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Home / Expert Opinion / Money Management: How long will our high interest rates last?

Money Management: How long will our high interest rates last?

George W. Karpus

George W. Karpus

Interest rates in the United States are quite high relative to other developed countries, as can be seen in the attached table. Only Greece and Portugal in Europe, and Columbia, Brazil and Mexico in the Americas have higher interest rates.

The lack of fiscal responsibility by our current president and previous president, as well as the irresponsibility by both Democrats and Republicans has caused our national debt to rise from $5 trillion to nearly $19 trillion in just 15 years.

Politicians did not wake up even with the downgrade of our debt in 2012.

Our national debt is six times our government’s income. And that is with a huge tax increase two years ago. Do you think banks would lend a household six times their income?

In 10 years with the unfunded liabilities from Social Security, Medicaid and Medicare, our debt to our income ratio will be just like Greece before it defaulted. But no one will bail us out.

I believe if we balance our budget now, the world will view us as a more responsible borrower and this would drive our interest rates down relative to the rest of the world.

George W. Karpus is chief investment strategist and chairman of the board of Karpus Investment Management, an independent, registered investment advisor that manages assets for individuals, corporations and trustees. Offices are located at 183 Sully’s Trail, Pittsford, N.Y. 14534; phone (585) 586-4680.

 

10-year Sovereign Debt

United States                                    2.07%

United Kingdom                               1.85%

Spain                                                     1.80%

Italy                                                       1.66%

Canada                                                 1.52%

France                                                    .99%

Netherlands                                         .80%

Sweden                                                   .71%

Germany                                               .62%

Japan                                                      .30%

Switzerland                                        -.27%