With the likelihood of a $800 brillion to a $1 trillion “stimulus” package coming our way through the “generousity” of President Obama and the Congress, there is still an important question unasnswered: Where is the money going to come from?
I discuss this in a new article of mine, “Who Will Fund Obama’s Stimulus Spending?”
The Congressional Budget Office estimates that the Uncle Sam will have at least $1.5 trillion of deficit spending to finance in the current fiscal year.
The Treasury as already looted the “trust funds” like Social Security. And while due to the current economic uncertainties, U.S. Treasuries have seemed like a temporary “safe haven,” it is highly doubtful that private individuals or corporations will have the willingness of ability to fund that $1.5 trillion dollars.
About one-third of the Federal government’s outstanding debt — around $10.6 trillion total debt — is held by foreigners. The Chinese are the largest of such holders, with Japan and Great Britain in second and third place.
But following their own form of Obamanomics, the European Union nations are planning their own stimulus packages likely to run in the neighborhood, cumulatively, of at least $300 billion that will have to be funded.
The oil-producing countries have lower revenues to invest in U.S. securities, and the Chinese are already complaining about the “hits” they’ve taken in the American investments they bought into in the past.
The leaves the U.S. financial markets — the markets that Washington has been bailing out in the tune of $100s of billions — to provide the funds. Which, at the at the end of the day, means the magic of money creation courtesy of the Ben Bernanke and the Federal Reserve (our monetary central planning agency).
So hold on to your hats, your pants and anything else that seems “vital.” The inflation express is heading our way.