Petr Svab, Epoch Times: Fed Will Soon Return to Money Printing to Avert Government Default, Says Analyst
“I think they have to. I don’t think they have a choice,” he recently told Wealthion’s Adam Taggart.
The problem is that higher interest rates mean that government will have to pay more interest on its debt, which now stands at over $30 trillion. Moreover, higher rates mean less credit and less economic activity. What is already becoming apparent is that higher mortgage rates mean fewer home sales and less construction. That means the government will start collecting substantially less in taxes, according to Gromen. Meanwhile, a contracting economy translates to higher welfare expenses as more people go to the government for relief.
“The U.S government is not going to be able to cover its interest and interest-like expenses, which I call the true interest expenses—entitlement, pay-gos, Treasury spending—they’re not going to be able to cover that with tax receipts, which means they will have to default or the Fed prints the difference,” Gromen said.
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