June 10, 2026 | Imagine The Government’s Interest Cost When This happens

The US government has been trying to minimize its interest expense by borrowing at the short end of the yield curve, where rates are lower.

The result? Massive amounts of Treasury paper must be rolled over each year. The current number is $8 trillion.

Apparently, the plan was to cut short-term interest rates back to zero, where all those 3-month Treasuries could be rolled over for free, thus shrinking interest expense even as debt continued to soar.

But that’s not gonna happen. Thanks to the Iran war’s disruption of global energy and agriculture supply chains, inflation is now running at twice the Fed’s 2% target. From CNBC this morning:

Consumer prices rose 4.2% annually in May, highest in three years

The consumer price index rose at a seasonally adjusted 0.5% for the month, putting the annual inflation rate at 4.2%, both in line with expectations.

Much of the inflation surge came from a 3.9% jump in energy prices, putting the 12-month increase at 23.5%.

Now, according to prediction markets, it’s increasingly likely that the Fed will be forced to raise rather than cut rates in the year ahead.

Rising debt at higher rates will beget an even more parabolic rise in interest expense.

When your interest costs exceed your military budget, you’re in a financial and geopolitical death spiral. Which means increasing turmoil.

All we can do in response is keep stacking.

John Rubino June 10th, 2026

Posted In: John Rubino Substack

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