In a
recent article on this website, The Keynesian Spending Spree
is Over, I pointed out that, according the Fed’s own
reports, 61% of all the new US Government debt issued in 2011 was purchased
by the Fed itself, probably with computer game money--electronically issued
money backed by nothing except the purchased bonds, not by regular buyers
or real tangible pre-existing bank capital of the Fed. I presume this
continues in 2012, perhaps at an even higher percentage.
This
means that the market among real buyers for US government debt has largely
dried up, at least at the interest rates on offer—as well it should
due to our government’s continuing reckless spending beyond its
means.
Now
when I refer to our government, I really mean all of us, because our politicians
could not do it if we did not let them. I am not trying to give you permission
to magnify your resentment of your favorite political villain in the piece,
and escape from facing the full problem into a fantasy that if only your
favorite villain in the piece would act differently, the whole problem
would go away. Because I know a resentful approach to our problems will
not enable us to face them soberly and address them realistically. Also,
your resentment of anyone is a splendid way of directing attention away
from your own small or large part in the drama, and of ignoring the real
fact that there are things, large and small, that each of can do. See
my previous article on this website, How Do You Gather and Share News?
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