I find it very disturbing that major news outlets here in the United States are not following this story more closely. Perhaps because to do so would mean casting Obama and his cronies in a negative light.
The story is that in order to finance the massive debt we are running up (5 times larger than what the Bush Administration ran up) we are prining money at a break-neck pace. And it is causing concern among those who are floating our debt right now, namely, the Chinese government.
From the Telegraph UK:
|Richard Fisher, president of the Dallas Federal Reserve Bank, said: “Senior officials of the Chinese government grilled me about whether or not we are going to monetise the actions of our legislature.”
“I must have been asked about that a hundred times in China. I was asked at every single meeting about our purchases of Treasuries. That seemed to be the principal preoccupation of those that were invested with their surpluses mostly in the United States,” he told the Wall Street Journal.
What happens when the Chinese call us on these loans? We won’t be able to pay and our monetary systems collaspses.
|Mr. Fisher, the Fed’s leading hawk, was a fierce opponent of the original decision to buy Treasury debt, fearing that it would lead to a blurring of the line between fiscal and monetary policy – and could all too easily degenerate into Argentine-style financing of uncontrolled spending.
I think we are already at the “uncontrolled spending” stage with the Democrats feverishly trying to squander our children’s and grand-children’s future by saddling them with huge debts and liabilities in order to waste money on ear-mark and pork projects now.
|The Oxford-educated Mr. Fisher, an outspoken free-marketer and believer in the Schumpeterian process of “creative destruction”, has been running a fervent campaign to alert Americans to the “very big hole” in unfunded pension and health-care liabilities built up by a careless political class over the years.
“We at the Dallas Fed believe the total is over $99 trillion,” he said in February.
“This situation is of your own creation. When you berate your representatives or senators or presidents for the mess we are in, you are really berating yourself. You elect them,” he said.
His warning comes amid growing fears that America could lose its AAA sovereign rating.
Massive spending will not get us out of this. Nor will increasing the size of the government. In fact, those two actions in tandem will cause the situation to get worse and worse which is precisely why the United States is in danger of losing the AAA sovereign rating.
You can access the complete article on-line here:
China Warns Federal Reserve Over ‘Printing Money’
May 27, 2009