Thought for the day

How strong is the US government financially?  Consider this:  the US has seen the rise of a very popular political movement over the past 30 years that has, as it’s stated goal, the financial strangulation of the federal government.  They seek to “drown it in a bathtub”.  One of the tactics of that movement has been to force the government to run up massive debt, hoping to force a financial catastrophe that would lead to the dismantling of the federal governments major programs like Medicare and Social Security.

If you listen to the David Walker’s, Pete Petersen’s, and Ross Perot’s of the world, the plan has been achieving significant results.  They’ve been telling us for years that the US government is teetering on the edge of collapse. Entitlements must be cut.

As it turns out, it’s the private sector financial system that is teetering on the edge of collapse.   The panic in that system is so great that private bankers will not lend money to each other, even overnight.  They’ve all run to the public financial system seeking shelter.

As a result, the government, even though it’s been under assault from the anti-government crowd for decades, is able to borrow money short-term at virtually zero interest rate.  Even twenty year bonds yield only 4.5%.  Think how much lower those rates might have been had the US government not been under assault by the conservative political movement?

Then again, the private financial system probably would not have collapsed had it not been for the conservative political movement, and government borrowing rates would be higher.  I guess it’s a chicken and egg kind of thing.

Advertisements

Leave a comment

Filed under economics

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s