Rising Interest Rates Will Crush the Federal Budget

The Federal Reserves policies of increasing interest rates and quantitative tighteningreducing its $8.9 trillion balance sheetwill increase the volume and cost of federal government borrowing, slamming the federal budget and exposing the consequences of decades of deficit spending.

The impact will be felt even without a recession, but if the economy does contract, the government will have limited capacity to spur a recovery with fiscal stimulus.