Posted by WARREN MOSLER on May 17th, 2009
It’s for real – Obama’s in the deficit terrorist camp, using the communication skills he learned in his rhetoric 101 class.
by Roger Runningen and Hans Nichols
May 14 (Bloomberg) — President Barack Obama, calling current deficitspending â€œunsustainable,â€ warned of skyrocketing interest rates for consumers if the U.S. continues to finance government by borrowing from other countries.
- It’s domestic budget surpluses that are unsustainable- they remove savings.
- Interest rates are set by the Fed, not the market or the deficit. Japan’s deficits have been triple ours and their rates lower for decades, for just one (unnecessary) example.
- The US government is not dependent on borrowing from other countries in order to spend.
â€œWe canâ€™t keep on just borrowing from China,â€ Obama said at a town-hall meeting in Rio Rancho, New Mexico, outside Albuquerque. â€œWe have to pay interest on that debt, and that means we are mortgaging our childrenâ€™s future with more and more debt.â€
That’s a load of inapplicable rhetoric for the purpose of terrorizing uninformed Americans.
Holders of U.S. debt will eventually â€œget tiredâ€ of buying it, causing interest rates on everything from auto loans to home mortgages to increase, Obama said. â€œIt will have a dampening effect on our economy.â€
Interest rates are set by the Fed, not by those who elect to buy Treasury securities.
The president pledged to work with Congress to shore up entitlement programs such as Social Security and Medicare and said he was confident that the House and Senate would pass health-care overhaul bills by August.
â€œMost of what is driving us into debt is health care, so we have to drive down costs,â€ he said.
Whatever costs he’s got in mind (insurance, drug company markups, etc.) should be minimized in any case.
It’s not about the ‘debt’.
The biggest risk to our economy is the risk of Obama succeeding in enacting measures to reduce the deficit.