The Current State of the Government Debt

The debt-to-GDP ratio is too high. The U.S. is not Greece or Italy — yet. But if we stay on the current path, at some point an auction of Treasury securities will fail in the sense that there will be no bidders from the private sector. The Fed could bail out Treasury by purchasing the entire new issue. But that is a policy choice that the Fed must make. The really scary part of all this is that nobody knows the debt-to-GDP ratio at which an auction will fail. There will be warnings, however. Watch for rising interest rates on TIPS (Treasury Inflation Protected Securities).
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NY-26: Media Innumeracy Strikes Again

Perennial candidate Jack Davis ran for the same seat in the previous three elections, each time as a Democrat. This time he proclaimed himself the tea party candidate and managed to siphon 9% of the vote away from Ms. Corwin. Without his presence in the race (or if he had followed form and run as a Democrat), the Republican Corwin would have won going away. And there would be no story for the mainstream media. I’m quite sure they wouldn’t have trumpeted a Corwin victory as a win for Rep. Ryan’s reform proposal. Continue Reading →