Highest level of Government debt + Lowest Interest Rates =

by Laura Ehrenberg-Chesler on May 2, 2013

in Debt

I had the privilege of hosting a partner of Sandler O’Neill in our office on Friday.  He and I discussed a book he had put together on the current state of the economy, interest rates, regulation and the budget.

With varying opinions about whether or not the Federal Reserve will raise rates anytime soon, there was one chart and commentary that really stood out.

The chart showed a blue line which represented Federal Government Debt Outstanding and a red line which represented Interest Cost.  Federal Debt, as illustrated by the graph, began to climb sharply in 2002, and it began to soar in 2008.  Interest Cost has been declining at various rates of pace since 1984.

With the cost to the government so low, and the rate of debt so high, it’s hard to see how rates will climb meaningfully anytime soon.

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