What we need to borrow is the delta between what we take in and what we spend. If the world (China being part of it) doesn’t demand out debt at the current rate, AND productive capacity isn’t high enough to offset the losses (through additional tax receipts), THEN interest rates go up to make our debt more appealing.

And if that happens, pressure goes on to increase taxes, which decrease the ability to produce, putting more pressure on to increase taxes……and we go into a death spiral.

Nice, eh?

Written by

Data Driven Econophile. Muslim, USA born. Been “woke” 2x: 1st, when I realized the world isn’t fair; 2nd, when I realized the “woke” people are full of shit.

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