The downgrade of United States federal debt by Fitch Ratings is not as meaningless, this time, as Wall Street is claiming. The downgrade is based on the tremendous rate at which the Federal government is issuing debt through its primary dealer banks, with the Federal Reserve now not buying any, net, and with tax revenue actually falling year-on-year despite a proclaimed “Bidenomics boom.”
That rate of new U.S. debt is projected as $1 trillion, net new debt in the third quarter, and another $850 billion net new debt in the fourth; this $3 trillion-plus/year in new debt is projected to continue through 2025. Government outlays now, this year, are approaching a 12 months’ rate of $7 trillion, getting close to the $7.6 trillion in outlays from June 2021 to June 2021. That far-unprecedented amount represented the core of the huge Federal Reserve-Treasury coordinated printing of $9 trillion over 18 months.
Now, however, the Fed is not printing money. The Federal Reserve has pushed interest rates, on Treasury securities from 6 months to 2 years maturity, to the highest of any major economy in the world; and net Federal interest paid will reach $1 trillion in 2023.
