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Deficits erode U.S. position

March 2, 2010
The Daily Mining Gazette

We Americans have been warned over and over again that the national debt is more than an unpleasant reality and a political talking point. It has very real ramifications. Recently, they became painfully apparent.

Treasury Department officials revealed that demand for U.S. government securities - that is, bonds - fell by a record amount during the past few weeks.

In December the amount of U.S. securities held by foreign governments dropped by $53 billion. China led in dumping U.S. debt, reducing its holdings by $34.2 billion.

That will make it more expensive for the government to market its bonds.Investors will demand higher interest rates, and that will make servicing the debt more expensive.

It is similar in a way to what happens when, for one reason or another, your credit card company decides to increase the interest rate on your account.

The national debt stands at about $12.4 trillion. It is increasing so rapidly that Congress has been forced to formally set a new debt limit of more than $14 trillion.

As matters stand, there is no reasonable strategy in place to curb the deficit spending that is piling on to the debt.

To the contrary, fiscal irresponsibility during President George Bush's administration seems like the good old days in view of President Barack Obama's plans for record deficits.

Failure to cope with deficit spending is costing us very real money - and will cost us much more in the near future unless real change occurs.



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