Here is my chart of projected deficits, interest and debt. This builds on my previous forecast of Projected Government Spending (ex Interest) through 2040. My calculation of interest is simple and probably wrong. It is just 4% of the Debt to the Public at the end of the previous fiscal year. So this indicates a breaking point in 2042. Compare this to my previous forecast that indicated a breaking point in 2059. And the one before that which saw a breaking point in 2039.
The main difference between this and the CBO forecast is that I project much higher interest costs. I think that they are vastly underestimating interest expenses. It makes sense to me to base interest on the amount of debt, instead of GDP.
So what do I think will happen in 2042, give or take a few years? Most likely inflation will rise above 10% or even go into hyperinflation, making our financial system unrecognizable.
What about DOGE cutting spending? I don't think it will make much of a difference, the swamp is too deep and can't be drained. Maybe they could cut spending by $100 billion per year, but it won't make a very big difference.
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