So the Congressman walks into the Bureau of Public Debt and is greeted by the government employee. (Yes... there really is a Bureau of Public Debt. I didn't believe it either... but go to www.publicdebt.treas.gov and see for yourself)
Hello, I'm 3rd District Congressman Soandso and I would like to know just a little more about what you people do here?
Certainly... It's really great to have you here, we don't get many Representatives or Senators over here.
Really? Why is that and just how often DO you get visitors from Congress over here? asks the Congressman.
Well, I've been here for 22 years and you' re the first... responds the employee!
The Congressman asks... Just exactly what does your Bureau do?
Our job is to borrow the money needed to operate the federal government and to account for the resulting debt. In a nutshell, we borrow by selling Treasury bills, notes, and bonds, as well as U.S. Savings Bonds; we pay interest to investors; and, when the time comes to pay back the loans, we redeem investors' securities. Every time we borrow or pay back money, it affects the outstanding debt of the United States. Essentially, we sell the debt that is created buy Congress when it spends more than it takes in! We are the agency that finds customers to buy our debt. One of our primary responsibilities is to account for the U.S. public debt. We update this number daily at http://www.treasurydirect.gov/NP/BPDLogin?application=np
I'm sure you've looked at the new stimulus package and our outstanding debt... so just how much public debt in Bonds, Bills and Notes will you need to sell to cover our debt?
The employees eyes and head drop slightly and he whispers... 150 Billion dollars a week!
I'm sorry... I didn't hear you... speak up!
The employee raises his head, puffs out his chest, looks the Congressman directly in the eyes and clearly states... 150 Billion dollars a week! When the new stimulus package passes and we add that to the present outstanding government debt we will need to sell 150 billion dollars of debt each and every week! Most debt is short term debt and rolls over rather quickly so the sum will be basically 150 billion dollars a week.
The stunned Congressman... ask... How much? What did you say? Did you say.... a150 Billion dollars a week?
Yes... responds the employee. 150 Billion dollars a week! The debt is basically traded on a weekly basis. Our customers are foreign governments like China, OPEC and Arab States, oil Sheiks, some customers are friendly... some are not! Just recently China has indicated they are limiting what they are going to buy in the future and some European countries are talking about a new monetary standard. It's getting harder and harder to sell that much debt every week!
The Congressman asks... What happens if we can't sell 150 billion dollars of our debt each and every week of the year?
OH!... that won't be a good thing... responds the employee. In fact that just recently happened in Germany. They decided to sell a fairly small sum of debt and the auction collapsed... they couldn't sell the debt... not a good situation! NO... No ... not good!
So do we just print the money to cover our debt?
Well... we could... but that would lead to hyper-inflation like pre-nazi Germany or like in Argentina a few years ago. Basically... banana republic monetary policy!
Holy crap! 150 Billion dollars a week, every week, just to cover our debt the Congressman mumbles as he turns and walks away with his head up his ass!
The Flyover Conservative
PS: Thanks to Congressman Mark Kirk, 10th District, IL for this idea.