Maybe the most important thing to keep in mind is that we're living in the era of low cost borrowing for government. The government was paying over 6% interest on debt in 2000. Now, the government borrows at less than 2.5%. So while Federal outlays (Federal spending) under Obama have significantly increased, our interest payments on debt have gotten cheaper.
The FED has purchased something like $4 trillion in bonds. Washington pays zero interest on that money, and essentially never has to pay it back.
The rest of the world is so messed up that our government has been able to sell treasuries at close to zero interest.
So that's a huge reason why our annual deficits are not as bad as they could be, or should be in a real world, given how much we're spending. And the increase in the dollar supply created by debt monetization has not led to extreme inflation, as it normally would, because the world is depressed. Yes, Janet Yellen has begun tapering, but some suspect that's a mirage when you look at what the FED is doing with the other hand.
Interest rates remain low, and demand for treasuries remain high. We're living in the era of a magical economy where the government can buy votes by handing out freebies without any immediate consequences. But, you'd have to guess that all this low cost borrowing is creating the worst bubble ever. If that's not the case, why work? After all, if wealth can be created just by printing (or clicking in this case) currency and spent into a real-life physical economic world, then there is no need for industry, for tax collection, for education, for creativity or innovation.
The FED has purchased something like $4 trillion in bonds. Washington pays zero interest on that money, and essentially never has to pay it back.
The rest of the world is so messed up that our government has been able to sell treasuries at close to zero interest.
So that's a huge reason why our annual deficits are not as bad as they could be, or should be in a real world, given how much we're spending. And the increase in the dollar supply created by debt monetization has not led to extreme inflation, as it normally would, because the world is depressed. Yes, Janet Yellen has begun tapering, but some suspect that's a mirage when you look at what the FED is doing with the other hand.
Interest rates remain low, and demand for treasuries remain high. We're living in the era of a magical economy where the government can buy votes by handing out freebies without any immediate consequences. But, you'd have to guess that all this low cost borrowing is creating the worst bubble ever. If that's not the case, why work? After all, if wealth can be created just by printing (or clicking in this case) currency and spent into a real-life physical economic world, then there is no need for industry, for tax collection, for education, for creativity or innovation.
