The Real Looters: The Federal Reserve

The Federal Reserve has kept interest rates at near zero for the past 6 ½ years.  For the past four years we’ve seen headlines saying “Federal Reserve considering rate hike in (insert date 4-6 months from x date).  The fact is the Federal Reserve is bluffing.  The Federal Reserve will never voluntarily raise rates.  The Federal Reserve has entered the roach-motel of economic policy.  

For the fiscal year 2014 that ended last September, the federal government paid $430.8 billion in interest on the national debt. Back in 2004 with “only” $7.3 trillion in debt, the interest bill added up to $321.6 billion. With only 40% as much debt, the government was paying 75% as much in interest.  Historically, normal interest rates for U.S. government debt is in the range of 4 to 6%.  If the federal government was currently paying a historically average interest rate on the debt, instead of $431 billion in interest the annual bill would be around $900 billion.  By raising the interest rate, the US would more quickly be in a situation where the government is borrowing more money then they are borrowing currently to pay the interest on the money they already borrowed from the Federal Reserve (make sense?)

The Federal Reserve are looting us and our government sits by idly and does nothing to check their power.