which all works of course in the absence of inflation. In the event of inflation.
Coutesy of Shadowstats.com, John Williams is an ex US government economist. This chart tracks US inflation as it was calculated in the 1980s. There have been many changes since then. For example as of the 90s, if meat goes up a long way they substitute the price of hamburger meat.
If the current inflation rate in the US is 11% does that mean they have been in recession for some time?!
I dont see any problem for interest rates right now, but do you really think the bond vigilanties will sit on the sidelines for ever, especially now that China is a net seller of US bonds?
In future, if interest rates go up 1% that's a 50% increase the governments repayments. The Fed will print even more, will that lead to hyperinflation? Germany hit hyperinflation at 60% debt to expenses ratio, the US is currently at 43%, so I hope they can pull some tricks out the bag soon.