruption, whereas that correlation is far less pronounced in Japan — the Japanese central bank uses debt to stimulate their economy, versus the political transfer of wealth that’s customary in Venezuela.
Going forward, it’s obviously not a good idea to threaten USA fed independence and put in place plumbing that’s even more inefficient than what we’ve had since the GFC,
The reinvention of the treasury and Fed in the next few months is incredibly dangerous with the level of deficit where it is! Attempting to make the government more efficient is awesome, but actually reducing the deficit will require painful actions that aren’t on a bingo card.
If we don’t go the path of Venezuela, then the path of Japan screams slow growth for decades.
Hi Wolf.
Is it so bad now that it will keep you awake at night or after a few more years assuming nothing significant is done? Thanks.
I do try to get some sleep every now and then.
The problem here is that this is a long-term pressing issue that took many years to get here and will take many years to address, and Congress won’t be in the mood to address it until the bond market starts to revolt, and we’re far from that.
There is nothing anyone can do in one day that will solve this. I also don’t expect this to blow up tomorrow. So I expect this to get worse and worse and worse. And it has room to get worse, which is part of said problem.
Interest payments are 38% of tax receipts, which are $745 billion. That’s $283 billion in interest (745*.38). Prior to the pandemic, interest payments were 20% of tax receipts. To get an economy large enough for $283 billion to equal 20% of tax receipts, the GDP would have to expand by 90%, to $1,415 trillion.
And maybe the missing graph is interest on the national debt as a percentage of GDP. Always a missing graph. Dismal.
I took it out because it doesn’t add anything new and because it doesn’t really matter much after you see the much more relevant “interest expense as percent of tax receipts.”
But since it’s Friday, and to make you happy for the weekend, here it is: