Investors brace for risk of first half-point Federal Reserve rate hike in more than 20 years in Marc

[libertybele]

Investors brace for risk of first half-point Federal Reserve rate hike in more than 20 years in March

Fresh from a three-day holiday break in the U.S., investors returned on Tuesday to a bond market that’s bracing for an aggressive start to the Federal Reserve’s monetary-tightening campaign to combat inflation, now at an almost 40-year high.

Evidence of those more aggressive expectations could be seen in fed funds futures, which were pricing in a more-than-100% chance of a 25-basis-point rate hike in March as of Tuesday, strategists said. That implies some chance of a greater-than-expected 50-basis-point increase, they said — a size that the Fed last delivered in May 2000.

“Now that the Fed has moved away from the idea of transitory inflation and there are geopolitical risks looming over us — with fears of a Russian invasion of Ukraine, which could lead to market stress related to gearing up for war — a 50-basis-point, one-and-done rate hike in March would be seen as a way to acknowledge inflation and see how the market takes it,” Michael Franzese, head of fixed-income trading at MCAP, said via phone.

“A lot of people believe the Fed is behind the eight-ball, and this is one of the things now being floated out there,” he said.

But it doesn’t end there: Expectations are also growing in some parts of the market for a faster winddown of QE purchases — with widening mortgage spreads and chatter among traders suggesting that Fed officials might even accelerate the tapering process to end in February or completely stop in January, said Scott Buchta, senior managing director and head of fixed income strategy at Brean Capital in Chicago. However, Fed officials have gone to some length to dash speculation of a sudden end to asset purchases in January, and traders like Franzese also don’t see an abrupt stop happening. The Fed’s next meeting is Jan. 25-26 in Washington.........

https://www.marketwatch.com/story/investors-return-from-three-day-break-to-a-market-bracing-for-more-aggressive-start-to-federal-reserves-rate-hike-campaign-11642528065?cx_testId=22&cx_testVariant=cx_1&cx_artPos=8&mod=home-page-cx#cxrecs_s

[jmyrlefuller]

About darn time.

I remember when you could get a reasonable rate of returns on a savings account in this country: 3%, even 5% if you put it in a CD—competitive with the average 7% ROI from stocks without as much risk.

It's been stuck at 0 for so long, it's changed the paradigm of how the younger generation manages their finances. So saving is practically pointless and everyone's dumping their money into stocks, and now cryptocurrency—which, as structured now, is practically worthless for its intended purpose of being a medium of exchange and has transformed into a sea of pump-and-dump scams.

[catfish1957]

About darn time.

I remember when you could get a reasonable rate of returns on a savings account in this country: 3%, even 5% if you put it in a CD—competitive with the average 7% ROI from stocks without as much risk.

It's been stuck at 0 for so long, it's changed the paradigm of how the younger generation manages their finances. So saving is practically pointless and everyone's dumping their money into stocks, and now cryptocurrency—which, as structured now, is practically worthless for its intended purpose of being a medium of exchange and has transformed into a sea of pump-and-dump scams.

Zero?  That is a tad overstated, if you pick your peaks, and don't mind locking in long, you can do like we did on some fixed instruments like CD's making 3 1/4% over 5 years.  And some super sound corporate bonds that at last peak were yielding 4-4 1/2%  over 30 years.

But back to your original point of what amounts to modern finance being a game being played with "play money".  You make a good point But as I tell many Tulips are for sale everywhere for speculation, if you like repeating 500 year old mistakes.

Still  the interest rate debacle is  one of the most untold and underreported financial stories in the past 15 years.  The long held axiom that seniors hold half their portfolios in safe CD's and Bonds has slammed millions of their lifestyles and financial well being. I see examples of friends and old associates who have money in equities that are set aside for basic living expenses.  Very scary.   

[Fishrrman]

I'd like to see banks selling 6-month CDs for 9-10% interest again.

Raise mortgages and other loans accordingly.

That would get prices down quickly!

(only half-kidding here...)

[libertybele]

Zero?  That is a tad overstated, if you pick your peaks, and don't mind locking in long, you can do like we did on some fixed instruments like CD's making 3 1/4% over 5 years.  And some super sound corporate bonds that at last peak were yielding 4-4 1/2%  over 30 years.

