The credit crunch is hitting Washington, DC, as Uncle Sam maxes out his credit cards.
In addition to the enormously costly Obama budget, all the multi-trillion dollar bailouts, stimulus, and government expansion plans depend on one thing—the ability of the U.S. government to get money and spend it. Uncle Sam gets his money from one of three ways: taxes, borrowing, or just printing more currency.
Raising taxes during a recession is near-universally panned, except for the most die-hard liberals.
The ability to borrow is now in trouble, after Wednesday’s effort to auction $24-billion in new U.S. government bonds met with resistance. Those willing to loan the money (by buying the bonds) have started to demand higher interest rates as the government’s ability to repay becomes more questionable.
In the United Kingdom, where the British are also trying to stimulate their economy by massive government borrowing, the head of the Bank of England has said: “We cannot afford any more stimulus plans.” Indeed, the British couldn’t find enough investors at the offered interest rate willing to buy all $2.25 billion worth of their bonds on Wednesday.
Meantime, Obama presses forward with spending plans that far exceed any other President’s. As one observer noted, Obama says in a few years he’ll cut the deficit in half—but only after he quadruples it first.
I Have contacted GOP Congressman Leader, John Boehner, He is Great! I am glad to have him Representing My State! He has worked hard to get the GOP Plan Out to No Avail!! Thank You!
As Roger W Garrison makes quite clear in his speech on the Federal Reserve (http://mises.org/multimedia/mp3/Fed1992/05_Fed1992_Garrison.mp3), Treasury securities will always be 100% secure (until the collapse of the dollar) because the government will always produce more money to make payments. This auction is noteworthy only in that people paid an unexpectedly low price for the securities. These securities will keep selling, it's just that DC won't get as much money for them.
Ask yourself this. If the federal U.S. government were a contractor, is there anything you would hire them to do for you with their past track record? Rush asked this on the radio. Poignant, as usual. A very good grounding question to ask now and again.