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... With the national debt now topping $12 trillion, the White House estimates that the government's tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher. In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan... "What a good country or a good squirrel should be doing is stashing away nuts for the winter," said William H. Gross, managing director of the Pimco Group, the giant bond-management firm. "The United States is not only not saving nuts, it's eating the ones left over from the last winter."
With the national debt now topping $12 trillion, the White House estimates that the government's tab for servicing the debt will exceed $700 billion a year in 2019, up from $202 billion this year, even if annual budget deficits shrink drastically. Other forecasters say the figure could be much higher.
In concrete terms, an additional $500 billion a year in interest expense would total more than the combined federal budgets this year for education, energy, homeland security and the wars in Iraq and Afghanistan...
"What a good country or a good squirrel should be doing is stashing away nuts for the winter," said William H. Gross, managing director of the Pimco Group, the giant bond-management firm. "The United States is not only not saving nuts, it's eating the ones left over from the last winter."
A picture is worth a thousand Krugman essays, which is why we present a chart comparing the US Monetary Base (and by subtracting Reserve Balances with Fed Reserve Banks, Currency in Circulation), and the Fed's holdings of MBS and Agency paper (worthless GSE/FHA garbage). In summary: Currency in Circulation: $920 billion; MBS/Agency Holdings: $997 billion. The dollar in your pocket is now entirely backed only by worthless, rapidly devaluing and subsidized housing.
"Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
Bah. The dollar is backed by the full faith and credit of the US government, with its ability to extract reveneues from a population of 300 million and its several thousand nuclear weapons.
Those who think the dollars is worthless, please send your worthless dollars to me. I'm sure I can find a use for them. Peak oil is not an energy crisis. It is a liquid fuel crisis.
Bah. The dollar is backed by the full faith and credit of the US government, with its ability to extract reveneues from a population of 300 million
Unfortunately the tax base of the US, and most other jurisdictions, is founded upon the taxation of earned income, which is disappearing fast down the toilet as the productive sector shrinks. The Left swallow this idiocy because they know (having read their Marx) that all value comes from Labour. It suits the Right, on the other hand, to go along with this bollocks because it is entirely consistent with taxation of earned income - rather than the unearned income derived from the privileged property rights of those who own the US.
If a large part of taxation were in fact derived from the use value of land/location - as it is in (say) Hong kong and Denmark, where up to 30% of taxation comes from this use value - then the US dollar could indeed be correctly thought of as land-backed. "Any economic unit can emit money. The serious problem is to get it accepted" Hyman Minsky
What happens to Wall St when it has bled the rest of the US dry?
It's the winter, you idiot.
You need to wait for the summer to stash away.
It is Bush's tax cuts that were like eating the leftovers from the previous winter. En un viejo país ineficiente, algo así como España entre dos guerras civiles, poseer una casa y poca hacienda y memoria ninguna. -- Gil de Biedma
Growing investments on Capitol Hill, such as those in the medical-device industry, raise questions about appearances of conflict. Even if lawmakers have done nothing wrong, ethics specialists said, such apparent conflicts are troubling because it is often impossible to know whether the lawmaker is acting in the interest of citizens or their own portfolios. On Wall Street and in federal agencies, the suggestion of a conflict is often the basis for an investigation. The uncertainty created about lawmakers' motivation undermines confidence in Congress and the political process, the specialists say. More than half of all lawmakers own stock. In the House, the number of lawmakers trading stock jumped from 91 in 2001 to 259 today, according to academic researchers and the nonprofit Center for Responsive Politics. That includes 68 lawmakers who, as of the beginning of 2008, individually owned more than $100,000 in stock, not including mutual funds.
The uncertainty created about lawmakers' motivation undermines confidence in Congress and the political process, the specialists say. More than half of all lawmakers own stock. In the House, the number of lawmakers trading stock jumped from 91 in 2001 to 259 today, according to academic researchers and the nonprofit Center for Responsive Politics. That includes 68 lawmakers who, as of the beginning of 2008, individually owned more than $100,000 in stock, not including mutual funds.
it is often impossible to know whether the lawmaker is acting in the interest of citizens or their own portfolios.
No, it really isn't.