But back to your original point of what amounts to modern finance being a game being played with "play money".  You make a good point But as I tell many Tulips are for sale everywhere for speculation, if you like repeating 500 year old mistakes.

Still  the interest rate debacle is  one of the most untold and underreported financial stories in the past 15 years.  The long held axiom that seniors hold half their portfolios in safe CD's and Bonds has slammed millions of their lifestyles and financial well being. I see examples of friends and old associates who have money in equities that are set aside for basic living expenses.  Very scary.

No investment is safe. You are right though, CD's aren't paying squat and haven't in a very long time. Dividend stocks give some income, but there is obvious risk. Bonds and treasuries are risky business these days. Real estate is a good investment if you buy it right, but you still have to pay taxes,and it doesn't provide income until it increases in value etc., and those who were renting out property had to wade through all the COVID restrictions and exceptions in the past few years.

Inflation is going to continue to rear its ugly head and it will put people out on the streets even those with jobs.  We are heading for a Great Depression. 

Joe is going to make Carter look like an economic genius.

[IsailedawayfromFR]

I'd like to see banks selling 6-month CDs for 9-10% interest again.

Raise mortgages and other loans accordingly.

That would get prices down quickly!

(only half-kidding here...)

Excellent way to make inflation go roaring even higher.

Costs of all goods would skyrocket as companies would be squeezed on loan payments, interest rates would be so high company capital expenditures would plummet, reducing economic vitality and the US would be paying virtually all its budget to service debt.

[Free Vulcan]

They better get a handle on inflation soon, or servicing our debt is going to get impossibly expensive real fast.

[Hoodat]

Inflation would end today if the Fed would stop printing up new money and handing it to the government.

Interest rates are set by the supply and demand for borrowed money.  When the Fed pretends it has an unlimited supply of money to 'borrow', the discount rate can remain at zero.  When the Fed decides that it is no longer going to contribute to that supply, then anyone needing to borrow money (i.e. Congress) is going to have to look elsewhere for financing.  In other words, their borrowing will be limited to money already in circulation, primarily from people overseas holding dollars (i.e. China and Saudi Arabia).

So when government finds itself facing a $2 trillion shortfall between the money it collects in taxes and the money it wants to spend, then it is going to have to go out in the market and convince a hell of a lot of people to lend it money.  And the only way they are going to convince that many people is by setting interest rates very high.

This current madness began in 2009.  It has got to stop now.  The Fed has to take the first step by cutting off the free money.  And once that happens, it will take a taxpayer revolt to get Congress to cut back on spending.  Until that happens, we continue down this spiral until the US becomes Greece.

[Hoodat]

interest rates would be so high company capital expenditures would plummet, reducing economic vitality and the US would be paying virtually all its budget to service debt.

This last part is only true if the US continues to borrow.  The big lie is that a rise in interest rates would have an immediate effect on the interest owed on our $30 trillion national debt.  It wouldn't.  Those rates are fixed.  It is only with any new debt taken on that higher interest rates would be applied.

If the government would balance its budget and live within its means, then interest rates would remain a couple of points above the rate of inflation.  The initial rise in interest rates would cause enough unemployment to bring inflation in check, which would bring interest rates back down.

[IsailedawayfromFR]

This last part is only true if the US continues to borrow.  The big lie is that a rise in interest rates would have an immediate effect on the interest owed on our $30 trillion national debt.  It wouldn't.  Those rates are fixed.  It is only with any new debt taken on that higher interest rates would be applied.

If the government would balance its budget and live within its means, then interest rates would remain a couple of points above the rate of inflation.  The initial rise in interest rates would cause enough unemployment to bring inflation in check, which would bring interest rates back down.

Your statement is not totally correct.  I did not say it would immediately increase interest to the US.  The interest, however, is not 'fixed'.

The average maturity of US debt now stands at a bit over 5 years, with maturities spread from a few months to 30 years or more of fixed interest.  Some interest increase will will occur over a very short period of time as the shortest-term debt would be forced to refinanced at higher rates.

Over time, 100% of the debt will see increased interest so will be a burgeoning burden on the US budget to service that debt.

The best way to approach to increase in interest for long term objectives within the federal budget is of course as you suggest to cease new borrowing.  It is also best in the face of having any long term debt to increase maturities to well beyond 5 years to 10, 20 ot 30 years as well.  Some added interest will occur over short time but will be much lower over long times in an inflationary, rising-interest rate period such as we certainly will have.

[Bigun]

Excellent way to make inflation go roaring even higher.

Costs of all goods would skyrocket as companies would be squeezed on loan payments, interest rates would be so high company capital expenditures would plummet, reducing economic vitality and the US would be paying virtually all its budget to service debt.

And that's a fact jack!

[Kamaji]

This last part is only true if the US continues to borrow.  The big lie is that a rise in interest rates would have an immediate effect on the interest owed on our $30 trillion national debt.  It wouldn't.  Those rates are fixed.  It is only with any new debt taken on that higher interest rates would be applied.

If the government would balance its budget and live within its means, then interest rates would remain a couple of points above the rate of inflation.  The initial rise in interest rates would cause enough unemployment to bring inflation in check, which would bring interest rates back down.

Not so.  U.S. T-bills have maturities that are typically measured in weeks, and once one set of T-bills matures, new T-bills are issued to cover the redemption of the old T-bills.  The T-bills themselves are issued in a way that sets the rate at the time of issuance.  As a result, even though the rate on one given tranche of T-bills may be fixed, that rate will only last for the term of that tranche - typically weeks - and when it matures, a new tranche, with a new rate, will take its place.

[Hoodat]

Your statement is not totally correct.  I did not say it would immediately increase interest to the US.

I wasn't accusing you of saying that.  It is part of the rhetoric coming from those who support perpetual deficit spending.

The interest, however, is not 'fixed'.

The average maturity of US debt now stands at a bit over 5 years, with maturities spread from a few months to 30 years or more of fixed interest.  Some interest increase will will occur over a very short period of time as the shortest-term debt would be forced to refinanced at higher rates.

The key word there is 'refinanced'.  I am proposing the budget be balanced.  With a budget in balance, there will be no need for refinancing.  A 5-year bond, 7½-year bond, 20-year bond, etc., will be retired when it matures.  The cost of retirement is included in the budget.  So yes, the rate for all existing Treasury bonds is fixed.

It is only when the bond becomes due that the government chooses to re-borrow the money at the new 'current' rate.  Again, if the budget is in balance, there will be no re-borrowing, thus no exposure to rising interest rates.

Over time, 100% of the debt will see increased interest so will be a burgeoning burden on the US budget to service that debt.

Only if Congress refuses to balance the budget, choosing instead on borrowing more money to retire due debts.

The best way to approach to increase in interest for long term objectives within the federal budget is of course as you suggest to cease new borrowing.  It is also best in the face of having any long term debt to increase maturities to well beyond 5 years to 10, 20 ot 30 years as well.  Some added interest will occur over short time but will be much lower over long times in an inflationary, rising-interest rate period such as we certainly will have.

True.  The biggest cause for rising interest rates is the demand to borrow money.  Once the $2+ trillion annual demand of the federal government is removed from that equation, the price (interest) of borrowing will adjust accordingly.  But if government chooses instead to continue expanding the money supply (á la the Weimar Republic), then all bets are off.

[Hoodat]

Not so.  U.S. T-bills have maturities that are typically measured in weeks, and once one set of T-bills matures, new T-bills are issued to cover the redemption of the old T-bills.  The T-bills themselves are issued in a way that sets the rate at the time of issuance.  As a result, even though the rate on one given tranche of T-bills may be fixed, that rate will only last for the term of that tranche - typically weeks - and when it matures, a new tranche, with a new rate, will take its place.

Again, if the budget is balanced, then bonds are paid off at term, thus eliminating the need for a new tranche/rate.

[Kamaji]

Again, if the budget is balanced, then bonds are paid off at term, thus eliminating the need for a new tranche/rate.

No.  Even if the budget is balanced, so long as there is debt outstanding that rolls over, the rates will in effect float, although they will float with a "cliff" effect.  Since at least 24% of the federal debt is in the form of T-bills with maturities measured in weeks, at least 24% of the pre-existing federal debt is effectively floating interest debt.

