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The Spectacle Blog
A 1923 Weimar German bank note in the sum of 50 million marks
In a few years will Americans be using wheelbarrows to carry around enough cash to buy a loaf of bread, as happened in hyperinflation-ravaged Germany in the 1920s?
Probably nein, but we are all going to experience pain as inflation eats away at our paychecks, our 401(k)s, and our bank accounts.
One worrying sign is that investors are less than enthusiastic about buying triple-A rated U.S. government debt.
AP reports this afternoon:
Stocks lost ground after a weak auction of U.S. government debt stirred worries about how easily Washington will be able to raise money to fund its economic rescue program.
Investors gave an unexpectedly cool response to a $24 billion auction of 5-year Treasury notes Wednesday, which also sent prices for Treasurys lower.
The government is running up record deficits in order to fund an array of plans to provide stimulus to the economy and support to the ailing financial system. [emphasis added above]
Investors are justifiably worried about the long-term solvency of the U.S. government which lacks the political will to set its financial house in order. They also worry whether the value of the U.S. dollars that the Obama administration is urging them to buy will be diluted by an orgy of money-printing. Remember that just a month ago Secretary of State Hillary Clinton had to beg the Chinese to keep buying Treasurys.
The fact that investors, including foreign central banks, have just about had their fill of greenbacks should scare the bejeezus out of all Americans.
View all comments (10) | Leave a comment
More Blog Posts by Matthew Vadum
http://spectator.org/blog/2009/03/25/us-debt-time-bomb-takes-a-lick
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Bill Bailey| 3.25.09 @ 3:51PM
Jeezus!
Paul Nelson| 3.25.09 @ 4:11PM
Assets of the Federal Reserve have roughly tripled in the past six months. If Uncle Milty Friedman is right that it takes about two years for an increase in the quantity of money to effect an increase in prices, we can expect that a dollar will be worth roughly a third of what it is worth now. That assumes that the Fed will not print even more money in the meantime. Why would anyone buy a two year treasury note that carries an interest rate of less than 100% per year?
Pingback| 3.25.09 @ 4:20PM
U.S. Debt Time Bomb Takes A Licking But It Keeps on Ticking — But As For Me links to this page. Here’s an excerpt:
Matthew Vadum | 3.25.09 @ 4:41PM
Milton Friedman was a wise man.
Floyd Looney | 3.25.09 @ 5:47PM
They couldn't even sell $24 billion in debt?? ouch... are we gonna print trillions in new dollars??
Angel| 3.25.09 @ 9:03PM
ZerObama is a disaster. Which is he: The stupidest president ever, or the most calculating?
MAS1916 | 3.25.09 @ 9:36PM
Hadn't thought of this! By running up inflation, perhaps we can finally count on the value of our homes catching up with the loan amount. And we will all be millionaires! Obama is brilliant!
But seriously, Obama will bankrupt this country if he is not stopped soon. Perhaps then the schools will start teaching basic economics.
chemman| 3.25.09 @ 9:45PM
Dream on MAS1916 the schools have taught basic biology including the carbon cycle, photosynthesis and cellular respiration for years and the fools still want to regulate CO2 as a pollutant. What makes you think it will be any different with economics.
Daphne| 3.25.09 @ 9:53PM
C'mon, you guys; you know very damn well that the only things public schools teach is (bogus) self-esteem and (excuse my french) screwing. We can tell the truth here--we're Conservatives, after all.