Tito's Blog

$900 Billion To Come Out Of The Printing Press

I thought that the U.S. would turn into a Japan-style economy, where Americans now more inclined to saving, would buy as many treasuries as needed to finance ever growing budget deficits. In his NY Times op-ed, Warren Buffet says that it would not be enough.

Out of the $1.8 trillion treasuries to be issued, Americans will only purchase at most $500 billion. Another $400 billion will maybe be bought by foreigners (mainly export-driven economies like China and the Middle East states, assuming that they keep buying). The rest, a staggering $900 billion, will be purchased by the Fed, i.e. freshly minted dollars.

Unchecked carbon emissions will likely cause icebergs to melt. Unchecked greenback emissions will certainly cause the purchasing power of currency to melt. The dollar’s destiny lies with Congress.