The Fed cannot raise the FEDFUNDS rate enough
A higher FEDFUNDS rate (currently around 0%) causes higher rates on treasury yields.
Here is our "effective rate" (ER) we pay on the national debt. Currently around 1.9% and 22% of tax receipts go to paying this interest.
If ER goes above around 3%, interest payments are around 26% of US federal revenue.
If ER goes above around 5%, interest payments are around 43% of US federal revenue.
Inflation is at 7.5%, it is impossible to bring the FEDFUNDS to 7.5% (which would amount to 63% revenue).
Good luck, FED.
Here is our "effective rate" (ER) we pay on the national debt. Currently around 1.9% and 22% of tax receipts go to paying this interest.
If ER goes above around 3%, interest payments are around 26% of US federal revenue.
If ER goes above around 5%, interest payments are around 43% of US federal revenue.
Inflation is at 7.5%, it is impossible to bring the FEDFUNDS to 7.5% (which would amount to 63% revenue).
Good luck, FED.
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