At a 4.0% interest rate, the United States cannot bear it.
The monetary policy meeting minutes released by the Federal Reserve earlier this month indicate that if economic data is generally in line with expectations, the U.S. may gradually cut interest rates.
In November, the federal funds rate in the U.S. is 4.5% to 4.75%, which has been reduced by 50 basis points compared to September, but is still above 4.0%.
Assuming the U.S. federal funds rate remains above 4%, the $36 trillion U.S. debt would require interest payments of up to $1.44 trillion each year. According to IMF forecasts, U.S. economic growth in 2024 is projected to be 2.8%, while the Federal Reserve's forecast is 2.1%, both lower than the current U.S. debt interest rate.
For the Federal Reserve, it is now like an ant sitting on a hot pot; cutting interest rates is an inevitable outcome. If the Federal Reserve's interest rate remains higher than economic growth, at 3.0% or even above 4.0%, it will not only lead to rising interest payments on U.S. bonds but also increase the financing costs of the U.S. federal budget. $BTC
