What does debt cost?

By James C. Sherlock

As part of its constant work to refinance the federal debt, the Treasury sold inflation-adjusted bonds today that earn a 9.62% interest rate.

Be very afraid.

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38 responses to “What does debt cost?”

  1. James McCarthy Avatar
    James McCarthy

    When youse guys take over and eliminate SS, Medicare/aid, and abandon Ukraine, the problem will be fixed. Thanks for the heads up.

    1. James C. Sherlock Avatar
      James C. Sherlock

      Perhaps the President can just forgive this debt too.

      1. James McCarthy Avatar
        James McCarthy

        Now you’re talking. Will you advocate no cuts in favor of forgiving the debt? Can you be quoted?

        1. James C. Sherlock Avatar
          James C. Sherlock

          You have officially lost your mind.

          1. James McCarthy Avatar
            James McCarthy

            I’m keeping up with your Byzantine train of thought and banal commentary. The national debt is not being “refinanced.” What fear are you passing on to others?

    2. Eric the half a troll Avatar
      Eric the half a troll

      How else would they fund their tax cuts for their rich cohorts… well, aside from on the backs of our kids that is…

  2. Donald Smith Avatar
    Donald Smith

    We all knew this was coming. Ever since the 1990s we were warned that federal spending was unsustainable. Some of us prepared, some of us didn’t…

    1. James McCarthy Avatar
      James McCarthy

      Please share your secret strategies for preparing against feared financial Armageddon? When will unsustainable occur?

      1. Nancy Naive Avatar
        Nancy Naive

        A shack in the woods and lots of ammo.

        1. Yet, it’s better than putting your head up your butt and voting democrat.

      2. First, avoid denial and recognize that the problem exists. Once you do that, come back for step 2.

      3. LarrytheG Avatar

        the boogeyman cometh… he’s coming… wait til he gets here to see what he looks like…

        and when he gets here, we’re gonna look like a 3rd world country where blah blah blah…. fear that!

    2. James Kiser Avatar
      James Kiser

      Nobody is prepared.

  3. James McCarthy Avatar
    James McCarthy

    Sherlock, good of you to make this deflective post from Youngkin’s crude remark about Speaker Pelosi. Nice move.

  4. Dick Hall-Sizemore Avatar
    Dick Hall-Sizemore

    This is so misleading. That interest rate on iBonds has been available for months. I bought some earlier in the summer. The rate is based on inflation and is good for six months. There are limits on how much an individual can purchase in a calendar year ($10,000). Friday was the last day a person could purchase bonds with that interest rate. It is expected to drop to 6.47 percent on November 1. https://www.treasurydirect.gov/savings-bonds/i-bonds/i-bonds-interest-rates/


    1. Nancy Naive Avatar
      Nancy Naive

      Apparently the Treasury site was so busy it crashed. The I bond is a good addition to a long term portfolio. You can reap after just 5 years without penalty. They also make for good estate planning. Use a named beneficiary.

    2. Eric the half a troll Avatar
      Eric the half a troll

      What? Sherlock is cherry-picking and misleading in his posts…?! Say it ain’t so!!

      1. LarrytheG Avatar

        Lawd… Lord.. the man IS developing a “reputation”….. no matter the subject , it’s gonna be “predictable”…

    3. The i-bond rate is a combination of a fixed rate and an inflation adjustment, adjusted every 6 months. The current fixed rate is 0.00%. I-bonds can, and have, paid 0.0% interest in times of low inflation. Since you can’t cash the bonds for 5 years without penalty, you must be very certain that the current high inflation will continue for a long time to recommend them; especially since the rate is expected to fall by 1/3 in 3 days, while inflation continues to soar.

      1. Dick Hall-Sizemore Avatar
        Dick Hall-Sizemore

        Thanks for this additional information.

      2. LarrytheG Avatar

        Even with the caveats, Treasury Notes are generally the worldwide Gold Standard for protecting assets, no?