Then there are TIPS, where the principal is adjusted periodically to account for inflation, and then interest is paid at a rate fixed at issuance on that adjusted principal.  But this is just economic gaslighting because the same economic result is accomplished by keeping the principal fixed and letting the rate float.  About 8% of federal debt is in the form of TIPS.

All told, at least 32% of pre-existing federal debt is subject to rates that reset every few months or so.  It's not a theoretically perfect float, but it will follow the market without too much lag.

[DefiantMassRINO]

0.50% is too much, too fast relative to where rates are.  A schedule of planned 0.125% or 0.25%, coordinated with other foreign monetary authorities would be more palatable to rate sensitive sectors.

Unilaterally raising rates won't necessarilly help the economy.  American exports will become more expensive.  Energy prices are high due to supply constrained by OPEC, geo-potlical instabilities, and the Global Climate Change nonsense.  Adding recession during supply chain disruptions may only lead to stagflation.

Rates need to rise to more natural levels, but too much, too big, too soon will lead to a rapid, violent asset rotation.  To add dereasing home values and falling stock values to high inflation is a recipe for economic and political calamity.  Government would need to allocate greater % of budget to servicing the debt.

I hope to God banks haven't re-adopted NINJA loans and mark-to-market accounting - that would be another economic death spiral.

[libertybele]

No.  Even if the budget is balanced, so long as there is debt outstanding that rolls over, the rates will in effect float, although they will float with a "cliff" effect.  Since at least 24% of the federal debt is in the form of T-bills with maturities measured in weeks, at least 24% of the pre-existing federal debt is effectively floating interest debt.

Then there are TIPS, where the principal is adjusted periodically to account for inflation, and then interest is paid at a rate fixed at issuance on that adjusted principal.  But this is just economic gaslighting because the same economic result is accomplished by keeping the principal fixed and letting the rate float.  About 8% of federal debt is in the form of TIPS.

All told, at least 32% of pre-existing federal debt is subject to rates that reset every few months or so.  It's not a theoretically perfect float, but it will follow the market without too much lag.

TIPS are not the way to go, especially in an economic climate that is spelling disaster.

https://www.investopedia.com/articles/investing/102215/3-reasons-stay-away-tips.asp

[Hoodat]

No.  Even if the budget is balanced, so long as there is debt outstanding that rolls over, the rates will in effect float, although they will float with a "cliff" effect.  Since at least 24% of the federal debt is in the form of T-bills with maturities measured in weeks, at least 24% of the pre-existing federal debt is effectively floating interest debt.

That's not balancing the budget.  Let's say you borrow money to buy a car, agreeing to make one balloon payment in three years time.  Marked down in your household budget is an entry showing that balloon payment.  So in three years time when that payment is due, your budget already shows an allocation for paying that off.

Our government doesn't do that.  When the payment becomes due, they have no intention of paying it.  The money allocated to pay it ends up being spent elsewhere, and they renegotiate the term of the loan to be paid off with an even larger balloon payment three more years down the road.  Government's budget in effect remains unbalanced.

Balancing a budget means paying off debt when it becomes due.  It does not mean rolling over debt at new interest rates.

[Free Vulcan]

That's not balancing the budget.  Let's say you borrow money to buy a car, agreeing to make one balloon payment in three years time.  Marked down in your household budget is an entry showing that balloon payment.  So in three years time when that payment is due, your budget already shows an allocation for paying that off.

Our government doesn't do that.  When the payment becomes due, they have no intention of paying it.  The money allocated to pay it ends up being spent elsewhere, and they renegotiate the term of the loan to be paid off with an even larger balloon payment three more years down the road.  Government's budget in effect remains unbalanced.

Balancing a budget means paying off debt when it becomes due.  It does not mean rolling over debt at new interest rates.

Which concerns me even more than coupon payments. With so much of the debt rolling over fairly frequently, I could see spiking rates creating serious cash flow problems for the Treasury.

