Borrow Short, Lend Long

Most bankers know this concept but perhaps y'all State legislators not so much...

Maturity Mismatch:

"Banks and other financial institutions often borrow money which... involves short-term liabilities (like checking accounts or overnight loans). They then use these funds to make longer-term loans to individuals and businesses, such as mortgages, auto loans, or business loans"

An example: Broward's bank borrows $100K in 1-year Treasuries at 4% interest and then loans it to Hungry Homeowner for 30-years at 7%. Sweet! I'm making a 3% annual profit and donate cash to your election campaign!

Then rates rise and I rollover my 1-year loan at 5%.

Still sweet, I'm profiting 2% per year and still donate a bit.

Then around year 5, short-term rates hit 8%. Yikes, now I'm losing 1% after rollover. Year. After year. Until finally... KA-BOOM and no donation for YOU! Savings and Loan collapse of the 1980s.

Federal Government is essentially a gigantic Savings and Loan now, with $9 trillion in short-term treasuries to refinance in the next year. They borrowed short (treasuries) and loaned long (Social Security, Medicare, etc). They're struggling to keep the 10-year treasury within a 4% to 5% range to prevent a hyperinflationary feedback loop, although, like Biden's fake inauguration, nobody is supposed to mention this to the common folk.