Monday, July 6, 2009

My post on Wednesday, June 10 regarding the coming explosion in the U.S. Government's cost of borrowing now has company in this article from the UK's Daily Telegraph.

From the article:

In a 2003 paper, Thomas Laubach, the US Federal Reserve’s senior economist, calculated the impact on long-term interest rates of rising fiscal deficits and soaring national debt. Applying his assumptions to the recent spike in the US fiscal deficit and national debt, long-term interests rates will double from their current 3.5pc.
The impact would be devastating by making it punitively expensive to finance national borrowings and leading to what Tim Congdon, founder of Lombard Street Research, called a “debt explosion”.

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