What Fed Chair Powell is doing right now is often being compared to how Fed Chairman Paul Volcker handled inflation back in the late 1970s and early 1980s. At that time, Volcker pushed the interest rate to as high as 18% to fight against the hyperinflation inflicted on the country. The obvious question now is: can Powell dare to follow the same path?
Here is the interest amount the current government is paying on the national debt, which represents about 10% of the total tax revenue.
But if rates rose to 10%, interest payments would encompass about 77% of all tax revenue, leaving $900 billion for other spending.
You really think the US government can survive in this scenario? Don't kid me!!
That's why I never believe the Fed will seriously raise the interest rate for long. On the contrary, we may start to see the Fed change its course, shifting from QT to QE in the not so far future!
Sounds incredible, right? Let's watch and see what is coming.
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