Spending more money we don’t have
October 11, 2008 – 6:22 pmAccording to the AP, Speaker Pelosi is already making plans for an Obama presidency, specifically writing more bailout stimulus checks:
After consulting with Barack Obama, Democratic leaders are likely to call Congress back to work after the election in hopes of passing legislation that would include extended jobless benefits, money for food stamps and possibly a tax rebate, officials said Saturday.
The bill’s total cost could reach $150 billion, these officials said.
I guess the thinking is that if bankers and bondholders get trillions as part of various bailout plans then why can’t the working poor have another $150 billion?
Has it occured to any of the Democrats that they are doing far more harm for the working poor by levering up the Federal Government’s balance sheet? What will happen to them when interest rates shoot through the roof? (This, by the way, is a primary argument against the bailout plans themselves.)
Right now interest rates on Treasuries are low because everyone’s panicking and flying to quality. But over time, the speculative bubble in Treasuries will burst, just as the oil, housing and internet bubbles did. Congress can’t borrow an unlimited amount of cash without eventually causing a spike in long-term interest rates.
Did anyone notice last week that credit default swaps on U.S. government debt were higher than for Campbell’s? Yeah, the soup company.
Posted in bailout, bubble, credit default swaps, Economy, government spending, taxpayer issues |
3 Responses to “Spending more money we don’t have”
As you said “But over time, the speculative bubble in Treasuries will burst” and this has me thinking that this is the last hurrah of the world economy dominated by the U.S. Krushchev couldn’t carry out his threat to bury us, but we just may be burying ourselves in the name of digging ourselves out.
When people act as if money is unlimited there should be worry. We’re seeing the results of “cheap” money in the housing bust. Americans as individuals have until recently forgotten what it means to say “I can’t afford it” and look where it got us…nobody wants to be holding the bag of bad debt yet nobody can make it go away.
By CB on Oct 12, 2008
Well, people need soup.
By dearieme on Oct 12, 2008
I have to say if we’re gonna have inflation I’d rather the printing be for basic life support. The tricky part is not making the welfare programs permanent.
I think this is actually money better spent that in elective foreign wars or on Wall Street bailouts.
Yes there will be inflation but apparently the logic here is that you want to transfer wealth from the rich and middle class to the poor. If you morally support any form of wealth transfer, it isn’t a bad argument.
By Aaron Krowne on Oct 12, 2008