Re: fed policy

On Sat, 02 Feb 2008 09:46:22 -0500, WeathermanBill <no@xxxxxxxx>
wrote:

On Thu, 31 Jan 2008 22:21:22 GMT, Dave K <dave.k@xxxxxxx> wrote:

snip
Let's stimulate an economy in debt by lowering interest rates. BTW,
that saves the fed a lot too, because they have borrowed a lot of
money. Let's ignore the market forces of the fed borrowing huge
amounts of money to finance a war. Let's just pretend it isn't that
way, and hope like hell that we can salvage some Republican seats in
congress. If the Democrats win, we can blame it on them.

2009 may be a hairy experience.

The National Debt is growing now approaching 9.2T. The Fed is easing
interest rates in the face of inflation concerns. Americans do not
save enough therefore we finance our spendthrift ways via foreign
investment. The dollar is dropping.

Point one: Will the combination of the dollar dropping and interest
rates of Treasuries decreasing ever reach a point that our creditors
will no longer buy our debt??

Remember, we're talking about business here. Business will always
take the best deal. If our debt is not the best deal, you can darn
sure betcha it will not be bought into.

Point two: What are the chances of stagflation. I lived thru that and
it ain't pretty.

Don't know on that one.

Point three: Are we opening ourselves to foreign blackmail. Does
China and Japan have enough dollars and are they willing to bankrupt
the US

Opening? I'd say we've already gone 'round the bend on that one.
From a 2006 article:

"For several years, China's loans have helped to keep prices and
interest rates low in the United States, and to finance big tax cuts.
If the lending began to dry up - because Chinese officials decided to
diversify into other currencies or to spend more at home - prices,
interest rates and taxes in the United States would very likely rise.

"If the loans dried up quickly - a worst-case scenario - the result
could be a sharp financial crisis. A gradual shift could mean a long
downward trend in American living standards as a higher cost of living
took its toll."

<http://www.iht.com/articles/2006/10/23/opinion/edchina.php>

It used to be Democrat spending, but this Republican drunken sailor
routine has put this country is quite a bad spot.
--

Cheers! :)
.

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