Thursday, March 12, 2009

Our Government's Credit Card Interest Payments

The spreadsheet linked here shows the equivalent: promissory notes bought by foreign creditors, and the interest paid by the US. Now - given the new US deficit this year - either the monthly/yearly interest payment is going to sky-rocket (further ensuring larger deficits (because we cannot restrain our own spending, nor can taxes be increased sufficiently)), or we will see "quantitative easing" (increasing the quantity of the supply of money (inflation)).

You guess which. I have here already.

Pay attention to whether the forecasts offered by the Feds are done on an accrual or a cash basis of accounting. You'll noticed they are intertwined: when it comes to income, accrual basis; when it comes to expenses, cash basis. This is a systematically misleading reporting method. Now why would a government (or any organization) do that - unless it is trying to hide something? Umm, insolvency?

No comments: