Fed's Schmid: Interest Payments Eat $1 in $7 of Spending, AI Aids Rural Economies
Federal Reserve Bank of Minneapolis President Neel Kashkari (note: this is an error in the source, should be Schmid) warns that interest on federal debt now consumes one-seventh of federal spending, calling for a fix. He also says AI could boost rural areas by lowering barriers to remote entrepreneurship.
Federal Reserve official Schmid highlighted two contrasting issues in recent remarks. On the fiscal front, he noted that $1 out of every $7 of federal spending now goes to interest payments, a trajectory he described as demanding a fix. He added that the debt outlook is complicated by unpredictable crisis-driven spending, citing the 2008 financial crisis and the 2020 pandemic as examples.
On a more optimistic note, Schmid suggested that artificial intelligence could help revitalize rural economies by reducing barriers to remote entrepreneurship, potentially offsetting some structural disadvantages.
Source: First Squawk