Why Honest Interest Rates Would Break the U.S. Government

July 15, 2025

Ever wonder why rates never stay “high” for long — even when inflation soars?

It’s not just bad economics.

It’s a survival instinct.

Because if the U.S. government had to pay honest interest on its debt...

It would break.

The Math No One in Washington Talks About

Let’s say the federal government owes $34 trillion.

Now give it an “honest” rate — maybe 5%, like a mortgage in the 90s.

That’s $1.7 trillion in annual interest.

Not defense. Not education.

Just interest.

That’s:

  • More than we spend on Medicare.

  • More than Social Security pays out.

  • More than the entire discretionary budget.

And that’s just to stand still.

The Debt Trap in Plain Sight

Here’s the part most people don’t see:

Every time interest rates go up, the cost of rolling over government debt explodes.

This year’s low-rate bonds become next year’s high-rate liabilities.

So the Treasury quietly needs rates low — even if inflation runs hot.

That’s why "fighting inflation" is often theater.

And why inflation always seems to linger longer than promised.

The Soft Default

Instead of raising taxes...

Instead of slashing spending...

Instead of owning up to decades of bad math...

They let inflation do the dirty work.

Because inflation:

  • Shrinks the real value of what they owe.

  • Punishes savers, not lawmakers.

  • Doesn’t require a vote.

It’s the default you don’t notice — until your grocery bill reminds you.

What to Watch Next

  • Rising debt service as a % of GDP

  • Quiet “rate pauses” despite sticky inflation

  • Fed balance sheet behavior (watch the rollovers)

  • TIPS market signals (inflation expectations)

They can’t afford real interest. So they’ll keep inflating instead.

It won’t be announced.

It won’t be obvious.

But it’s already here.

— Death