        1. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          These are different from Treasury notes. It is one type of savings bond.

          1. LarrytheG Avatar

            Yes but at the end of the day, they are still considered a safe place for your money – compared to other choices and inflation in the US is considered not as much a problem as inflation in the rest of the world.

            Our inflation IS “influenced” by inflation in the rest of the world, for instance, if the price of imported goods is higher, then we experience that inflation also and not much the US can do about it, not even Republicans!

            I just think that the main schtick of many (not all) Conservatives in the US is to spew FUD about issues (fear, uncertainty, and dread).

            NO matter whether it’s about the economy, crime, education, social security, health care, immigration, you name it, it’s their name of the game more often than not.

            Their “solution” is that they’ll “fix” it but “details” are often harder to come by and/or are “simple minded”.

          2. You say:
            Our money’s safe if we give it to the gov’t.
            The world’s largest economy is powerless against unnamed international inflationary forces.
            Biden’s policies have no effect on inflation or other issues.
            Those who disagree are spreading FUD.

            I say:

          3. LarrytheG Avatar

            Not BS:

            1. – US Treasury notes, even the inflation version are considered safe and more safe than many other options.

            2. The worlds largest economy imports goods from other countries. If the price goes up, we can’t no more force it down than we can prices increases in this country. It’s called a market economy and it’s reality.

            3. – Dealing with realities is way better than FUD but Conservatives have no other answers and prefer FUD to truth.

          4. 1- Only so long as the gov’t keeps borrowing/printing more money to pay them off. If the gov’t borrows itself into bankruptcy, they go down with it.

            2- Your focus on import prices is way too narrow. Why didn’t we have extreme inflation when Trump put a 25% tax on Chinese imports? It certainly raised the price of imports.
            You ignore the forces driving prices upward. Massive borrowing is always inflationary; increasing the money supply without a corresponding increase in production is kinda the definition of inflation (more money chasing fewer goods). Gov’t regulations that increase the cost of production are inflationary. Subsidies and taxes are also inflationary.

            Has the current administration done these things?

            3- Your, and your left wing friends, constant anti-conservative, anti Trump comments are also FUD.

          5. LarrytheG Avatar

            1. – how does the govt “borrow itself into bankruptcy” ?

            2. – It’s funny you mention Trump who did massive tax cuts and financed them with debt! And when Trump put a 25% tax , he ALSO had the govt give those farmers subsidies to compensate. The whole thing was an exercise in economic idiocy.

            But world markets have been around a long time and function through all kinds of economic conditions and according to fundamentals of supply and demand. Political ideologues forget or pretend these realities don’t exist and actually trump govt.

            3. FUD is when folks prefer misinformation and disinformation to facts and realities, It’s Conservatives main game plan… i.e. stuff like “when the govt goes bankrupt” or claim tax cuts will pay for themselves with higher revenues, i.e. supply side economics – that just got the UK gal tossed out – by Conservatives!

          6. 1- the same way anyone else does – owe more money than you can afford to repay.
            The fact that you don’t think the gov’t can go bankrupt explains a great deal about liberal’s crazy economic theories.

            2- Trump taxed Chinese imports to the US, not the exports of US farmers to China. That raised the cost of Chinese imports and, by your theory, should have given high inflation.

            3- if your theory about taxes is correct, all we need to do is tax ourselves at 100%, and we will all be rich.
            By FUD, do you mean the Steele Dossier? Russia collusion? Gas was $5/gal when I was inaugurated? Inflation is transitory and temporary? If Trump is elected, the markets will crash, and we will have a recession?

  5. Nancy Naive Avatar
    Nancy Naive

    Wow, exciting. Almost as thrilling as the Reagan years.

  6. LarrytheG Avatar

    You have to ask yourself WHY the Treasury Notes ARE the “gold standard” for financial safety, the world over!

    JAB has beat this drum for years that …. “some day” “China and other owners of our debt will come and get us”.

