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What Janet Knows
What Janet knows, as The Burning Platform's Jim Quinn exclaims, is that a 1% increase in interest rates would increase the interest on the National Debt from $400 billion per year to $600 billion per year, a 50% increase.
Interest rates back at NORMAL historical rates that we had as recently as 2007 would increase the interest on the National Debt to $1 trillion per year, a 150% increase.
Plus, the National Debt increases by $1.5 billion per day, so our interest bill goes up by $35 million per day already.
Do you really think Yellen is going to be increasing interest rates?
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US debt and unfunded liabilities, or the fiscal gap, has increased from $60 trillion in 2003 to $210 trillion in 2014. No way can Old Yeller raise interest rates:
CBO tells us that the national debt was a little less than $13 trillion in 2014. But the fiscal gap in that year as calculated by Kotlikoff was $210 trillion, more than 16 times larger than the debt estimated by CBO and already judged, by CBO and many others, to be unsustainable. If a $13 billion gap is unsustainable, what term should we apply to a $210 trillion gap? Kotlikoff also calculates that the fiscal gap is equal to about 58 percent of the combined value of all future revenue. Thus, we would need to reduce spending or increase taxes by enough to fill that 58 percent gap if we wanted to put the federal budget on a path to solvency that balances the interests of those now receiving benefits and those who hope to receive benefits in the future.
Kotlikoff goes on to illustrate that the fiscal gap is increasing at an alarming rate and that delay makes our problem much worse. In 2003, just a little more than a decade ago, the fiscal gap was $60 trillion. But by last year it had catapulted to $210 trillion. The fiscal gap may not continue increasing as rapidly as it has over the past decade, but with each passing year - as Congress and the President do their best to avoid action - our hole grows deeper by substantial amounts.
http://www.brookings.edu/research/opinions/2015/04/08-federal-debt-worse...
And here in is the rub, should be interesting to see how they deal with this little issue in the coming years. All they know is to lower interest rates. They have said QE doesn't work so they are going to get rid of the zero lower bound and lower interest rates, negative of course, yet again.
HOW they get rid of the zero lower bound is the only question.
Here is plain truth. If you are listen what Central Bankster is really say, you are understand. Bankster and ecommunist is always to talk about economy, about labor, about inflation, deflation. This is nice, but is all macro economic and is not about what is really important, the freedom or happyness of citizenry. If you are slave owner in plantation, you are maybe talk same, about productivity in field, even longevity of labor force, but every night you are shackle slave to bed post.
Janet Yellen knows one thing and that is keep charade going. Only mandate is while sheer sheep, don't shave too close so as to kill.
...but what is Boris know!?
increasing and normalizing are two different things.
What if always is increasing (like national debt or emotional disregulation of lazy nephew)? Then increasing is normalizing, no?
Boris know what 99% of sheeple don't.
Did you hear the quiver in her voice during her testimony. I think she is only holding on by a thread or a threat. Take your pick.
Face it. We're broke. All the machinations are just happy talk on the way to the slaughterhouse.
That's right Boris - you can skin a sheep only once. I think the time is now - I hear Mr. Yellen bleating.
Bluffing constantly.
If they do raise them they will have to lower them immediately.
Becoming more obvious that the Fed is stuck in the corner with 0% to negative rates while doing a QE cycle every year and a half.
Notice each QE has to be larger to get the same effect?
Feadfred prediction: They will brute force the stock market up through the highs in an attempt to restore the psychology. Then they will raise rates (in December) and cross their fingers, last bullet fired, hail Mary shot from half court or whichever phrase you wish to use. Who knows, maybe the economy won't collapse (don't bet on it).
I honestly believe if they go negative they will face a revolt. All confidence will be lost and anger will take over.
Interest rates back at NORMAL historical rates that we had as recently as 2007 would increase the interest on the National Debt to $1 trillion per year, a 150% increase.
Why do people keep quoting this? We owe half the interest TO OURSELVES because the FED owns the notes. And it's not as if the whole debt just resets to the new interest rates. Hell 10 year notes that are coming due are going to be refinanced effectively LOWERING interest paid on the debt. I'm not saying a normailzation is in the cards because it's not, but some small moves towards normalization aren't going to suddenly blow up the size of the interest payments on the National Debt.
