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Inflation, interest rates and deficit explosion.

Historical US interest rates indicate a steady decline from 2000 with a spike during the GFC. Here are the Inflation number since April 2021. There is now a comparatively huge rise in 2022. There is an inverse relationship between inflation and interest rates. In South Africa from 1981 to about 2000, interest fluctuated wildly and…
April 13, 2022

Historical US interest rates indicate a steady decline from 2000 with a spike during the GFC.

Here are the Inflation number since April 2021. There is now a comparatively huge rise in 2022.

There is an inverse relationship between inflation and interest rates. In South Africa from 1981 to about 2000, interest fluctuated wildly and often in the bad days of Apartheid, and settled down once we had democracy. We could always see that interest and inflation balanced each other.
In the USA this relationship has been distorted in favour of lower interest than real inflation.

Please see the Shadow stats more traditional inflation figures below. 17% compared to 8.5%!

These Fred numbers are a bit behind the data above, but they show the trends.

Now look at the growth of the US debt, compared to GDP. That is basically how much USA owes compared to it’s annual income. The debt just keeps growing, and since Covid is has grown in leaps and bounds. The second chart below is the US$ Value of GDP, annualized by quarter. So the spike of debt to GDP in 2020, was both because the debt went up and because GDP dropped.

But the really startling fact, is that the USA deficit debt has been growing, Looks like from the early 1900’s.

I know that Clinton had a concerted drive to balance the budget and in 2001 succeeded. What he also decided, was to export America’s production to China, to help him balance the budget!!! No one seems to recognize, was that that was the single act that has caused the demise of the American Empire, because they could save a few $ by buying cheaper imports. Where did they think the money to buy the imports would come from???? The net result is the growth of the deficit from $0 in 2001 to $3 trillion a year in 2021. Cumulative total at just below $30 trillion!

How do you pay the interest on $30 trillion?
That is really not the question. The debt has been increasing FOREVER!!! All the interest does is push the UNPAYABLE debt up faster.
Inflation MUST go up, until we have hyper inflation.
The World currency reserve status is now being seriously challenged by both Russia and China. Once the Petro $ falls away, how long can USA hold out??