2026-09-21 The Debt Trap: Inflation, Rising Rates & Your Retirement

Well, it's no secret that interest rates just keep going up.

In fact, they're not moving up gradually, they are moving up, you would describe it as abruptly.

The US Treasury bond market continues its slide, which means the value of bonds are declining.

That means interest rates are moving higher.

The 30-year U.S. Treasury bond finished last week, as I'm recording this, with a yield of 5.36%.

That's up from 5.24% or 12 basis points the prior week.

When you look at interest rates and you look at the fact that they're going up, you have to ask why? Well, I think there's three big reasons that you're seeing interest rates go up.

One, inflation is stubborn and it's not going away anytime soon.

When you look at inflation on the wholesale level or the production level, that is the producer price index.

And you see inflation in services year over year, that's gone up four and a half percent In goods, if you exclude energy, costs are up 5% year over year.

And energy, we're seeing costs up 24% year over year.

That is simply an eye-popping number.

There are actually now gas stations in California that are having to price their diesel fuel at $9 and 99.9 cents a gallon.

The price is higher than that, but that's as high as the pump goes.

So when you look at the overall inflation rate at the wholesale level measured by the producer price index, that is up 5.4% year over year.

Now that in and of itself is not good news for the economy.

We live in an economy that is very much dependent on consumer spending.

And as prices go up and wages don't keep pace, that means less discretionary income to be spent on the things that drive the economy.

Now, the second factor relating to these interest rates is simply that government deficit spending is accelerating.

July federal government outlays exceeded revenues by $766 billion.

That's the second largest July deficit ever, exceeded only by the deficit in 2020 when the government was spending massively during COVID.

Government deficit spending is one of the major drivers of inflation.

So short of draconian-style spending cuts like we're seeing in Argentina a couple years ago, deficits will continue to expand as interest rates rise further, and that fuels inflation.

It really requires only a cursory study of history to quickly conclude that this is a cycle that feeds on itself and it continues until the loss of confidence in the system reaches a tipping point.

Now, let me be clear.

Well, it's no secret that interest rates just keep going up.

In fact, they're not moving up gradually, they are moving up, you would describe it as abruptly.

The US Treasury bond market continues its slide, which means the value of bonds are declining.

That means interest rates are moving higher.

The 30-year U.S. Treasury bond finished last week, as I'm recording this, with a yield of 5.36%.

That's up from 5.24% or 12 basis points the prior week.

When you look at interest rates and you look at the fact that they're going up, you have to ask why? Well, I think there's three big reasons that you're seeing interest rates go up.

One, inflation is stubborn and it's not going away anytime soon.

When you look at inflation on the wholesale level or the production level, that is the producer price index.

And you see inflation in services year over year, that's gone up four and a half percent In goods, if you exclude energy, costs are up 5% year over year.

And energy, we're seeing costs up 24% year over year.

That is simply an eye-popping number.

There are actually now gas stations in California that are having to price their diesel fuel at $9 and 99.9 cents a gallon.

The price is higher than that, but that's as high as the pump goes.

So when you look at the overall inflation rate at the wholesale level measured by the producer price index, that is up 5.4% year over year.

Now that in and of itself is not good news for the economy.

We live in an economy that is very much dependent on consumer spending.

And as prices go up and wages don't keep pace, that means less discretionary income to be spent on the things that drive the economy.

Now, the second factor relating to these interest rates is simply that government deficit spending is accelerating.

July federal government outlays exceeded revenues by $766 billion.

That's the second largest July deficit ever, exceeded only by the deficit in 2020 when the government was spending massively during COVID.

Government deficit spending is one of the major drivers of inflation.

So short of draconian-style spending cuts like we're seeing in Argentina a couple years ago, deficits will continue to expand as interest rates rise further, and that fuels inflation.

It really requires only a cursory study of history to quickly conclude that this is a cycle that feeds on itself and it continues until the loss of confidence in the system reaches a tipping point.

Now, let me be clear.