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:
- Predicting a Crisis, Repeatedly - NY Times
- Fed Officials Reject Warning Losses May Weaken FOMC Clout – Bloomberg