We’ve going to spend over $3.5 trillion next year, run up an annual debt of $1.7 trillion, and are on schedule to add another $9 trillion to reach an aggregate debt of $20 trillion in eight years. The Obama administration and the Congress spend days on end fighting over how to spread and spend the borrowed money. But still, no one ties the additional expenditures to additional revenues….Who Will Lend? Victor Davis Hanson, Pajamas Media, 5/4/2009
Something’s going to change, we were told. Well, here we are, three months plus into the change administration, and all that’s changed is the amount of money that overseas creditors, or the Treasury, are expected to come up with in the purchase of those IOUs called T-bills and other government bonds. Hanson’s written about this often, and you should read his whole post. The presumption that all the Federal government has to do is ask, and somebody will buy, is the elephant (or jackass, if you prefer) in the living room that nobody sees.
Imagine that you decided that next month you were going to buy a one million dollar house. You have a lot of credit card debt, about $30,000 worth. You’re doing two part time jobs because the bank you worked for folded. You’re two months late on payments for your Escalade and usually miss the payments schedule for your Visa, Mastercard, and American Express cards, causing you lots of penalties and a credit rating of 342. But that’s okay. You plan to get into the new house regardless; you hire a moving van, pack the plates and silverware, the DVD’s, the CD’s, the PC’s, everything but the beds and the kiddies. The day before the van arrives, you walk down to the bank and say “we’re closing on this new house today and we expect you to give us the money to do so.”
What banker, in this market, would do anything more than ask you to leave the building? And how much longer does the administration think that Chinese and European banks will do the same for the US government? Evidently, they don’t expect full “compliance”. So, even worse, they’re encouraging Treasury to buy the bonds with printed money. Imagine using a photocopier to pay for a new house? What would happen to you?
What will happen to America is double-digit inflation and fulfillment of Obama supporter George Soros’s dream to severely devalue the dollar.
Such practical considerations as Victor Davis Hanson’s are given short shrift in Democrat-controlled Washington. Nobody there much seems to care for anything beyond their personal appearance under the DC Big Top.s