The monthly budget statement was just released today, and in November the federal government took in $133.6 bln and spent $253.9 bln. This works out to $1.90 going out for every $1.00 coming in. Believe it or not, this is actually an improvement from October when the ratio was $2.3 going out for every $1 coming in! Over the last 12 months alone, the Federal government has racked up a deficit of $1.4 trillion. Needless to say, this pace of spending versus income can't keep up forever, and today's lousy 30-year auction is an indication that investors aren't too keen on locking up their funds in long-term IOUs from Uncle Sam right now.
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"...today's lousy 30-year auction is an indication that investors aren't too keen on locking up their funds in long-term IOUs from Uncle Sam right now."
Ummm... what? 4.52% is still lower than the rate's been at any time in the last four years. And, in the last year and half, the U.S. Treasury has increased the supply of Treasury bonds held by the public by $2.5 trillion, without moving the needle at all on either the real or nominal interest rates it has to pay.
If investors aren't too keen on locking up their money in a 30-year Uncle Sam IOU, then what do you call all the people buying the treasuries? Financers? Lenders?
Posted by: Sprizouse | December 10, 2009 at 04:50 PM