Lets talk Debt

Debt? So what…so many people say we owe it to ourselves, it isn’t a big deal.  Well, that is not exactly true.  As we have seen with Social Security the debt is coming due.  I did a search to see if I could find out what was coming due when….check out page 13 of the Bureau of the Public Debt’s financial audit report.  It says that 65% of the marketable securities currently held by the public (not even including the 90 day notes) will mature in the next four years.  In other words, we’re going to have to pay off a big chunk of our debt very soon or refinance it.

This isn’t particularly upsetting if you believe that we can continue to roll the debt over. However, Social Security won’t be purchasing our debt any more, and Americans aren’t saving alot now, and China has cut back on how much they are buying… Will we have to raise the interest rate we pay on that debt?  Check out this comment from a March 4th 2010 report put out by the Congressional Budget Office (CBO).

“Outlays for net interest on the public debt have risen dramatically—by 39 percent compared with the same five-month period last year.”

The interest rate that we are paying on new or refinanced debt has gone up 39%!  Wait… I thought the Federal Reserve bank was going to hold the interest rate down… does that mean it is costing us more to borrow than we are charging to lend? Do I dare ask how much that is going to cost us? Is that in the “budget”?

Filed under: Uncategorized | Posted on March 20th, 2010 by Holly

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