Sunday, February 21, 2010

Thoughts on a Rainy Sunday Morning

1. There is much criticism of allowing China to hold such a large chunk of U.S. public debt. Some fear that China will one day use its ability to sell or stop buying U.S. Treasuries as a political weapon against the United States.

Meanwhile, the U.S. government should send the People’s Bank of China a thank you note for helping to fund the overseas "contingencies" in Iraq and Afghanistan. The defense budgets for fiscal years 2010 (the current fiscal year), 2011, and 2012 project spending in those military efforts at $130 billion, $160 billion, and $160 billion respectively. With budget deficits exceeding a trillion dollars in each of these years, it was considerate of China to buy a substantial amount of U.S. government bills, notes, and bonds, especially at low interest rates.

2. Lawyers, doctors, and other professionals can be sued for malpractice. How about economists who give bad advice to policy makers when that advice fails?

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