"The average American households' share of federal borrowings is now equal to half the median price of their homes, and the figure's rising fast. Right now, teachers, nurses, store owners and IT workers (i.e. average Americans) aren't paying any of the interest on those tens of trillions, since the federal government's simply ramping the IOUs to cover the carrying costs. But that can't go on forever."
"After the crisis passed, the U.S. kept spending at far above pre-pandemic norms, creating the growing, structural gulf between revenues and expenditures before interest expense, or what's called the "primary deficit." The rapid rise in rates on Treasuries deployed to finance those gaps-the two-year T-bill now yields 3.6%, sixteen times its 22 basis point rate in mid-2021-worked in tandem with the budget shortfalls to triple interest payments from $352 billion in FY 2021 to $970 billion in FY 2025,"
Average American households now carry a federal borrowing share equal to about half the median home price, and that burden is rising quickly. Currently most households are not directly paying interest on the accumulated tens of trillions because the government is rolling those obligations forward. Market constraints and sharply larger deficits make that accumulation unsustainable without major adjustments. Post-COVID spending pushed the debt-to-GDP ratio higher by creating persistent primary deficits. Simultaneously, Treasury yields rose—from two-year rates near 0.22% to about 3.6%—which, combined with budget shortfalls, tripled annual interest payments from $352 billion in FY2021 to $970 billion in FY2025.
Read at Fortune
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