the visible hand

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U.S. Debt Increase May Test Ability to Borrow

Posted by ecoshift on January 2, 2009

U.S. Debt Set to Soar in This Year – washingtonpost.com
$2 Trillion Increase May Test Federal Ability to Borrow

By Lori Montgomery
Washington Post Staff Writer
Saturday, January 3, 2009; Page A01

With President-elect Barack Obama and congressional Democrats considering a massive spending package aimed at pulling the nation out of recession, the national debt is projected to jump by as much as $2 trillion this year, an unprecedented increase that could test the world’s appetite for financing U.S. government spending.

For now, investors are frantically stuffing money into the relative safety of the U.S. Treasury, which has come to serve as the world’s mattress in troubled times. Interest rates on Treasury bills have plummeted to historic lows, with some short-term investors literally giving the government money for free.

But about 40 percent of the debt held by private investors will mature in a year or less, according to Treasury officials. When those loans come due, the Treasury will have to borrow more money to repay them, even as it launches perhaps the most aggressive expansion of U.S. debt in modern history.

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3 Responses to “U.S. Debt Increase May Test Ability to Borrow”

  1. ecumenik said

    It doesn’t matter at all to the Wealth-Class, they are writing checks they know the average tax-payer will have to cover. If we investigate further, we find that most of the checks are written to themselves, one way or another. Moviedad

  2. ecoshift said

    Plenty of favors being called and buddy checks written in the last few months, no doubt. Good time to be a friend of Hank.

    Still, it will matter if we can’t find takers for the debt. China’s move to try and establish the renminbi as a reserve currency isn’t a good omen. The interest on the debt “we” will have to cover is likely to rise. Mortgage rates and Commercial rates will rise as well.

    As they say over on CR: “we’re all subprime now….” Hopefully the rest of the world won’t offer us interest only floating rate terms on our treasuries.

  3. 8xcdqx said

    dsfsdfs67877 test test

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