The short answer...because Americans have taken over the financing of her own liabilities!
New York Times’ Floyd Norris writes,
NEARLY a decade ago, when budget deficits ballooned in the United States, it was widely said that Washington — like Blanche DuBois in “A Streetcar Named Desire” — “depended on the kindness of strangers.” In Washington’s case, foreigners — mostly foreign governments — stepped in to buy most of the new Treasury securities being issued.
Budget deficits have ballooned again, but the story is different this time. Americans are buying most of the new Treasuries being issued. Foreign governments, whose purchases were once critical, were net sellers of Treasury securities in the first half of 2010, according to figures released this week.
Well, the US government’s policy to inflate simply means robbing her citizens of her purchasing power.
In a choice of policy actions, it’s almost always short term or goals of immediacy over the long term consequences that matters for policymakers. Who cares about tomorrow? In the long run we’re all dead as their favorite icon used to say.
Yet once the bond bubble implodes, this is going to hurt Americans badly.
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