[Kamaji]

That's not balancing the budget.  Let's say you borrow money to buy a car, agreeing to make one balloon payment in three years time.  Marked down in your household budget is an entry showing that balloon payment.  So in three years time when that payment is due, your budget already shows an allocation for paying that off.

Our government doesn't do that.  When the payment becomes due, they have no intention of paying it.  The money allocated to pay it ends up being spent elsewhere, and they renegotiate the term of the loan to be paid off with an even larger balloon payment three more years down the road.  Government's budget in effect remains unbalanced.

Balancing a budget means paying off debt when it becomes due.  It does not mean rolling over debt at new interest rates.

No, it doesn't.  You're confusing the current annual budget with the balance sheet. 

A clean balance sheet is not the same thing as a balanced budget.

[IsailedawayfromFR]

That's not balancing the budget.  Let's say you borrow money to buy a car, agreeing to make one balloon payment in three years time.  Marked down in your household budget is an entry showing that balloon payment.  So in three years time when that payment is due, your budget already shows an allocation for paying that off.

Our government doesn't do that.  When the payment becomes due, they have no intention of paying it.  The money allocated to pay it ends up being spent elsewhere, and they renegotiate the term of the loan to be paid off with an even larger balloon payment three more years down the road.  Government's budget in effect remains unbalanced.

Balancing a budget means paying off debt when it becomes due.  It does not mean rolling over debt at new interest rates.

I see where you are coming from now, and essentially agree with it.

Realistically, to balance a budget of almost $30 trillion when tax receipts are only $3.4 trillion per year is an impossible feat.  If we can begin making headway that direction, it will at least be a start though toward a satisfactory and rewarding end.

[IsailedawayfromFR]

Which concerns me even more than coupon payments. With so much of the debt rolling over fairly frequently, I could see spiking rates creating serious cash flow problems for the Treasury.

That is why one takes on much longer maturities than what we have now at an average of only about 5 years.  These maturities have been reduced deliberately to shorter terms not for national concerns, but for purely political reasons only to mitigate interest rates over the short term

[Weird Tolkienish Figure]

My parents like to talk about double digit interest rates in the 70's. Might they be returning?

[Kamaji]

My parents like to talk about double digit interest rates in the 70's. Might they be returning?

Quite likely.

[IsailedawayfromFR]

Quite likely.

All brought to you courtesy of the Democrat party and their henchmen who support them like Big Tech and the media.

[Free Vulcan]

The other thing is that the Fed only determines certain interest rates, such as the Fed funds. They don't determine rates for either new or existing govt debt. That is determined by the market.

And with a significant percentage of debt held by foreign agents, spiking rates means their holdings are losing money. Compound that effect by the currency exchange loss if they start selling large quantities of our debt and drive the dollar down. That will bleed to the equity markets too, which in turn will exacerbate our budget problems even further in a vicious cycle.

We have created a perfect storm that could just pound the crap out of our entire financial system with a self-reinforcing hurricane if it lets loose.

[Hoodat]

I see where you are coming from now, and essentially agree with it.

Realistically, to balance a budget of almost $30 trillion when tax receipts are only $3.4 trillion per year is an impossible feat.  If we can begin making headway that direction, it will at least be a start though toward a satisfactory and rewarding end.

Only a manageable fraction of that $30 trillion will become due this year.  It doesn't all have to be paid off in one year, but only when those bonds become due, the majority of which are held by the Social Security Administration and the Fed itself.

[Hoodat]

My parents like to talk about double digit interest rates in the 70's. Might they be returning?

They're already here.

[Kamaji]

All brought to you courtesy of the Democrat party and their henchmen who support them like Big Tech and the media.

Indeed.

[Hoodat]

No, it doesn't.  You're confusing the current annual budget with the balance sheet. 

A clean balance sheet is not the same thing as a balanced budget.

Again, each annual budget includes the retirement of debt that become due in that fiscal year.  Balancing the budget means that those outlays due that fiscal year are honored.

[Kamaji]

Again, each annual budget includes the retirement of debt that become due in that fiscal year.  Balancing the budget means that those outlays due that fiscal year are honored.

Whatever, chief.

[Hoodat]

All brought to you courtesy of the Democrat party and their henchmen who support them like Big Tech and the media.

