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Help me understand? (lemmy.world)
submitted 5 months ago by to c/economy@lemmy.world
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As an uneducated schub, I have only a limited grasp on macroeconomics. Can someone help me out with this?

As I understand the US economy right now...

If the interest rate goes up, the Federal budget is fucked because the payment on the debt will be unmanageable.

If the interest rate doesn't go up, inflation will runaway and eat the value of the dollar until it is worthless.

Is this correct as far as it goes? What is the most likely outcome? The desired method of fixing this? The timeframe for the shit to hit the fan? If I do have this right, is gold the only safe haven?

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[–] 2 points 5 months ago

The fed is primarily concerned with unemployment and inflation. Increasing the interest rate tends increase the unemployment rate, but reduce inflation. The fed generally tries to balance these out. Tangentially related to that is the looming issue of the size of debt payments by the federal government. The fed rate isn't the entire factor for bonds, but it is part of it. If bond rates increase dramatically it could be a problem for the government as that could be the trigger for hyperinflation or stagnation, but that could also happen regardless of the fed rate.

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