punditman says...While Peacenik grows increasingly uneasy about the safety of a swine flu vaccine, punditman turns his gaze to the supposed "economic recovery" with equal skepticism. As always, Paul Craig Roberts sorts through the haze.
How Fake is the "Recovery"?
By PAUL CRAIG ROBERTS
Last week on NPR a professor in the Sloan School of Management at MIT explained that what is really at stake in the health care bill is the US government’s ability to borrow. In other words, the bill is about cutting health care costs, not about providing hard-pressed Americans with health care.
The professor said that if we didn’t get health care costs under control, in 30 years the US government would not be able to sell Treasury bonds.
It is not at all clear that the Treasury will be able to sell its debt instruments in 30 months, and it has nothing to do with health care costs. The Treasury debt marketing problem has to do with two back-to-back US fiscal year budgets, each with a $2 trillion deficit. The size of the US deficit exceeds in these troubled times the supply of world savings available to fund the US government’s wars, bailouts and stimulus plans. If the Federal Reserve has to monetize the Treasury’s new borrowings by creating demand deposits for the Treasury (printing money), America’s foreign creditors might flee the dollar.
The professor didn’t seem to know anything about this and gave Washington 30 more years before the proverbial hits the fan.
One looks in vain to the US financial media for accurate economic information. Currently, Wall Street, the White House, and the media are hyping a new sign of economic recovery--”surging” June home sales. John Williams at shadowstats.com predicted this latest reporting deception.
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How Fake is the "Recovery"?
By PAUL CRAIG ROBERTS
Last week on NPR a professor in the Sloan School of Management at MIT explained that what is really at stake in the health care bill is the US government’s ability to borrow. In other words, the bill is about cutting health care costs, not about providing hard-pressed Americans with health care.
The professor said that if we didn’t get health care costs under control, in 30 years the US government would not be able to sell Treasury bonds.
It is not at all clear that the Treasury will be able to sell its debt instruments in 30 months, and it has nothing to do with health care costs. The Treasury debt marketing problem has to do with two back-to-back US fiscal year budgets, each with a $2 trillion deficit. The size of the US deficit exceeds in these troubled times the supply of world savings available to fund the US government’s wars, bailouts and stimulus plans. If the Federal Reserve has to monetize the Treasury’s new borrowings by creating demand deposits for the Treasury (printing money), America’s foreign creditors might flee the dollar.
The professor didn’t seem to know anything about this and gave Washington 30 more years before the proverbial hits the fan.
One looks in vain to the US financial media for accurate economic information. Currently, Wall Street, the White House, and the media are hyping a new sign of economic recovery--”surging” June home sales. John Williams at shadowstats.com predicted this latest reporting deception.
Keep Reading...
