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« If The Bankers Hate It, I Like It | Main | USA Today's Historical Tax Calculator: A look back at tax rates and federal spending »
Monday
Mar152010

As Budget Deficit Hits Record High, Interest On US Public Debt Hits Record Low (ZERO HEDGE)

What is wrong with this picture: the MTS just announced that the February budget deficit was $220.9 billion, after receipts of just $107.5 billion with vastly surpassed by outlays of $328.4 billion. This is a record. Yet the interest on the public debt was a mere $16.9 billion (page 13 of the MTS report). The reason for this is because as TreasuryDirect points out, in February the interest on public marketable debt (actual cash outlays), which as of Monday stood at $8.061 trillion, hit an all time low of 2.548%. How is it possible that unprecedented debt accumulation can result in ever declining interest rates, and Treasury auctions, such as today's 10 Year reopening, in which the Bid To Cover hit an all time high? One answer: The Federal Reserve, which through complete domination of the entire capital market courtesy of ZIRP and QE has now turned market logic upside down by 180 degrees. In a normal world, the more money you borrow, the greater the associated risk, and the greater the interest payments on this debt. Not in America though. So can we assume that the Fed can forever keep rates on debt at record low levels? No. Which begs the question: what happens when interest rates do finally start going up?

Here is the relevant page highlighting the deficit. In a word: the US collects enough money organically (via taxes) to cover less than a third of its outlays.

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Reader Comments (1)

Retired general: Gays made Dutch weak in Bosnia
By PAULINE JELINEK, Associated Press Writer Pauline Jelinek, Associated Press Writer
Thu Mar 18, 7:46 pm ET

WASHINGTON – A retired U.S. general says Dutch troops failed to defend against the 1995 genocide in the Bosnian war because the army was weakened, partly because it included openly gay soldiers.

The comment by John Sheehan, a former NATO commander who retired from the military in 1997, shocked some at a Senate Armed Services Committee, where Sheehan spoke in opposition to a proposal to allow gays to serve openly in the U.S. military.
Mar 18, 2010 at 11:57 PM | Unregistered CommenterZarathustra

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