Treasury Just Needs Another Half Trillion To End The Year

The numbers are almost incomprehensible. The Treasury announced today that it expects to raise $550 billion between now and the end of the year.

Bloomberg has the report and it's stunning. From July through December of this year, Treasury borrowings are expected to exceed $1 trillion. That does not count the money they are borrowing on behalf of the Fed. The deficit is now forecast to be somewhere in the neighborhood of $1 trillion. That's a pretty good neighborhood.

I will probably be proven wrong but it seems as if this level of borrowing has to inevitably crowd out private borrowers, many of whom are already paying onerous rates for new debt. If nothing else, it can't help interest rates and certainly can't be viewed as something that will enhance economic recovery. Oh, don't forget these numbers are all before we start paying for all of the campaign promises and the inevitable fiscal stimulus bills sure to come down the pike.

Tom Lindmark