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Source link: http://archive.mises.org/9388/who-is-going-to-fund-obamas-stimulus-spending/

Who Is Going to Fund Obama’s Stimulus Spending?

February 6, 2009 by

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.

Richard Ebeling

{ 11 comments }

Marco Costa February 6, 2009 at 1:31 pm

Sorry, but the link to the article is messed up.

Diakrisis February 6, 2009 at 1:40 pm
Michael February 6, 2009 at 1:45 pm

My favorite question to ask my MSM-hypnotized friends: “Who’s paying for this boondoggle of boondoggles?” Usual response is blank faces.

It will be interesting to see how foreign investment in US debt moves in the coming weeks and months.

8 February 6, 2009 at 2:00 pm

What about at the expense of consumption?

Roy Hasenfratz February 6, 2009 at 2:04 pm

I’ve thought about the need for economic stimulus, had several ideas and would like to know from you why they are BAD ideas.

Auto Industry:
Reduce Aid to or Sell
- all Municipal, Police and Gov’t Vehicles to Africa, South America, Iraq ect.
- School Buses to Africa, South America, Middle East for public transportation infrastructure.

Replace US Fleet with 2009/2010 Ford, GM and Chrysler.
Distribute between the three(or more) based on amount of US based workers and available capacity to rehire and fire up mfg lines.

Benefits: Expand global market penetration of US cars
Future sales channel for parts
Save aid money
Rehire Autoworkers fast and support US car parts industry
Upgrade US police, municipal and gov’t car fleet
Make US fleet more fuel efficient

Constraint: Ensure that a majority of the profits from the gov’t contract is invested in R&D for the next generation of fuel efficient cars.

Computer and Education:
Reduce Aid to or Sell
- all older/used computers from schools, public colleges, libraries and gov’t offices to Schools in Africa, South America, Middle East

Replace with personal computers assembled/manufactured in the US or by US companies. (Replace a Mac with a Mac and an IBM with an IBM)

Benefits: Improve US and 3rd world educational infrastructure
Positive impact on hardware and software world markets

Health Industry:
Same as above but with hospital equipment such as Xray machines ect.

Don’t stop here – many used US assets could LARGELY benefit 2nd and 3rd world countries!

We would improve the world, while saving on aid money and instead giving real assets, expanding US product penetration, improve standing in the world with this major aid program, keep our private sector busy until US consumer is confident again, investment in private sector more likely to sustain jobs compared to added gov’t jobs/funds, save foreign aid money for domestic program like this one…

Please tell me why this is not a good idea?

Pat February 6, 2009 at 2:16 pm

Roy,

That money would be taken from the taxpayers. Not to mention, the customers in those countries you propose to sell wouldn’t result in the kind of return worth for the companies. There is a lot of reasons the companies haven’t done what you suggested when they didn’t need the stimulus, one of them being they wouldn’t be able to make any profit or revenue. You can’t sell a product in a market where the purchasing power is low. So, the government would be throwing money out of the window.

Bruce Koerber February 6, 2009 at 6:01 pm

February 6, 2009
Who Is Going To Fund This Keynesian Spending Spree?

The ones who will be perceived by the looters as having wealth.

What does this chaos sound like? It sounds like riots in the streets. It is class conflict.

This is what is being touted as the great stimulus – a stimulus of riots that will come as a result of the inflationary depression brought about by the fallacious Keynesianism pursued by the ego-driven interventionists. Hyperinflation will just exasperate the problem.

These riots are part of the class struggle between the socialist political class and its fascist friends versus the productive members of society. The political class will continue to try to rob the productive members of society and the socialist leeches created by Keynesianism will follow suit.

Civil rights will be trampled and racial tensions will be very high since the leader of the ‘envy brigade’ will use the pulpit of the Presidency to promote socialism.

Sir, if you care about the American people you will discard your socialist ideology and allow America to return to its classical liberalism roots.

danny February 6, 2009 at 6:53 pm

Roy

How about moving out of your house so a poor person can move in for free while you still make the payments, and then you contract with an American to build a new replacement house for you to live in.

That is what’s wrong with your scenario.

Kevin February 6, 2009 at 7:14 pm

Who will fund it? Simple, the collateral the government signed over in 1913…the United States taxpayer. We’ll pay for it with higher taxes, hyper-inflated currency, and probably lives as the government will do the same thing it did when the Great Depression didn’t end…embark on another world war.

Mick February 18, 2009 at 11:41 pm

Bailout 2008, a poem by David Jeffrey:

Like a bloodied warrior,
laying broken and torn.

Like a dying soldier, hopeless and forlorn.

But the blood, it be green,
the color of money.

And the soldier is an economy,
and it is anything but funny.

Broken are it’s people and shattered are their dreams.

Thanks to the ultra rich and their full proof schemes.

It is a tragedy with more pain to come.

Finance will be Hell, and their wills will be done.

http://www.voicesnet.org/allpoemsoneauthor.aspx?memberid=982900010

Terry August 19, 2009 at 10:23 am

David Jeffrey sure said it…..and I said it before and I’ll say it again, mmmmmmmmm I love butter tarts. Did Kevin spend these ‘loans’ wisely?

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