While America was having last weekend off, the country’s public debt ticked over to the impossible to comprehend figure of $US12 trillion, or over 80% of the country’s annual GDP, and set up a possible big brawl between the Obama Administration and the loony right in the US.
The debt bill rose from $US11.99 billion last Friday to $12.031 billion on Monday — that’s around $US100 extra for every one of the 300 million or so Americans.
The figure makes our argument about our Federal Government debt burden look insignificant, which it is. Its growth is remorseless at the moment as the economic slump slashes tax and other revenues and spending rises for stimulus, unemployment, the wars in Iraq and Afghanistan and the myriad other things that the country’s voters and their congressional representatives demand (while complaining about the size of the deficit and all the debt).
Seeing public debt only topped the $US10 trillion mark in September of last year, the $US2 trillion rise in just over 13 months has been nothing short of astounding, confirming the enormous damage done to US Government finances by the deepest slump since the 1930’s.
It also adds to pressure on the economy from weak bank lending, poor growth and high levels of unemployment, as Fed chairman, Ben Bernanke reminded Americans once again in a speech on Monday. The debt is quickly approaching the statutory limit of $US12.104 trillion, meaning Congress will have to raise the ceiling to prevent a shutdown of government operations. That will have to happen sometime in the next week. Could this be the next big brawl between president Obama and the right wing of American politics, including Rupert Murdoch?
But contrary to claims from conservatives and others that the rise in spending and the huge surge in debt would make buyers (especially foreigners) of that debt unhappy, or unwilling, nothing has been further from the truth. US Treasury bond auctions have gone off like clockwork: over $US80 billion of debt was sold last week, over $100 billion late last month. Demand remains solid, especially from foreign buyers, as figures from the US Treasury overnight revealed.
In fact the figures showed stronger than expected demand for US Government debt and for non-government US dollar denominate investments. So much for all that talk about how the weakening US dollar would see foreigners, especially Governments, like China’s, shy away from investing in the US. The Treasury figures show that net long-term capital flows to the United States climbed to US40.7 billion in September from $US34.2 billion US dollars the prior month.
On the whole, foreigners bought $US133.5 billion of US securities in September, the most since October 2008, up sharply from the inflow of $US25.3 billion. China, which this week attacked the current stance of US monetary policy, the deficit and the weaker dollar, raised its Treasury bond holdings in September to $US798.9 billion US dollars from $US797.1 billion in August.
Foreign private net purchases of Treasury bonds and notes rose to $US25.7 billion in September from US14.8 billion in August and net foreign official purchases rose to nearly $US19 billion from $US13.1 billion.
“Net foreign purchases of long-term US securities were $55.7 billion. Of this, net purchases by private foreign investors were $44.8 billion, and net purchases by foreign official institutions were $10.9 billion,” The Treasury said.
Britain, Japan and Canada were the biggest buyers of US bonds for the month of September.
There’s a motto for the US right, and it goes “people who live in glasshouses shouldn’t throw stones” – A lot of that 12 trillion was incurred under conservative governments.
We’re facing a shutdown of US government operations unless the debt limit is increased, but certain major business interests are considered “too big to fail” and bailed out by the American people (against their will). Coupled with the fact that the Federal Reserve Bank creates money out of thin air, then enslaves the US population by making them repay the money it creates with interest, the joke is once again on ordinary people, democracy and liberty. The success of the capitalist elite minority at controlling the whole world, and at the expense of everyone else, is astonishing.