Despite all the attention on the rising inflation has received this year, one of its most striking direct consequences has gone almost unnoticed: The US public debt is shrinking rapidly. Not in dollars and cents. No, it’s growing day by day. , minute by minute. But it falls in the way that really matters: compared to the inflated size of the economy.
The Good Side : Then there will be less inflation, less economic growth, and higher interest payments for the government… the perfect cocktail to pump up the debt again.
The Bad Side : It’s terrible for bondholders. The money government will pay you back will be worth a lot less than the money you invested. Don’t think this is a new long-term trend. This year’s slump was preceded by two years of explosive debt-to-GDP growth and economists are still worried about the outlook, Because the Federal Reserve is frantically raising interest rates to dampen rising prices.
Moving Forward : Then there will be less inflation, less economic growth, and higher interest payments for the government… the perfect cocktail to pump up the debt again.