Mistaken Emphasis

This is what our Federal Reserve Bank MFWIC Jerome Powell said, with a straight face, on public radio last Thursday:

Given the low level of interest rates, there’s no issue about the United States being able to service its debt at this time or in the foreseeable future[.]

Our current national debt is some $27.8 trillion. At Powell’s low interest rates, our interest payments on that debt will amount to some $380 billion for FY2021. Our economy has use for those $380 billion; it would behoove Powell and our…politicians…to cut out the borrowing and begin paying down the debt, rather than hiding behind “sustainability.”

Powell’s claim is just a tad bit circular, too: it’s his Fed that’s artificially suppressing those interest rates. And he’s going to lose control of the whole thing when, as our economy recovers from the Government-created shutdowns from the Wuhan Virus situation, Mr Market begins bidding down the prices of private economy debt instruments—driving interest rates higher—and walks away from Federal debt in favor of those private instruments’ returns—which will drive up Federal interest rates, whether Powell likes it or not.

After that claim, too, Powell added this, with no sense of irony:

[T]here will come a time—and that time will be when the economy is back to full employment, and taxes are rolling in, and we’re in a strong economy again [see, by the way, a couple paragraphs above]—when it will be appropriate to return to the issue of getting back on a sustainable fiscal path.

“Get back on a sustainable fiscal path.” Implying—no, meaning very clearly—that we’re not now on a sustainable fiscal path.

Which drives the question: since we’re not on a sustainable fiscal path, in what universe is our ability to service our national debt—which is Fed-speak for “make the interest payments, to hell with paying down principle”—a sustainable path at our debt’s current, and growing, level?

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