The last financial crisis of 2008 swept in unannounced almost overnight. It was a result of over-leverage by businesses, households, and governments. The U.S. government’s balance sheet is much worse than five years ago, even as businesses and households have reduced debt. As an insurance policy against another meltdown, it would seem prudent to cut government spending, grow the economy, and lower the debt. Instead, Mr. Obama, the congressional Democrats, and even some Republicans are pushing for even more federal spending and debt, even though we’re still borrowing one-half trillion dollars a year. No, we are not Argentina. We are not Greece. But America has not repealed the laws of finance. Debts must be paid. When they get too high, investors panic and start selling their bonds. Our interest rates today, thankfully, are low. But if rates rise by two percentage points more than projected — which would hardly be a giant surprise — the debt rises by another $3 trillion or so over ten years. Interest payments on the debt could become the single largest expenditure in the federal budget.
Posted on: Sat, 09 Aug 2014 23:35:00 +0000
Trending Topics
Recently Viewed Topics
© 2015