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["Don Bowen" <don.bowen AT earthlink.net>]

> WASHINGTON, Nov 3 (Reuters) - Facing the need to borrow up to a staggering
> $2.1 trillion in the current fiscal year to fund economic rescue programs,
> the U.S. Treasury is expected to significantly expand its debt securities
> arsenal.

I have been thinking about this today after I read about the borrowing we
will be doing over the next few years.  Where will that money come from?
Japan, Great Britain, China and the oil countries have been loaning us money
in recent years but each has problems of their own.  In order to attract the
money it will be necessary for the US to raise interest rates which could
revive the carry trade.  But what it will do is force us unto massive tax
increases.  The percentage of the national budget devoted to interest
payments on the debt will grab an ever larger share.  As the economy shrinks
there will be less money from the payroll tax to hide the deficient
spending.

The Treasury cannot spin up the printing presses faster, that is the job of
the Fed.  They invent money by spinning the dials of the computer slot
machine then loan that digital money.  Will the treasury find an open window
when it needs it?

Bernanke and Paulson are busily fighting the last depression and failing to
see that those tools no longer work but they are so mired in the existing
system that they cannot see any other way.

Don Bowen  KI6DIU
http://www.braingarage.com/Dons/Travels/journal/Journal.html