And then everyone wonders WHY the Ignorati can't seem to understand financial matters! It's 'cause TPTB are constantly talking thru their hats!
Exponential functions: learn 'em, know 'em, luv 'em!
" No way can Old Yeller raise interest rates:"
Are we getting close to time when Yeller goes rabid? What are the odds that Yeller will get put down?
Oh really?
See
http://showrealhist.com/yTRIAL.html
She only raises if this is a trigger mechanism to start the downward spiral to anarchy with the resulting reactionary crack down. They may not get another lawless administration in office again. Not letting a crisis go to waste has become create the crisis not to waste.
Absolutely NOT.
Shiiiit, they removed the debt ceiling until 2017, Washington will run this bitch up to 26 trillion by then and I will lay money on that.
Unlimited spending has been the goal for awhile now; it just took Congress and the President awhile to get there. By 2017, they will have suspended the debt ceiling indefinitely, and we will never have restraints on government spending again. Spending money is what career politicians do; it's ALL they want to do, since it is the best guarantee of job security for them.
Obama is true to his Chicago roots.
Spend until bankrupt and then start selling national assets, just like Chicago sold the skyway and parking meters for emergency cash.
She looked absolutely terrified at the hearing last week but my take away was that she will be raising by 0.25 in December and then she hopes to stay at that for a few years.
So, yes Tyler, she is raising rates by 0.25 in December.
Incremental 50 Billion per year. No problem. Fed can print that easy peasy!
FED owned by big banks, which are globalist owned. Globalists are done with USSA, moved all assets over to Asia. Time to implode USSA, which they've been doing for years. Stop assuming the FED's interested in saving or improving Amerika, they aren't.
IF they do raise rates, and they may not, it will be as much to show that they CAN as to show that they SHOULD (based on their criteria). Too many of us have said they won't do it for too long, credibility is in the toilet, and a teeny weeny raise will, in their minds, help to restore that credibility. They may need to reduce the rates in 2016, but that won't matter to them.
Nope, not in any meaningful way which is why NIRP is in our future. Technically we are living under NIRP now when you look at real rates VS nominal rates. but we are going to be even NIRPier in the future.
just whck a mole.
The pension system implodes instead.
There are no good choices left.
Definitely have to tke the pension and retirement funds. Mr. And Mrs. Citizen: give us your money or we send your son off to war.
"Technically we are living under NIRP now " True.
But if these criminals decide to go one step further and institute negative rates, then you will be better off to withdraw your money from the bank and stick it in your mattress. That is why the increasing meme about getting rid of cash. Legalized theft- nothing less.
They will print money to Infinity and Beyond...
"forever isn't long enough"
What cannot be sustained will not be.
Yellen will find out about this after she raises rates.
Then we need to see another market pullback in November like we had in August. That'll fix it: it will be impossible to hike then. The Ponzi Munchkin can then make the claim that the 'global situation' won't allow for it, "but we will be doing it soon".
There'll be another speech where she pukes on her own lies again...
Saw Ben S Bernanke's new book at Costco the other day, too bad there were no trashcans nearby, I would have put the whole stack in there. Or, I could have put them all on top of the toilet paper display.
were the pages filled with crayola drawings?
If you did that the store would have to pay for the books which defeats the purpose. Best thing to do is right a sign that say's "Asshole speaks again", then put it next to it.
Let's approve the FED interest rate hike to see what's in the national debt repayment program.
we are in a Japanese Kamikaze dive....you know the ones you can't pull out of
I'd equate it more to a flat spin, quite literally.
Key is value of the dollar; raise i-rates to support...SHTF.
Somebody's cruise missile takes out a carrier....SHTF
Putin & Xi (& others, KSA, EU) do more non-$ trade....SHTF
What to do? What to do?
