Sunday, June 28, 2009

Funny Money Economy

The world believes that the US is borrowing money from capital markets. It is often said that the Chinese and the Japanese will buy government bonds. But the truth of the matter is that trust in the gravitas and reliability of the United States has suffered to such a great degree that fewer and fewer foreigners are purchasing its government bonds. That's why the Federal Reserve is now buying securities that it has printed itself. The Fed's balance sheet has more than doubled since 2007, making the US central bank one of the world's fastest-growing companies. The purpose of this company, though, is to create money out of thin air.

Can this be true? Gabor Steingart of Der Spiegel says so. He also says that Obama follows Larry Summers, his senior-most economic advisor, around like a lap dog.

The crisis, Summers intoned last week at a conference of Deutsche Bank's Alfred Herrhausen Society in Washington, was caused by too much confidence, too much credit and too many debts. It was hard not to nod along in agreement.
But then Summers added that the way to bring about an end to the crisis was -- more confidence, more credit and more debt. And the nodding stopped. Experts and non-experts alike were perplexed. Even in an interview following the presentation, Summers was unable to supply an adequate explanation for how a crisis caused by frivolous lending was going to be solved through yet more frivolity.

I am no economic expert. But even I know that this sounds bad.


WoFat said...

Perhaps a result of the "credit card thought process"? No money. No matter. Charge it.

When our sin was 7, he wanted something - I forget what - and we said, 'Sorry pal, we don't have any money right now.' "Well, charge it," he said, as though he had some faint idea of finance. He grew up and got smart. Many didn't.

a49erfangirl said...

I do have to agree with you that it does sound bad. I know I should be paying more attention but lately I have tried not to. Hope whatever they do things get better with the economy.

LL said...

The Socialist agenda calls for crashing the present US economy so that it can be redesigned under another model since "free enterprise" will have failed. I am not a conspiracy theorist but I can't see why else they're doing what they're doing.

Opus #6 said...

Wo, not smart, I agree.

49er, and they hope that you don't pay attention.

LL, I hate conspiracy theories as well, but...if it was simply honest inexperience at work here, they would get things right sometimes. Since that is not happening, I fear the worst.

Quiskaeya said...

I'm not sure I fully understand everything said, but the direction our current economy is headed under our current administration scares me. I've never been a support of BIG government and that's the approach that is being taken now to fix everything. Also, I totally agree that credit flowed way to freely and that has greatly contributed to our current financial situation.

Opus #6 said...

The big borrowing and spending has to stop!

Just a conservative girl said...

49er - they are counting on us not paying attention. That is all part of the plan. We need to show them that we are paying attention. Join the letter writing campaign to cut off re-election funds to the Cap & Tax 8
Template on my blog.

Opus #6 said...

Great idea, jacg! No re-election funds to the traitors!

Just a conservative girl said...

Opus - I just wanted to make sure you heard about the CA rep that called conservative radio hosts terrorists. I am totally in love with the Bay area. I have one of my nearest and dearest living there. But I am afraid to live in that state. What is up with the people out there?