I understand your ‘Angst’, but it really is quite simple. Our ‘Goverment’(Treasury) issues BONDS to finance our government (military, foreign aide, all that 3 letter shit). These TREASURY BONDS (30 years note) and BILLS (not important to discuss now) are what we all call our DEBT. A BOND is like a savings account with a fixed amount (usually in the $1000s, an INTEREST RATE, and an EXPIRATION (anywhere from 2 to 30 years). They sell those BONDS on the ‘Open Market’ to corporations, foreign governments, pension funds, ect. We still have to pay the INTEREST payments on all those $$$TRILLIONS every month. Those BONDS (our national debt).
The scumbags in government have spent so much money in the last 15 years, that now, we have passed the point where no amount of TAX revenue would be enough to cover even the cost of the interest on all that money our government borrowed (Treasury bonds).
ALSO …. All that slushy new money that the government printed eventually landed in our Banking system. Regional Banks (by and large) found themselves sitting on piles of deposits (covid stimulus and that other shit). THey bought Bonds with most of it (almost had no choice). When the interest rates started going up, the REAL VALUE (usually $1000 each) of the Bonds with LOWER RATES went down. One Minute their Bonds were worth $1000 each … the next day $950, then when the next Fed hike hits … $900, then $880, and so on. Well … they are still liable for the $1000 in deposits they used to buy that $1000 bond. Ooooops! Now they have UNREALIZED LOSSES (unrealized because they haven't actually sold the Bonds yet, but they are still accounting losses).
I understand your ‘Angst’, but it really is quite simple. Our ‘Goverment’(Treasury) issues BONDS to finance our government (military, foreign aide, all that 3 letter shit). These TREASURY BONDS (30 years note) and BILLS (not important to discuss now) are what we all call our DEBT. A BOND is like a savings account with a fixed amount (usually in the $1000s, an INTEREST RATE, and an EXPIRATION (anywhere from 2 to 30 years). They sell those BONDS on the ‘Open Market’ to corporations, foreign governments, pension funds, ect. We still have to pay the INTEREST payments on all those $$$TRILLIONS every month. Those BONDS (our national debt).
The scumbags in government have spent so much money in the last 15 years, that now, we have passed the point where no amount of TAX revenue would be enough to cover even the cost of the interest on all that money our government borrowed (Treasury bonds).
ALSO …. All that slushy new money that the government printed eventually landed in our Banking system. Regional Banks (by and large) found themselves sitting on piles of deposits (covid stimulus and that other shit). THey bought Bonds with most of it (almost had no choice). When the interest rates started going up, the REAL VALUE (usually $1000 each) of the Bonds with LOWER RATES went down. One Minute their Bonds were worth $1000 each … the next day $950, then when the next Fed hike hits … $900, then $880, and so on. Well … they are still liable for the $1000 in deposits they used to buy that $1000 bond. Ooooops! Now they have UNREALIZED LOSSES (unrealized because they haven't actually sold the Bonds yet, but they are still accounting losses).
Thanks for good summary!