Answer: Dollarize Venezuela
They will find a way to make the debt thing meaningless or fix it with some world, we are all (Group of Seven/G7) in this mess together, reset. Then life as we know it will change forever. It is much easier to control the weak.
https://thinkpatriot.wordpress.com/2015/10/27/ignoring-the-absolutely-in...
We citizens need to be preparing to continue sans government, as government is burning itself down. Good.
Arm yourself and your neighbors so you are resistant to the standard mechanisms for setting peoples against each other. We have an internet, we don't need government.
We'll have to cornhole some folks...
i am beginning to have a bad feeling about all this.
...as am I.
Things have been in place for chaos for years now but it is beginning to circle the drain in so many facets it is impossible not to notice.
But, isn't the additional interest expense added to GDP?
s/
With the economy booming and unemployment at only 5%, the fed needs to raise rates. Then, after the economy slows due to unexpected snow in January, the rate can be returned to 'normal'. Inflation crisis averted due to prudent Fed action.
Wait...what?!?! Snow in January? What are you some kind of Nostradamus? How can you be able to predict that far? I'm suspicious of this sorcery of yours.
Mission accomplished Mr. Yellen. You've succeeded in completely decimating the middle class.
WTF!? Tiny shack in Palo Alto, California in for just under $2million | Daily Mail Online
Don't buy it. The land is worth it (at today's valuations) but Palo Alto building codes really suck. They do things their own way and you won't know it until the inspector comes.
"Rip it out Mr. Cross and don't forget about the excess landfill surcharge"
I looked at the land factor. It's puny lot sandwiched in on one side by a huge fence.
Good luck going through all the bureaucratic red tape, zoning ordinances, costs/palm greasing to rebuild.
Not to mention all the neighbors are probably progressive libtard assholes.
Libtard neighbors would be the least of your problems. You'd be lucky to live long enough to actually build a house and move in.
California bureaucrats are the undisputed champions at cutting red tape---lengthwise.
Baby steps folks, it's all about baby steps. The Fed will raise rates but by an almost infinitesimal amount - something like 0.10%. One must be prudent and not rush head long into these types of situations.
Ughhh
Xactly. I'm figuring on 12-1/2 basis points. Far from anything we would call normalized. But enough for the talking heads to celebrate.
Enough for some well times trades.
Heave Hoe, heave Hoe....get to work Ms. Debtfire!
The cartoon makes that troll yellen look good. This total debasement of the value of money, with zero interest rates, permits these debts to mount without consequence.
You get what you accept.
That yenta bitch can't raise rates without blowing up the entire world eCONomically speaking, and maybe otherwise.
Perhaps that is the goal; create global chaos and that man of perdition will rise to the top and save the impoverished world.
Help me out! Is he using Roughly 2% on 18.5 to come up with the current 400 billion a year????? And is that 2% sort of an aggregate of short term/lomg term debt?
This is why I consistently express my belief that there will be no rate hike ever, no matter what sound and fury might precede any FOMC meeting.
Rates are zero until TSHTF. There is no other option for TPTB.
Agree with you completely. It's all about the math.
Let's hike rates Bitchez!!! What’s wrong dude!? You Yellah!, Ahahahahaha that’s what I thought Yellah Pelly http://youtu.be/0c-UIkfsk1U?t=1m49s
Would be fun to see Ol Yellah hiking rates in this deflationary environment, gna, gna gna ...
step one: declare victory, we have achieved our 2% inflation target (they know this by looking at yoy comparisons and noting when the data smooths out)
step two: raise rates 1/4 point.
step three: sit behind the curve indefinitely
step four: inflate away the national debt by keeping rates lower than inflation.
step five: buy TIPs bitchez
Don't worry, the Federal Reserve will buy all of the government debt, even at 5%.
Yup the FED sure is out of options...
sarc
Do you even lift Janet Babushka ?
Even Viagra couldn't help this rise.
As long as the Fed owns most of the debt they can raise interest rates as high as they want. One might think that is what QE is about.
1/4 point rate hike, new inflation target of 3%, suckers
Real debt of the USA is 220 TRILLION
Prof. L. Kotlikoff
Don't worry about it! Once they can't use taxpayer's taxes to back stop this. they can always pledge US taxpayer's organs for collateral!
