Saturday, March 21, 2009

CBO predicts $2.3 trillion more deficit

The Congressional Budget Office predicts that the public deficit over a decade will be $2.3 trillion more than earlier estimates as a result of Obama's budget.
This does not need to be. When stimulus funds are paid to our auto companies and others, there is no reason for the treasury to first borrow more from China and others. If the Federal Reserve can bail out banks by writing numbers after the bank's accounts at the Fed, it could write numbers after the Treasury Department accounts, and the Treasury could then write checks to keep businesses going. Remember, there is no opportunity cost to putting unused resources to work. No one need save first and defer consumption.
Of course, there is one reason to keep doing things as done in the past--myth and superstition!

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