Republicans are complicit in this as well.  We haven't had a balanced budget in over 64 years.

[Kamaji]

Republicans are complicit in this as well.  We haven't had a balanced budget in over 64 years.

On that point I wholeheartedly agree.

[DefiantMassRINO]

Each fiscal year, they issue new debt to pay off the old debt.

They never retire any net principal.

It's like my paying my monthly mortage with a credit card whose balance I never payoff, but roll onto yet another credit card.

Sure, it looks like my mortgage principal is being paid down, but that's more than offset by the increasing credit card balances due and the accruing interest.  My overall net liabilities keep growing.

As soon as I no longer have sufficient cash flow to make the minimum monthly payments on my credit cards, the jig is up - my mortage comany and credit card companies are now in possession of my non-performing loans or lines of credit.  The government will bail out the mortage company and the credit card companies, but I'm out of luck.

[Hoodat]

Each fiscal year, they issue new debt to pay off the old debt.

They never retire any net principal.

It's like my paying my monthly mortage with a credit card whose balance I never payoff, but roll onto yet another credit card.

And this is the problem.  With your household budget, you are expected to pay your monthly mortgage out of the deposits made to your account that month.  That is what is known as 'balancing the budget'.  If the federal government did this with their own budget, our nation would be debt free by 2042.

[Hoodat]

Whatever, chief.

OK, let me try again.  I am not looking at balance sheets here.  I am only looking at what is due each year.  Let's say the government has $1 trillion of debt that becomes due in 2022, another $1 trillion in 2023, and so on up through 2026.  That's $5 trillion total on the balance sheet.  But they only have to come up with $1 trillion each year since that will be the amount actually due.

So in 2022, instead of retiring that year's $1 trillion by borrowing another $1 trillion, they simply cut back on spending and pay off that $1 trillion from tax revenues collected that year.  Going into 2023, their overall balance sheet is now at $4 trillion instead of $5 trillion.  But they only have to cover the $1 trillion that is due that year.  Going into 2024, the balance sheet shows $3 trillion.  But they only have to cover the $1 trillion that is due.

I don't know why that is difficult to understand.  Anyone with a household budget (with no means to print their own money) knows how this works.  Dave Ramsey 101.

[catfish1957]

My parents like to talk about double digit interest rates in the 70's. Might they be returning?

I remember the '70's, and this is actually more sinister, as the rates have shot up like a rocket. versus in Ford/Carter maliasie  era of the mid 70's, it was quite a bit more gradual in nature.

And to the point of double digit inflation?  Every January 1st, I craft very accurate and precise budgetary document almost to the $.
2022 expected expenses is up 14.08% versus 2021 expenditures.  I know I am only one example, but I have a feeling my numbers proabably track pretty close to everyone else.

So as far as what inflation, and actually what the CPI is?

Don't beiieve Biden one moment. My guessitmate is that it really more like 12-16%.

[IsailedawayfromFR]

Only a manageable fraction of that $30 trillion will become due this year.  It doesn't all have to be paid off in one year, but only when those bonds become due, the majority of which are held by the Social Security Administration and the Fed itself.

Unfortunately, those short term bills have become an unmanageable amount of the current debt.  Try +12% of current debt in debt with maturities less than one year.  These interest payments will skyrocket

https://www.treasurydirect.gov/govt/reports/pd/mspd/2021/opds122021.prn

[Hoodat]

Unfortunately, those short term bills have become an unmanageable amount of the current debt.  Try +12% of current debt in debt with maturities less than one year.  These interest payments will skyrocket

https://www.treasurydirect.gov/govt/reports/pd/mspd/2021/opds122021.prn

@IsailedawayfromFR

Where are you getting that 12% number from?  I'm not seeing anything at that link that denotes short term (i.e. less than a year) maturity.

I see roughly $2.3 trillion in adjustable rate and inflation rate securities which would be of concern.  But overall, $18 billion of the debt is held by Social Security or the Fed.  Rolling over $6 billion in Social Security bonds won't matter since the government will be paying itself the interest.  And the $12 billion owed the Fed will never be paid back.  They will simply write it off.

