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Comment by vinyl7 | Hacker News Reader

Interest doesn't increase inflation

It does if you continue printing to pay off the interest (currently $1 Trillion per year) while adding $1T of new debt every 100 days. The question is who is buying the projected $10 Trillion worth of maturing bonds in 2024?

If interest is 3 trillion per year and the government only takes in 2.5 trillion per year, the only way it can pay back it's debts is to print money.

Hence, inflation.

Isn't that just economics 101?

This is only part of what drives inflation. Yes, increase in money supply creates upward pressure on inflation. Higher interest rates reduce borrowing, which decreases demand for goods and services, this has downward pressure on inflation. This explains Fed activity over the last couple of years…the goal is to reduce inflation, not create higher interest payments on national debt…

Raising interest rates decreases inflation in the short term but that debt continues to increase every year.

In 2024 the interest expense surpassed defense spending for the first time in history.

the fed government already can't meet its obligations without borrowing.

so what that means is the Federal reserve has to print more and more money every year to compensate for these debt obligations of the federal government.

which is ultimately inflation

you're right there's other factors of play but this is the gigantic looming elephant in the room

https://fred.stlouisfed.org/series/CURRCIR

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