Episode 302 and 350 of the Caravan To Midnight.. in that order.. then try to raise the consciousness of any people you care about, who don't know. Talking about the banksters and Fed is mental masturbation, because they don't answer to anyone and care not who makes the laws. Nor do they care if 90% of the worlds people are harmed by their actions, there will be no 'A Christmas Carol'-esque redemption in the final hour... blood will be shed, lives will be lost, and then we'll know...
Here come the rate hikes, one right after the other.
It's the most sure way of starting WWIII. Either that or forcing every sovereign worldwide to bow before the almighty FED. For every other currency on the planet is going to collapse when the FED raises interest rates.
This one is a no brainer. Because the balance of FX will shift massively in favor of the FED as rates begin to rise. And while the FED seems backed into a corner, every other currency is literally teetering on the edge of a cliff.
In truth Americans owe the fed about 90 billion dollars because they've pulled a fast one on everyone in the country. Which is the whole purpose of the Fed. They "sell" 100 dollar bills with a %1000 mark up, plus interest. Each 100 dollar bill costs the fed about 15 cents if that. So they charge the people $100.00 plus interest on something worth 15 cents. They are owed about 90 billion dollars, that's all.
The last time I saw a well researched article on the subject, it costs about 2 cents to print a 1, 5, 10, 20, 50 or 100 dollar bill.
Regardless, the crows are coming home to roost - the debt can't be repaid, so default is a certainty.
It costs a dime to make a penny; gov't is not that efficient.
Sure, we look all frazzled and broke now, but our delightful rich folk community has the most and best yachts and houses in all sorts of 'fabulous' locales with breathtaking views of the sea and the shore. They're kicked back, drinking champagne and sucking up salmon eggs as their undocumented servants braise the ribs and help mom with her backswing.. no red tape and rock bottom prices!
Punk dictators around the world pee their pants in fear if our Decider In Chief looks sideways at em..
We got soadjurs stationed in far flung countries most haven't heard of and that means something, buddy.
And they did it all at no cost to us taxpayers by poofing money out of nowhere.
So let's not ungratefully raise these silly 'rates'.
Thanks Janet <smoochies>
It is estimated that Medicare's unfunded liabilities is around 25-30 trillion. If you consider Medicare as a big credit card...then when more taxes come in than expenditures...you can pay down on the 25 trillion debt.... if taxes are less than expenditures than you have to add to the credit card debt. Medicare is running a deficit each year. No solution to increase revenues to match expenditures. Credit card debit will continue to rise.... debt will never be payed off...it will only increase. Who cares...practically nobody. It will only matter if Medicare cannot pay a bill. Wiil this happen...probably not...Congress will just raise the debt limit to pay the bills. Wiil anybody care..probably not...until Congress cannot afford to pay the interest rate on the national debt. Will anybody care...probably not...because Congress will raise the debt to pay off only the "interest rate" charge. Will anybody really care...yea about this time the people buying the Treasury bonds will get a little queasy about Uncle Sam paying off the interest and principle of the money they are loaning...but who cares maybe this 25-50 years in the future. Most of Congress, Presidents, FED chairpersons and the baby boomers will be dead by then...so its not their problem.
The fed creates money to keep interest rates very low to keep US fedgov debt service low or it can create money to buy fedgov debt to pay interest on the debt.
Ultimately it is inflating the money supply for fedgov either way.
Better plan. Fedgov rolls over all it's debt into 30 year bonds at present rates or increases it's borrowing dramatically but only on 30 year bonds. Then raise rates. If fed gov was smart it should be selling tons of 30 year debt right now then saving the funds to pay off higher interest debt and to avoid future borrowing.
15-25bp's in NOT a rate hike; a real rate hike would be at least 100 bp's. So even if they did raise them by 15 bp's; they have it all covered in the shadows.
The federal reserve will only raise interest rates to any meaningful degree after the USD and economy are already BURNED TOAST. And maybe not even then.
However, the grandma who endlessly cries wolf may continue to threaten to raise rates "any day now" until the end.