Monday, November 23, 2009

Wave of Debt Payments Facing U.S. Government



Another incredibly misinformed article, this time from the New York Times. The author displays a complete lack of knowledge of the current monetary system and gets some "help" from the likes of Bill Gross.

WASHINGTON — 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.

But that happy situation, aided by ultralow interest rates, may not last much longer.


The Government spends by crediting bank accounts. There is no constraint to its ability to do so. Interest payments are made the same way that any spending is made--by crediting bank accounts. Moreover, ultralow interest rates were a matter of Fed policy. The Fed brought interest rates down by raising the level of bank reserves in the system, from $8 billion in 2007 to over $1.1 trillion, currently. Those reserves are the funds used to buy Treasuries. There is no financing, per se.

“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.”

I don't know about the squirrel analogy, but I do know that Bill Gross is a nut! Does a bowling alley have to "stash away points" so that it doesn't run out if too many bowlers score too high? The whole notion is ridiculous and is a "gross" display of Bill Gross's lack of understanding on this issue.

Read the entire, misinformed article here.

8 comments:

googleheim said...

If fed reservers are so high, then it sounds like we have enough nuts to feed squirrels and idiots like Bill Gross !!!

The banks have to pay back the "printed" monies not the government !

and definitely not the taxpayer !!

this is ludicrous.

googleheim said...

Bizradio going away ???

http://www.chron.com/disp/story.mpl
/business/steffy/6730192.html

Mike Norman said...

Yes, they were living high off of other people's money. Frishberg is a loser.

TomatoBasil said...

The government can't keep enough of the 0% T-bills on the shelves despite their number one bond salesman talking down his best selling products.

Biz Radio's all day infomercials for trading school, buckets of insurance annuities, investment managers, futures traders... don't pay for all that air time???? I thought the reason they eliminated The Contrarian was to make room for another infomercial...

Mike Norman said...

TB:

Please see this story on BizRadio:

BizRadio

Mike Norman said...

TB:

It was my decision to leave because they couldn't pay me anymore. I was the only host being paid by BizRadio, but they had no more money and wanted me to do what other hosts do on their air: pay them for air time. I don't do that.

Mike Norman said...

Goog,

Precisely! We have enough nuts to feed the squirrels. You should give Gross a schooling!

-Mike

googleheim said...

Hi Mike

I already approached someone campaigning to be a judge and another pollster holding a sign recently at an election.

They did not understand how the monitary policy works.

To the republican I say :
"Reagan spent more money than all previous administrations combined, starting el numbero Uno George Washington."

To the democrat I say :
"Lucky for you tax revenues do not generate enough funds to pay for this country to work. Unfortunately higher taxes will not pay for healtcare, and your lack of knowledge of the monetary procedures of the federal reserve and treasury will damage the chances for a healhful passage of a working healthcare bill."

Easy peasy now.

Just need for case studies in historical perspective :

40's
50's
60's ( vietnam etc )
70's
etc

Manufacturing does not have to go to China, and the problem is the differential between Republican and Democrat vacuum as well as overlap.

However, I would have to look at Libertarianish folk like Ron Paul to see how well they see it.