As the government debt reaches maturity, it needs to roll over and be repriced at current interest rates of 4% (but let’s take an average of 3%) - think of this as your fixed-term interest rates on your mortgage running out so you need to renegotiate a new rate with the bank. If we reprice the current $31.3T of debt at 3% interest rates, the interest expense would increase by ~$500 billion per year to almost $1 Trillion per year—That will overtake military spending as the biggest single line item for spending.
Not all the debt matures at the same time, does it? If not then maybe only the portion that matures gets repriced?
Not all the debt matures at the same time, does it? If not then maybe only the portion that matures gets repriced?
Correct, that’s why it says