[jyl]

And here's the crazy thing:

Rates US govt pays to service its debt is doubling and tripling.
6 month T-bill yield has moved from 0.06% in 2015 to 2.46% now
2 year T-bond yield from 0.64% to 2.85%
10 year T-bond yield from 1.40% to 3.16%

Amount of US govt debt is rising $800 billion a year, in 2018.
When the economy slows and next recession starts, US govt debt will start rising $1.5 trillion to $2.0 trillion a year.

That means the US govt's interest payments, which were about $260 billion/year a couple years ago, will be at least $400 billion in 2019 and will march up toward $1 trillion in a decade. For comparison, the defense budget is about $600 billion.

The govt is playing games to hold down interest payments in the short term. It is leaning on shorter maturity debt to get lower rates. So a 6 month US T-bill is yielding 2.46%, more than the 2.30% yield on typical 6-month bank CD. Think about that - the US govt is having to pay more to borrow money for 6 months than the average US bank is having to pay. Problem is, short maturity debt has to be rolled over soon, at higher rates.

When we have the next recession - 2019/20 is my bet - the Federal govt will not be able to use fiscal policy to stimulate the economy; fiscal policy will probably be making the recession worse. The Federal Reserve will have limited room to use monetary policy to stimulate the economy, because interest rates are still low (means not as much room to cut rates), the Fed still owns $ trillion in US debt (means not as much room to do quantitative easing), and the doubling of the US govt's borrowing needs will be pushing interest rates up.

A modest skid can get pretty bad if the driver isn't able to steer into it - or is forced to steer away from it.