    Totally not true and totally the same old, same old, standard fear mongering that is the “go to” for Conservatives these days.

    The debt doubled when Trump pushed through tax cuts that were not paid for – the same thing that the UK just rightly dumped Truss over.

    So the GOP loves to give tax cuts, not pay for them then caterwaul about the deficit/debt afterwards and threaten to gut social security and Medicare.

    Which is even dumber for Social Security as it is entirely funded from FICA taxes not other taxes but what they are REALLY proposing is getting rid of FICA taxes thar fund Social Security and Medicare! Every single developed country on the planet has a version of Social Security and Medicare but the GOP would gut it.

    1. Eric the half a troll Avatar
      Eric the half a troll

      Not only that, they have stated that they will shut down the government and refuse to raise the debt limit to do it… again…. crickets from the right on BR… sounds like Sherlock is on board…

      1. LarrytheG Avatar

        it’s like a broken record…. “do exactly what we want or we’ll shut down the govt….. again”.

    2. Forget the rhetoric you are hearing about the GOP wanting to destroy Social Security and
      Medicare. Quite the opposite, the GOP is trying to save them.
      If you want the see the real thinking in the republican party about Social Security, and not a rehash of highly biased Democrat talking points, here’s Congressman Steve Scalise:


      Recently Congressman Steve Scalise was asked about the GOP plan for Social Security and Medicare. He defended the GOP position for making both entitlement programs solvent. This is important because within the next fifteen years both programs will run out of money and essentially be broke. Something needs to be done now.

      Go to the link to see more detail.

      The traditional way to ‘fix’ SS is to raise taxes and declare victory for 10 or 20 or xx years. Let me offer this analogy:
      You’re driving and notice your car pulling to the left. You get out and see that the left front tire is almost flat. You go to a garage and they tell you to come back in an hour. When you return, the tire is round again. “What do I owe you?”, you ask. “$20” he says. You pay him. “What did you do?” “There’s a slow leak. It’s supposed to have 35 pounds, but it was down to 20. We blew it up to 50 and you will be able to go 40 miles before it happens again.”
      If you are happy with that repair to your tire, you will love the dem plan to fix SS. People with some intelligence might want to consider an alternative. See the link provided.

      1. LarrytheG Avatar

        and it’s lies because neither SS nor Medicare Part A will “run out of money” as both are financed with FICA taxes which continue.

        The lies stem from what is known as the “Trust Fund” which is NOT the primary source of SS and Medicare,

        The “Trust Fund” is the excess FICA taxes collected since the last major change in the Reagan years and was meant to supplement the FICA taxes being collected once they were insufficient to cover full benefits and needed to be adjusted again primarily because people are living far longer than they used to.

        FICA taxes collected each year almost equal income taxes collected.

        SS works like ANY annuity, The money collected now pays for those who receive SS,

        the GOP KNOWs the facts but they CHOOSE to spread misinformation and fear mongering rather than debate on the merits itself.

        1. The chief actuary of SS agrees with me:

          The last 11 Trustees Reports
          have indicated that Social Security’s Old-Age, Survivors, and
          Disability Insurance (OASDI) Trust Fund reserves would
          become depleted between 2033 and 2035 under the intermediate set of
          assumptions provided in each report.
          If no legislative change is enacted, scheduled tax revenues
          will be sufficient to pay only about three-fourths of the scheduled
          benefits after trust fund depletion. Policymakers have developed
          proposals and options that have financial effects on the OASDI Trust
          Funds. Many of these proposals and options have the intent of addressing
          the long-range solvency problem.

  7. James Kiser Avatar
    James Kiser

    Too late the Doom loop is now in charge.

  8. Lefty665 Avatar

    Remember, savings bonds only incidentally fund the government. Their purpose is to suck excess cash out of the economy. They work in concert with the quantitative tightening by selling Treasuries and Mortgage Backed Securities the Fed has embraced to reverse stimulative quantitative easing that put cash into the economy by buying them.

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