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The Economic Impact of a Shutdown and Rising Interest Rates
The rising interest rates indicate a growing recognition of the significant impact of deficits on the economy. The increase in long term rates is driven by concerns about the federal government's high debt, leading to a higher premium demanded by bondholders. This shift poses challenges as it elevates the cost of capital, stifles long term innovation, and hampers economic growth. To address this issue, a focus on reducing deficits is essential, irrespective of changes in inflation or short term rates.