US Money Pit Deepens

April 29, 2009

It turns out that financing President Obama’s wish list is not easy. The next two weeks will see stratospheric issuances of government debt, pumping billions of dollars into the economy as printing presses work overtime.

So we’re breaking out some fresh quotes from Tom Hanks’ 1986 film The Money Pit, relating Walter Fielding and Anna Crowley’s endeavors in restoring a broken down mansion to the historic spending spree financed by the Treasury and Federal Reserve aimed at fixing the financial crisis.

Here lies Walter Fielding. He bought a house, and it killed him.

The Treasury Department will auction $71 billion in securities, breaking down into $35 billion worth of 3-year notes, $22 billion in 10-year notes, and $14 billion in 30-year bonds. The funding will service $52.2 billion in maturing debt and raise $18.8 billion for ongoing operations.

All you want to talk about is money, lets about love, and sex. Forget it, let’s just talk about sex.

Well, maybe the Treasury isn’t talking sex, but they are certainly talking about money, creating new ways to finance America’s burgeoning deficit. The Treasury announced plans to reopen the 30-year bond auction each month. Treasury officials also discussed plans to offer a new 50-year bond as the U.S. looks to stretch its expanding debt load.

UP and DOWN, UP and DOWN! Strong strokes! PAINT! Don’t tickle. And don’t smoke!

The Fed reiterated its aggressive stance to combat frozen credit markets. Hoping to facilitate low interest rates with quantitative easing, the Federal Reserve is proceeding with its somewhat radical plans to purchase U.S. securities.

The following is excerpt of the text from the April 29th FOMC meeting:

“As previously announced, to provide support to mortgage lending and housing markets and to improve overall conditions in private credit markets, the Federal Reserve will purchase a total of up to $1.25 trillion of agency mortgage-backed securities and up to $200 billion of agency debt by the end of the year. In addition, the Federal Reserve will buy up to $300 billion of Treasury securities by autumn.”

Just because they showed up to collect the money is no guarantee that they’ll show up to do the work. And if they do, I can’t pay for it!

Where is all this money going anyway? Who’s getting pieces of this enormous pie? Who knows… As for who is paying? That’s simple: U.S. taxpayers.