The United States government is financing its more than trillion-dollar-a-year borrowing with i.o.u.’s on terms that seem too good to be true.
But that happy situation, aided by ultralow interest rates, may not last much longer.
Treasury officials now face a trifecta of headaches: a mountain of new debt, a balloon of short-term borrowings that come due in the months ahead, and interest rates that are sure to climb back to normal as soon as the Federal Reserve decides that the emergency has passed.
Woe to the Republic…
The government will seek to inflate its way out of the debt. Similar
to the ancient Roman practice of debt cancellation, which basically
was inflation with an infinite rate.
Debt management the old fashioned way – debase our fiat currency and pay off our creditors with very cheap dollars. The Fed was created for just this purpose. That we will lose our standing in the world and impoverish our nation is of no great consequence so long as the Fed’s benefactors are richly rewarded.
Elections do, indeed, have consequences. We are living that fact.