Courtesy of Mish.
With all the talk of tapering and expected hikes in interest rates by the Fed, inquiring minds are likely interested in what happens to interest on the national debt if the Fed ever does hike.
I asked ny friend Tim Wallace to graph that idea. The Following charts from Wallace provide a clear answer.
In these charts we make the assumption that the Congressional Budget Office (CBO) is accurate in its assessment of future budget deficits.
Neither Wallace nor I believe those estimates, nor do we believe the Fed is going to be in a position to tighten when they suggest they might, but here are the charts for discussion.
National Debt Trendline
Projected Interest at Various Rates
Hidden Agenda
The current blended rate of interest on the national debt is a mere 2.4% according to the CBO.
The “optimistic” projection of $668 billion assumes the rate will stay below 3.1% through 2020.
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