Meanwhile, there is little prospect that Congress will do what is necessary to bring spending and borrowing down to levels that do not trigger inflation. Politicians just don’t worry as much about inflation as about catering to their multiple constituencies. So the Treasury will have more trillions in IOUs to peddle.
But its best customers just might be unenthusiastic about adding significantly to their holdings. Wen already owns trillions in Treasury bills that are depreciating in value. Besides, China’s mounting needs for infrastructure and an improved safety net will sop up funds once used to buy American securities. Japan, another large customer, is now running a current-account deficit, and so it won’t have as many dollars to recycle. Nor will Middle East buyers, no longer receiving a flood of dollars from $140-a-barrel oil. Little wonder that Larry Lindsey, former economic adviser to President George W Bush, says he “cannot figure out what combination of foreign buyers is going to acquire . . . [the] debt” that Obama’s plans will generate.
Which leaves Americans and the Fed as customers. Even if they save more, domestic consumers can’t absorb all the Treasury bonds that will be on offer. And if the Fed keeps buying, it will pour fuel on the inflationary fires.
None of those who borrowed from US ever paid their debts. Why should we?
In addition, it’s time to vote out and to fire those incompetents and greedy who are responsible for this mess.
Borrowed from *the* US, that is.
The UK finally has: http://news.bbc.co.uk/1/hi/uk_politics/4970720.stm
Nevertheless, all Congress knows what to do is to spend. That’s how you buy votes. Of course, the next to blame are the citizens who demand to be the recipiants of largess.
Be careful what you wish for. If China stops buying our debt America is in a world of trouble that will make the 1930’s look like a Sunday School picnic.