Joseph Lavorgna, chief U.S. economist for Deutsche Bank, was on The Kudlow Report yesterday talking about how various US corporations (including, Berkshire Hathaway, Proctor & Gamble, Johnson & Johnson, Abbott Labs, and Lowe’s Home Improvement) are able to issue two-year debt at lower interest rates than the Federal government right now. This tends to get masked because the Federal Reserve is holding short-term rates low using accommodating monetary policy. However, this is an omen that when the Fed raises rates, much higher interest rates may be in store for Uncle Sam.
Fact from the video: Uncle Sam has issued some $2.6 trillion in debt since the beginning of 2009.
From my previous post, quoting former CBO director Douglas Holtz-Eakin,
By 2020, the federal deficit — the amount the government must borrow to meet its expenses — is projected to be $1.2 trillion, $900 billion of which represents interest on previous debt.
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