Rising Interest Rates Press Government

In the NY Times today there is an article about how rising interest rates are causing the interest payments of the U.S. Government to rise. RIGHT! Just one more reason why the Fed is going to think twice about raising interest rates again, any time soon. Plus, the slowing economy will cause a diminution of government receipts. That latest interest rate increase was a real disaster for the U.S. government, and the vaunted independence of the Fed is far from complete. Mr. Bernanke likely will not wish to go down in history as a one term governor. My prognosis, either the dollar falls significantly over the next two months, causing an increase in manufacturing for import substition and exports, or the Fed is going to lower interest rates sometime in early 2007. Some other part of the economy needs to step into the breach left by the housing melt down.