Even the Fed is starting to sweat the debt

As lawmakers work to hammer out a tax plan which is expected to cost the government around $1.5 trillion, Federal Reserve chair Janet Yellen said she’s growing concerned about the  “sustainability of the U.S. debt trajectory.”

The national debt is currently around $20.6 trillion, $14.9 trillion of which is owed by the public. If the Trump tax overhaul doesn’t spur the kind of economic growth the White House is expecting the nation could be in for an economic reckoning in the next few years.

“Our current debt-to-GDP ratio of about 75 percent is not frightening, but it’s also not low,” she said. “But when you look at, for example, CBO’s long-term budget projections, it’s the type of thing that should keep people awake at night.”

“It shows a picture in which, as our population ages, expenditures on Medicare, Medicaid, and Social Security grow more rapidly than tax revenues, and the debt-to-GDP ratio moves up,” she said. “This should be a very significant concern.”

Of course, it’s worth noting that the Fed certainly isn’t innocent in all of this.

Years of easy money in the form of quantitative easing at the Fed massively drove up debt as the helicopter money artificially stimulated the economy.  National debt nearly doubled during the Obama years, reaching $19.6 billion by the end of the previous president’s final term.

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