Baby Lee is one year old and has $2000 in his savings account. He lives in New York. That means he owes $61,562 to the federal and state governments, minus the $2000 in his savings account, he is $59,562 in debt, and he’s not even out of diapers yet.
That’s only the beginning though because now we’re bailing out the Europeans who can’t sustain their own governments. We are going to swap as many dollars for Euros as they need. Why not, we have our hands in China’s pockets and we have a printing press. The result of the dollar-euro swap is that the banks are flooding the financial system with cash, which is currently causing inflation of 3.8% with flat growth. It’s looking and smelling like stagflation* to me.
Senate Republicans are worried that a broader bailout for Europe is on the horizon. Europe has made spending and entitlement choices they should pay for, not Americans.
Geithner wants the European bailout fund to be increased, a lot, and we could be on the hook for more as a result.
…Investors have become increasingly worried that a $740 billion euro EU bailout fund isn’t big enough to cope with potential losses if Greece and other countries default on their debts, wiping out those assets held by European banks. With richer countries like Germany and France unwilling to commit more funds, Geithner wants the Europeans to boost the existing bailout fund’s firepower. One idea would be to use the money just to guarantee losses from bond defaults rather than buying up the bonds themselves…” Read here: We’re on the hook for Europe now too
*Stagflation is a condition of slow economic growth, relatively high unemployment – a time of stagnation – with a rise in prices or inflation.