I ran across a very interesting article this morning at Seeking Alpha characterizing the monetary choices made by our government over the past few years. I'm not about bashing the choices that have been made but I am interested in the outcomes that are waiting in the wings.
From the article:
So you're sitting in the club with Japan in 2001 and you say, "Help me out here, I need a couple of hundred billion to get through a rough patch - I'll give you a note with interest." Japan says sure -- even though it's 5% of his total income -- because he's sure you're good for it. Then you do it again in 2002, 3 and 4 and, one day, Japan is sitting in the club with the other G8s and says "Man that US is into me for a trillion dollars and he had the nerve to ask for more." Then Germany says "Holy cow, he hit me up for half a trillion too!"
The context of that quote makes it worth reading but the gist of the article is that as a nation we are living well above our means. No surprise there; it is a national epidemic. But I wish I understood the economics of that happens when as a nation we can no longer make our interest payments to these other countries. Will they write off that much money? I doubt they can.
