This is going to be interested, Cal. I am not sharp economist, but it seems to me, that in order to calm inflation down, FED needs to offer interest rates, which will beat the inflation. Considering, that the inflation rate is 7% (some saying even double of that figure), then interest hike up to 1%-2% will not really help.

But you are right, that the government just cannot afford to pay interest on such sum without borrowing even more. To make it even worse, the debt is not in some long term papers, but in T-bills. And on top of that, FED has been buying corporate debt as there was no tomorrow. I guess, nobody really knows, what sort of junk in on FEDs balance sheet and that, in case of an default, would again be paid by public.

The situation is IMHO quite unprecedented. As a parallel, I can offer an indirect historical experience. In Czech was the same problem in 1953 and it was fixed by issuing new currency at rate 1:50. Practically overnight, all saving of the "middle class” were destroyed. Surely, the US government would not do such a thing (unless of course it would), but I just don’t see too many ways out of this mess.  If FED does not raise the interest rate a lot, what else can it do? Kick the can down the road for few years?

I am pondering to exit the stock exchange, but unless one buys physical gold and hide it, it will always be held at mercy of the government decision about the debt. I wonder if Swiss Frank would be protected against the financial Armageddon, I am suspecting to be somewhere below the horizon.

Anyway, just my 2 cents. I sincerely hope, you all had a nice break. I had not :-).