Saturday, January 28, 2006


"On January 24th they [US Treasury Dept.] breached it [the national debt ceiling] brazenly and openly and with nary an accompanying explanation. Neither have any lawmakers broached this indelicate subject.

I suppose we could write this off as merely an unsurprising development from a government that no longer bothers to even appear to be adhering to rules, laws and procedures, let alone actually doing so.

But the silence is all the more troubling because there is an unprecedented level of government borrowing on the books for 1Q06 within the next 2 weeks (Feb 1st to Feb 9th) an especially busy period of time. An ambitious ~$70-$80b in Treasury paper will hit the market.


Another odd facet of this story is the deafening silence out there in the financial press (and I use that term loosely) regarding this matter. Leaving aside the issue of a technical default, one wonders why nobody is asking any questions about the rate of debt accumulation.

And whether it is sustainable.


Factoring out the plundering of excess social security contributions, the US government borrowed $52B in 3Q05, $96B in 4Q05 and expects to borrow $171B in 1Q06. A trend nearly as mind-boggling as the soon to be discontinued M3 series.

Why do I even bother to pen such distressing factoids?

Because in all my time studying economics I have determined only one thing; there's no free lunch. Pay now or pay later but pay we will.

Or, more accurately, we hope that our kids will, and not stiff us for the bill. But if they did, who could blame them?"

Dr. C. H. Martensen

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