The federal government generally does not "make money" from rising interest rates; rather, it pays significantly more interest on its debt, which usually outweighs interest income. While the Federal Reserve returns profits from its bond holdings to the Treasury, high-interest environments increase the cost of financing national debt, making it a net expense.
The Fed makes money mainly through interest on government securities — such as U.S. Treasury securities, mortgage-backed securities, and government-sponsored enterprise (GSE) securities — that it bought on the open market.
The financial sector has historically been among the most sensitive to changes in interest rates. Entities like banks, insurance companies, brokerage firms, and money managers with profit margins that expand as rates climb generally benefit from higher interest rates.
Trump has called for a more rapid and extensive reduction of interest rates. In an interview with The Wall Street Journal in December, Trump said within a year he wants interest rates to be “1% and maybe lower than that.”
With the help of the Federal Reserve, US banks are offering loans at higher rates than the interest they pay to depositors and pocketing the difference for themselves.
Yes, most economic analyses suggest President Trump's tariffs are hurting the U.S. economy, increasing costs for consumers and businesses, causing layoffs, reducing investment, and creating economic uncertainty, although some sectors see limited gains while facing retaliation, leading to overall negative impacts like higher prices and reduced trade. While the tariffs aim to protect domestic industry, they act as a tax, raising prices and reducing available goods, with studies pointing to job losses in manufacturing and decreased business confidence.
Historically, mortgage rates have spent much more time above 5% than below it. That doesn't mean rates can't decrease further, but it does suggest that a sustained return to 3% would likely require another major economic disruption.
Real GDP growth averaged a robust 3.4% during the first three years of the Biden presidency. The labor market was strong in 2023. The unemployment rate averaged a very low 3.6% in 2023, as it had in 2022; the last year with an average 3.5% unemployment rate was 1969.
Banks generally make money by borrowing money from depositors and compensating them with a certain interest rate. The banks will lend the money out to borrowers, charging the borrowers a higher interest rate and profiting off the interest rate spread.
In Australia, this interest rate is called the cash rate. As the Reserve Bank sets a target for the cash rate, it is often referred to as a 'tool' of monetary policy. Prior to the COVID-19 recession, the cash rate target was the Reserve Bank's only active monetary policy tool.
In its National Fiscal Outlook report for 2025-26, which consolidates forecasts from state, territory and federal budgets, the PBO found taxpayers would pay $48.1 billion in interest payments on state and federal debt this year, equivalent to about $1700 per person.
The national debt enables the federal government to pay for important programs and services for the American public.
A higher interest rate environment tends to slow business activity and can negatively impact the economy. As corporations experience lower revenues and earnings, their stock prices may decline in response.
Thanks To President Trump, CBP announces record-breaking $200 billion in tariff revenue. WASHINGTON—Between Jan. 20 and Dec. 15, 2025, U.S. Customs and Border Protection collected more than $200 billion in tariffs thanks to more than 40 executive orders put in place by President Donald Trump's Administration.
While the 25% tariff extended to auto parts on May 3, 2025, Trump exempted parts made in Mexico or Canada that were compliant with the USMCA.
To make $3,000 a month ($36,000/year) from investments, you need a significant lump sum or consistent, high-yield income streams, with estimates ranging from roughly $300,000 at a 12% yield to over $700,000 for stable Dividend Aristocrats, depending on your investment type, dividend yield, risk tolerance, and strategy. A simple formula is: Investment Needed = ($3,000 x 12) / Annual Dividend Yield.