NJ5 on 21 July 2009
Here is why the shit hits the fan:
If the US gov borrows that much, it will have to pay back the debt with interest. $24 trillion debt with, let's say, 4% interest (reasonable for treasury bonds) means paying almost a trillion dollars in interest every year.
The US federal budget in 2008 was around 3 trillion. So we're talking about a situation where around 33% of the budget will go to paying interest (not counting the already existing debt).
However, if borrowing goes that high, interest rates will probably go even higher (supply and demand), and we could be seeing half or more of the US budget directed to paying the interest on that debt.
My Mario Kart Wii friend code: 2707-1866-0957
