Thread by @RealBerwickW

The Federal Government has the largest external debt in the world. The only ingredient missing is double digit interest rates…soon.

https://twitter.com/paulkrugman/status/1469728251643838467

The biggest holders of US Treasuries are other countries like Chyna, UAE, etc but also many institutional investors like bond funds as part of their retail portfolios.

This means the value of your investment in US Treasuries are being vaporized by inflation. You’re being paid back in dollars that are rapidly becoming less valuable everyday. The only upside is the full faith (and thus far) outstanding credit of the US Government.

Eventually, after the Fed pulls it’s support of the economy through bond purchases, they will need to raise interest rates substantially to combat inflation. This leads to a larger percentage of revenue going to pay interest on the National debt.

So taxes (investments) will have to go up too because a recession and stagflation is where we’re headed. To suggest that inflation doesn’t hurt the poor is magical thinking.

The only way the US Government can successfully pay off its debt is by devaluing the dollar (inflation), higher revenues and paying fewer benefits…unless it sets the economy free and that’s something Democrats never willingly do.

@threadreaderapp unroll please!