Interest rates are made of up three components: opportunity cost, inflation, and default risk. US treasury rates are considered to be free of default risk, so they consist of nothing more than opportunity cost and inflation. Federally insured bank CD rates are close to treasury rates. Now, the US government could always avoid default by… [Read More]
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Tag: default
Waiting on Congress
Like everyone else, I’m waiting to see what happens in Congress on the debt ceiling. We need to raise the debt ceiling, raise revenues, and cut spending. All three are necessary. There is no magic solution, and default will be ugly. I love my country. I wish everyone in Washington did, too. It seems like… [Read More]
