How is it that we have no inflation, are in a recession, have the Federal government buying federally issued securities, while the Federal Reserve is acting to keep interest rates down, yet interest rates are going higher? Two sites which address the issue of federal debt and how it will affect the market and individuals are noted below. The first site reflects an article by John Taylor from the Financial Times. The following is an excerpt from that article:
Under President Barack Obama’s budget plan, the federal debt is exploding. To be precise, it is rising – and will continue to rise – much faster than gross domestic product, a measure of America’s ability to service it. The federal debt was equivalent to 41 per cent of GDP at the end of 2008; the Congressional Budget Office projects it will increase to 82 per cent of GDP in 10 years. With no change in policy, it could hit 100 per cent of GDP in just another five years.
The second article comes from Professor Greg Mankiw’s blog. Professor Mankiw is a renown economics professor, who teaches at Harvard University. His blog brings a unique perspective to the conversations trying to make sense of the direction of the government, marketplace, and world based upon the market downturn. One of the posts on his site is the following,
http://gregmankiw.blogspot.com/2009/05/fiscal-future-again.html
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