This leaves roughly $12 billion in debt that is held by outside entities.  That is definitely manageable, provided we balance the budget first, and then keep it balanced until the last bond is retired (20 years max).  If necessary, short term debt can be converted to long term debt for the first year.  After that, retire every bond that becomes due on time.  No more borrowing. 

[IsailedawayfromFR]

@IsailedawayfromFR

Where are you getting that 12% number from?  I'm not seeing anything at that link that denotes short term (i.e. less than a year) maturity.

I see roughly $2.3 trillion in adjustable rate and inflation rate securities which would be of concern.  But overall, $18 billion of the debt is held by Social Security or the Fed.  Rolling over $6 billion in Social Security bonds won't matter since the government will be paying itself the interest.  And the $12 billion owed the Fed will never be paid back.  They will simply write it off.

This leaves roughly $12 billion in debt that is held by outside entities.  That is definitely manageable, provided we balance the budget first, and then keep it balanced until the last bond is retired (20 years max).  If necessary, short term debt can be converted to long term debt for the first year.  After that, retire every bond that becomes due on time.  No more borrowing.

I am not an expert at federal debt, so LINK reproduced in its entirety

Tbills have a maturity of between a few days and 52 weeks as I understand it.
These comprise $3,770,066,000,000 or 12,7% of all federal debt that totals $29,590,001,000,000

Let me know whether I made an error here somewhere. @Hoodat

MONTHLY STATEMENT OF TrE PUBLIC DEBT
OF THE UNITED STATES
DECEMBER 31, 2021
(Details may not add to totals)
TABLE I -- SUMMARY OF TREASURY SECURITIES OUTSTANDING, DECEMBER 31, 2021
(Millions of dollars)
                                              Amount Outstanding
                                              Debt Held             Intragovernmental         Totals
                                              By the Public         Holdings
Marketable:
  Bills.......................................        3,767,964                     2,102                 3,770,066
  Notes.......................................       12,992,160                     8,346                13,000,507
  Bonds.......................................        3,474,153                     7,358                 3,481,511
  Treasury Inflation-Protected Securities.....        1,727,968                       627                 1,728,595
  Floating Rate Notes  20  ...................          603,302                        58                   603,360
  Federal Financing Bank  1  .................                0                     6,053                     6,053
Total Marketable  a...........................       22,565,547                    24,544 2              22,590,092
Nonmarketable:
  Domestic Series.............................           28,592                         0                    28,592
  Foreign Series..............................              264                         0                       264
  State and Local Government Series...........          109,703                         0                   109,703
  United States Savings Securities............          146,201                         0                   146,201
  Government Account Series...................          290,177                 6,448,923                 6,739,100
  Other.......................................            3,263                         0                     3,263
Total Nonmarketable  b........................          578,200                 6,448,923                 7,027,123
Total Public Debt Outstanding ................       23,143,747                 6,473,468                29,617,215
TABLE II -- STATUTORY DEBT LIMIT, DECEMBER 31, 2021
(Millions of dollars)
                                              Amount Outstanding
Title                                         Debt Held             Intragovernmental         Totals
                                                 By the Public 17, 1Holdings
Debt Subject to Limit: 17, 19
  Total Public Debt Outstanding...............       23,143,747                 6,473,468                29,617,215
  Less Debt Not Subject to Limit:
    Other Debt ...............................              478                         0                       478
    Unamortized Discount  3...................            5,684                    14,999                    20,683
    Federal Financing Bank  1     ............                0                     6,053                     6,053
  Plus Other Debt Subject to Limit:
    Guaranteed Debt of Government Agencies  4                 *                         0                         *
  Total Public Debt Subject to Limit .........       23,137,585                 6,452,416                29,590,001
  Statutory Debt Limit  5.....................................................................           31,381,463
  Balance of Statutory Debt Limit….…….………..…………………………………………………………………..                                    1,791,462
COMPILED AND PUBLISHED BY
THE BUREAU OF THE FISCAL SERVICE
www.TreasuryDirect.gov

[Hoodat]

Tbills have a maturity of between a few days and 52 weeks as I understand it.
These comprise $3,770,066,000,000 or 12,7% of all federal debt that totals $29,590,001,000,000

Thanks, @IsailedawayfromFR .  I learned something today.  I had no Idea the government was that stupid.  Why in the hell would they sell $3.7T of short term debt in a single year?  The time bomb you spoke of earlier is a device of their own creation.  There is zero excuse for having this much short term debt (unless you are Goldman Sachs and are collecting a fee for every bond sold).

