Everybody is wondering what is coming up in the near future as the Federal Reserve Board starts to respond to the current “temporary” surge in inflation. My pal Curtis Yarvin has a nearly incomprehensible piece on “Stagflation and neo-chartalism” on his Gray Mirror Substack. But I did learn something from him, that AOC’s favorite Modern Monetary Theory is an update of “Chartalism,” a theory that… Well, you’d better go to La Wik and figure it out. It reads like regime boot-licking just like Keynesianism. As they say: if you combine economics and politics you get politics.

But I believe in making things simple. And it just occurred to me to take a look at the Federal Debt in the 20th century and see what the debt was doing back when we had the last inflationary nightmare in the 1970s, courtesy of our Deep State friends. Of course, the info is right there for the asking on usgovernmentspending.com.

If you click on this link, to Chart D.13f, and run your cursor over the chart, you get to see the numbers, in percent of GDP.

Well! In 1980, at the peak of the Carter “Stagflation,” the Gross Federal Debt was only about 31 percent of GDP. Still, when the Reagan administration, headed by an “amiable dunce,” decided to fight inflation with the help of Federal Reserve Board Paul Volcker, interest costs shot up. Want to see how much?

To wring inflation out of the U.S. economy in the 1980s and 1990s, interest outlays more than doubled, from about 1.3 percent of GDP per year to about 3 percent of GDP per year. You can see the numbers if you click on the link for Chart D.14f. In 1982 the federal government was budgeting that the average rate for the payment of interest on the federal debt would be about 7.0 to 7.5 percent.

What about now? Well, my Federal Budget Interest page allows you to put in your own forecast of interest rates out to FY26, so if you are a congressional aide or staffer hiding behind a tilt-up vehicle barrier in Washington D.C. quivering with fright about the possibility of armed insurrectionists materializing in battalion strength at any moment! from behind the National Museum of the American Indian, you could try to calm your nerves by looking on my site and testing various interest rate scenarios. Okay, so you are quivering so much you can’t even. So here is my look at federal interest payments out through FY26 where I assume that the average interest rate by 2026 on the federal debt is 3.5 percent. I am assuming that the courageous Fed under Jerome Powell would courageously raise interest rates by 0.5 percent per year.

That would mean that federal interest payments by FY26 would cost 5.1 percent of GDP, compared to a peak cost of 3.1 percent of GDP during the 1980s fight against inflation.

But, frankly, I expect that the Fed is going to have to raise interest rates faster than that, and higher than that.

Meanwhile my congresswoman, Rep. Pramila Jayapal (D-WA), just sent me an Annual Report telling me about all the wonderful free stuff in the “$1.2 trillion infrastructure package” and the loot and plunder yet to come in the Build Back Better bill.

Hey, Pramila, you young thing, how high do you think interest rates got in the 1980s when you had just arrived in the U.S. as a teenager to go to college and learn how to be an Activist, oh, and “amiable dunce” Reagan was squeezing inflation out of the economy? I’m sure that neither you nor any of your aides and staffers have a clue. But I do, with my Federal Budget Interest page I mentioned above. Do you get it? Back in the 1980s, the average interest rate paid on the Federal Debt was between 6.0 and 7.5 percent. And that took about 2.5 to 3.0 percent of GDP. But that was when the Federal Debt was about 31 percent of GDP. And right now, the Gross Federal Debt is 129.5 percent of GDP. And you are pushing the Spendalooza BBB, you genius.

Okay, let’s make things Real Simple for the aides and staffers. Back in the 1980s with a federal debt at about a third of GDP it took 7 percent interest and a tripling of interest payments as a percent of GDP to wring inflation out of the system. So, with today’s federal debt at over 100 percent of GDP, 7 percent interest would mean about three times the interest payments of the 1980s. In other words, interest payments on the federal debt of about 10 percent of GDP.

You know, I just don’t even want to think what debt interest payments of 10 percent of GDP would do to the economy. Or even 5.7 percent of GDP.

Christopher Chantrill @chrischantrill runs the go-to site on US government finances, usgovernmentspending.com. Also get his American Manifesto and his Road to the Middle Class.