How Falling Interest Rates Deceived the Nation


What Has Happened With Interest Rates?

The Fed has reduced interest rates over the past thirty years, which has stimulated borrowing and increased the amount of debt by the federal government. Note the fall since 1980:


As Interest Rates Fall, the Government Borrows More At Lower Rates

How does debt rollover happen? Starting with 10 percent interest rates in 1980, you can see rates steered downward, coarsely, to 0 percent in 2009, about one-third of a percent per year on average.

Using actual historical data from US government records, this table shows how the government massively borrowed with little rise in interest payments. All values are in trillions of US dollars.


The chart shows more than $7 trillion in funding was secured with only a $56 billion yearly increase in interest payments; a 140:1 ratio of new funding to yearly interest – looks like less then 1% annual interest rate!

If a recovery were to occur, inflation would tick upward above 2 percent, and the 2 percent interest rate paid by the US government would become a money-losing investment. In a case such as this, the value of US debt would be increasingly negative. When value falls, investors lose money.

A “liquidity trap” has been created, wherein the debt added to create liquidity—to stimulate—has not had the desired effect. Now the government is trapped with low interest rates and no rising tax-revenue to pay back the new debt.

100% Failure Rate

Indeed, an extensive search for all stimulus or money printing or QE success stories described in the other articles ( yields the same results the United States has experienced thus far.   There are no success stories of money printing.  Keynes warned of printing currency because it fools 999,999 people out of 1,000,000:

“There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”

Get The Whole Story

All this and many more issues are explained in simple, direct narrative in Atlas Shouts.  Please buy and read it soon!!

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John Lofgren spent over 10 years researching US economic history, identifying best practices, and exposing findings in public forums in researching his well reviewed book, "Atlas Shouts". John earned degrees from the University of Florida and the University of Central Florida. A computer engineer, he holds five patents and has thirty years of design experience in electronics and design automation. He is also an accomplished lead singer and guitarist in a Motown/Classic Rock band.