The Fed is behind the curve in rates, Fed credibility remains intact, which has led one bank analyst to ask the simple question, “What about government debt servicing?”

Dick Bove, a veteran bank analyst at Odeon Capital, stated that the Fed could increase interest rates to $620 billion annually by 2022 if it continues with its aggressive rate increases. This would be nearly twice the level in 2021. The figure could rise to $900 millions by 2024. These payments could be made using money borrowed from the open market. In addition, equity in the Federal Reserve would be lost, if any.

Bove stated that “the numbers are concerning.” These numbers suggest that it is possible for the Federal Reserve to not follow the same rigorous path as was suggested.

Germany is asking how Germany could have fallen into the precarious situation it has due to its dependence on Russian oil. The Fed needs to ask the same question: How can it allow this nation to become financially independent?

Bove indicated that the Fed could not implement significant rate increases due to these risks. This will ensure that inflation remains a major problem.