However, we project that, if Congress continues to extend existing policies, including the recently enacted tax and spending legislation, federal debt will slightly exceed 100% of GDP and interest expense will rise to around 3.5% of GDP, putting the US in a worse fiscal position than the experience of the 1940s or 1990s.
I’m afraid that higher government spending and less central bank easing are two reasons that have been taking the interest rates higher, and the stock market has finally taken notice as interest rates rise.Stocks sold off because of a move higher in yields. I believe that from credit cards to mortgages even student loan debt the credit markets are getting into huge trouble, because with the rising interest rates beginning to affect all sectors with cheap credit are starting to find out it is not as cheap as they got used to. I think that this is only the beginning of the credit market meltdown as interest rates rise. This is a repeat of 2007-2008 or worse. The credit defaults start, then the banks start defaulting on their loans from the fed. As the defaults increase, banks stop lending in order to defend themselves. This starts the credit freeze and financial crisis, then all bubbles pop! I believe this upcoming crisis will be the biggest crises of all and rising interest rates will be one of the main reasons. To be honest I’m worried.