How U.S. Borrowing Costs Might Rise

Here’s one of the key charts from a new study by four economists who argue that the nation’s ongoing fiscal profligacy could ultimately create an adverse feedback loop and sharply higher borrowing costs, rather than the steady-state five percent average interest rate currently forecast by the Congressional Budget Office. 

Of course, that would make servicing the national debt a bit more complicated. I’ve not read through the whole report yet, the last one-third probably being the most important part - Implications for Monetary Policy.

Naturally, there’s been quite a bit of blowback on this as detailed in stories like these:

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2 Responses to How U.S. Borrowing Costs Might Rise

  1. rich t February 25, 2013 at 8:40 AM #

    Your old pal Mishkin is one of the authors! I don’t know quite what to make of that…

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