David Saks: Financing the National Debt : More Trouble

David Saks - Real Estate Broker - The Real Estate Mart of Tennessee, Inc. - 4040 North Watkins-Suite #4 - Memphis, Tennessee 38127 - Phone (901) 357-4663

Financing the National Debt : More Trouble

                                  debt

What happens when fiscal policy begins to determine the course of the natural state of the nations economy ?

Our federal fiscal policy is overseen by both the legislative and executive branches of the United States government.

What happens when the federal government spends more money than it expects to receive in the same year ?toilet paper

A big, nasty deficit, more shortage, more shortfall of economic resource and liquidity falls and slams head of the nation.

So, what does the government decide to do when this kind of thing happens ?

The government starts to sell interest bearing securities to investors who fall for the bait.

And what might the hook be baited with you may ask, for goodness sakes ?

Why it's none other than 500 billion dollars of Federal Rerserve Bank acquired mortgage backed securities from (you guessed again) Freddie Mac and Fannie Mae, resources that once belonged to private investors.

So what does this mean ?

It means that now private investors are once again lending money to the government to to cover the governments huge, failed spending catastrophe.

Will this have an effect on interest rates in the future ?

Yes ! They could increase.

Why ?

The government is borrowing, extracting, removing, withdrawing, absconding and making off with huge amounts of dough that rob the money markets and will in turn increase demand for funds for every aspect of commerce known to mankind.

Hang on to your hat !

That's about the only thing many will have left in a few days.

 




David Saks



Time&Temp Memphis

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Comment balloon 2 commentsDavid Saks • February 18 2009 03:10PM

Comments

Pretty scaring stuff. I cant wait until 6 moths goes buy to see what will happen.

Posted by Frank Magdefrau, Certified Master Inspector (DeSoto Home Inspection Services) almost 11 years ago

I'm interested in the next seven years, Frank, because of the attrition of equity. If the national of 3% per annum was shattered from the previous 10 years, and desparity of 30 to 40 percent in some markets has now become evident, recovery will be slow if the economy is saddled with new spending. There's always room for improvement, though, and I hope that our great mid-south (and national) builders believe in that idea. Hope you have a great week.

Posted by David Saks ((retired)) almost 11 years ago

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