Thursday, January 24, 2008

Throwing money around

Congress and the President have just agreed to pay taxpayers $150 billion increase the national debt by $150 billion to help stimulate the economy. And they're doing this in an election year ... what a shocker!

If you've ever wondered what qualifications are required to be a politician, now you know that basic math skills aren't among them. If the much-feared recession actually materializes, then you can be sure that Congress will be spending even more on various social programs to "help those who have fallen on hard times."

Here's the best part: this gigantic federal budget of Medicare, Medicaid, Social Security, "Income Security" and other entitlements is increasingly being funded by foreigners who buy U.S. treasuries to collect the interest. But the Federal Reserve Bank has been slashing interest rates lately, meaning they are effectively reducing the interest paid to new treasury buyers. It's hard to imagine why any European or Asian investors would want to invest in either U.S. stocks or U.S. bonds right now, especially if inflation starts to rise.

2 comments:

Cathy said...

Whoo! If that's the 'best' part - we're in deep do-do. Guess I'll order a few RV catalogs ;0)

Jody said...

That there's an RV!