When Giuliani took over as Mayor of NYC, the city was facing its own debt crisis, primarily because of short term debt.  Giuliani replaced that short term debt with more manageable long term debt, which helped pull NYC out of that debt crisis.  Democrats of course were kicking and screaming about what a stupid idea that was.  But in the end, Giuliani was proven right.

We are better off immediately replacing this short term debt with 5 and 10 year notes.  Except now that inflation has reared it's head, it is going to be near impossible to sell $3.7 trillion in bonds in a single year for less than 10%.  Gotta start somewhere though.  Cut spending below 18% of GDP, and then move forward from there.

[IsailedawayfromFR]

Thanks, @IsailedawayfromFR .  I learned something today.  I had no Idea the government was that stupid.  Why in the hell would they sell $3.7T of short term debt in a single year?  The time bomb you spoke of earlier is a device of their own creation.  There is zero excuse for having this much short term debt (unless you are Goldman Sachs and are collecting a fee for every bond sold).

When Giuliani took over as Mayor of NYC, the city was facing its own debt crisis, primarily because of short term debt.  Giuliani replaced that short term debt with more manageable long term debt, which helped pull NYC out of that debt crisis.  Democrats of course were kicking and screaming about what a stupid idea that was.  But in the end, Giuliani was proven right.

We are better off immediately replacing this short term debt with 5 and 10 year notes.  Except now that inflation has reared it's head, it is going to be near impossible to sell $3.7 trillion in bonds in a single year for less than 10%.  Gotta start somewhere though.  Cut spending below 18% of GDP, and then move forward from there.

Am glad we are on same page.  We are wrecking the country by ill-advised short-term borrowing in the face of a long-term trend on rising rates.

I respect and admire your posts

[catfish1957]

Thanks, @IsailedawayfromFR .  I learned something today.  I had no Idea the government was that stupid. 

My 30+ year career was primarily dealing with the government and governmental agencies.  You have no idea how much stupidity and ineptitude is involved with these folks.

[Kamaji]

My 30+ year career was primarily dealing with the government and governmental agencies.  You have no idea how much stupidity and ineptitude is involved with these folks.

My parents worked for the federal government, and one of their favorite sayings was "good enough for government work" - it was never meant as a compliment.

[Bigun]

My 30+ year career was primarily dealing with the government and governmental agencies.  You have no idea how much stupidity and ineptitude is involved with these folks.

Oh yes I do!

[Hoodat]

@IsailedawayfromFR

Thank you for your kind words of encouragement.

[Hoodat]

My 30+ year career was primarily dealing with the government and governmental agencies.  You have no idea how much stupidity and ineptitude is involved with these folks.

I did a one-year stint working on a DoE project contract.  Within a couple of months, I swore never again would I do any government contract work.

[catfish1957]

I did a one-year stint working on a DoE project contract.  Within a couple of months, I swore never again would I do any government contract work.

My actual first job out of college was with the State Dept. of Health (for a year).  During my training, the Chief who was doing the training spent about a half a day doing errands as we made rounds.  His quote was....   "We don't get paid enough, so if you have personal business ...  do it on State time.   That was etched in my mind forever, as what I was dealing with.

[DefiantMassRINO]

Federal Government work is more about bureaucratic compliance and conformity that competence.

The reason for so much in short-term notes may be a function of rates ... generally, investors don't want to hold long-term notes whose interest rate is less than the rate of inflation ... in such circumstances, they'd be holding notes that return negative yields when adjusted for inflation ... over a few months or a year, it might be a tolerable loss because it's so small ... but compounded over 5, 10, 20, 30 year terms the negative return grows exponentially to an intolerable level.

[IsailedawayfromFR]

Federal Government work is more about bureaucratic compliance and conformity that competence.

That is exactly what the USSR had which weakened them into mediocrity and eventually dissolution.