I do want to make sure we’re clear that the budget deficit has no effect on interest rates currently. It could if there were no buyers of our debt and if it continues upward it could get so high that we couldn’t do much about it but raise rates. So it is a concern.

I think that it’s difficult to keep them separate as the politicians want to take too much credit for their input into the economy and that goes double in a Presidential Election year.

 Just because the Financial Times is a wonderful publication worthy of as much praise as I can give it, doesn’t mean you don’t have to think about what it is saying. I just clicked on the top story. Its about the falling dollar and in it it says, “On Friday, John Snow, the US Treasury secretary, maintained that the US supported a strong dollar, and added the familiar rider that, the determination of exchange rates is best left to the market.” Does that mean the US has a strong dollar policy? Well if you weren’t thinking, or didn’t understand what they were saying, you could argue that the US does have a strong dollar policy, after all that is what the Treasury secretary said. To the casual observer that would be enough. But to the more knowledgeable, the second part is the key. The administration can say the have a policy all they want but their actions are the only thing that counts. And as they clearly report the actions are non-existent. They say strong dollar, they act weak dollar. So which policy is it? The verbal or the physical.

As for people paying off debt with rebate checks, nothing could be further from the truth. Debt has increased significantly at the same time rebates are being cashed. We spend, spend spend.

I saw a cartoon that had two guys walking down the street and one said to the other, “The economy’s bound to turn around. Never underestimate the American Consumer’s totally irresistible compulsion to spend money they don’t have on absurd junk they’ll never need.” Fact or Fiction? You decide… 😉