Just happy we don't have to worry about it.

As we’ve noted previously, one of the biggest problems with busy-body Keynesian economics is that it is not applied in a particularly Keynesian fashion. Everyone has got the whole deficit-spending thing down, pat – no worries, there. It’s the whole saving for a rainy day during the good times that no one in D.C. or Sacramento has time for.

And when the New York Times starts worrying about the debt burden, you may have to start paying some attention to it.

In some ways, ballooning deficits should not matter. Deficits are a useful way for governments to use public spending to stimulate the economy when private demand is weak. This works as long as a country closes its deficit and pays back its borrowings after its economy starts to recover.
The trouble is that government borrowing risks crowding out private investment, driving up interest rates and potentially slowing a recovery still trying to take hold. That is why the Federal Reserve announced an extraordinary policy this year to buy back existing long-term debt — $300 billion over six months — to drive down yields. The strategy worked for a while, but now the impact of that decision appears to be wearing off as long-term interest rates tick up again.

Even the Times seems hip to the fact of the inflationary pressures brought about by massive debts. But as long as we have someone to buy up that debt, no problems, right?

Uh-oh.

China, wary of the troubled US economy, has already "canceled America's credit card" by cutting down purchases of debt, a US congressman said Thursday.

China has the world's largest foreign reserves, believed to be mostly in dollars, along with around 800 billion dollars in US Treasury bonds, more than any other country.

But Treasury Department data shows that investors in China have sharply curtailed their purchases of bonds in January and February.

With the Chinese on their way out, who’s in?

Kirk said he was the first member of Congress to tour the Bureau of Public Debt, which trades bonds, and was alarmed at how much debt was being bought by the US Federal Reserve due to absence of foreign investors.

"There will come a time where the lack of Chinese participation may have a significant impact," Kirk said.
"We should track that, because up until last month they were the number one provider of currency to the United States and now they're gone."

So what are we doing to cover our own debt? Let’s start cranking up the printing presses.


Picture above represents shameless flaunting of nieces and nephews as well as a singling-out of the individuals who will be on the business end of this country's deferred responsibility program.