The average Federal Funds Rate from 1955 to 2023 is 4.62%

quick take

  • The average federal funds rate from January 1, 1955 to May 17, 2023 is 4.62%. We are now in a normal interest rate regime.
  • The problem is now the total debt to GDP (about 120%), which will become even more costly to pay off if interest rates continue to rise.
  • Due to high maintenance costs, debtthis will erode other areas such as healthcare and education, shrinking the pie and further collapsing society.
  • look to 2032. Interest costs are expected to reach $1.2 trillion, making it the largest spending program, surpassing Medicaid ($789 billion) and Defense ($990 billion).
  • The only way is for GDP to grow faster than bonds and debt, which is highly unlikely, especially given an aging and declining population.
GDP vs interest rate: (Source: FRED)
Federal Funds: (Source: FRED)
Federal Funds: (Source: FRED)

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