Over Feeding the Glutton While Hoping He’ll Lose Weight

I continue to marvel at the economy, mostly because I don’t understand it.  I see on the Internet:   Federal Budget Deficit Hits April Record.

Could deifying a president ever go wrong?

There is of course an alarming reaction to this soaring problem.  But then I read in this article:

So far the government has been able to pay low interest rates on the borrowing because foreign investors still see U.S. Treasury securities as a haven in times of turmoil. That was apparent last week when global markets were hit by fears over an expanding debt crisis in Europe.

Officials in China, the largest foreign holder of U.S. debt, have said it will be important for the administration to put together a credible plan for getting control of future deficits.

The mystery to me is that “investors” including China continue to be willing to take on the risk of U.S. debt because they see the U.S. government as a good place to invest money.   That is incomprehensible to me.  The investors are enabling the world’s biggest debtor to increase its debt – like offering free booze to alcoholics in the belief that eventually that will get satiated which will help them then control their excessive drinking.

Let’s see, insanity is said to be doing the same thing over and over and yet expecting different results. 

The investors seem like they don’t want the government to quit going deeper into debt.  Or are they addicted to this as well?   When everything crashes everyone will be scratching their heads saying, “What went wrong?”  and “It wasn’t our fault.”  

This all still reminds me very much of years ago when in Reaganomics people kept saying government debt is not a bad thing.  

As long as there is no tomorrow, I suppose, this thinking works.

“Investors” obviously are not sober enough to stop buying U.S. securities – risk taking (=gambling) is too addictive – and thus will never help the U.S. stop its gluttony.  The government apparently feels it is safe as long as investors are willing to keep taking the risk of buying more and more U. S. securities.  Both investors and the U.S. seem very aware of the risk involved of the soaring debt, but the co-dependency leads to denial and other reality defying thinking.