Real scary

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Treasury again increases auctions of 30-year bonds[/align]By MARTIN CRUTSINGER "“ 1 day ago
WASHINGTON (AP) "” The Treasury Department said Wednesday it will boost the number of times it auctions 30-year bonds to 12 times a year in another move to cope with the government's soaring debt.
The monthly auctions of 30-year bonds follows Treasury's decision just three months ago to double the frequency of the auctions to eight times annually from four.
Treasury also announced it will raise a record $71 billion in a series of auctions next week. The upcoming quarterly refunding will include auctions of three-year and 10-year notes and the 30-year bond.
The $71 billion in refunding auctions surpasses the record of $67 billion set just a quarter ago. It is part of total borrowing needs for the April-June quarter that the government estimates will hit $361 billion, a record for that period.
The huge amounts of borrowing reflect the government's soaring budget deficits, which are being driven by the costs of financing the $700 billion financial rescue program and the impact of a recession that is nearing a record as the longest in the post World War II period.
The economic slump has cut sharply into tax revenue and boosted government spending for benefit programs such as unemployment insurance and food stamps.
The administration is projecting the federal deficit for the entire budget year ending Sept. 30 will total an all-time high of $1.75 trillion, nearly four-times the size of the previous record of $454.8 billion set last year.
Treasury officials said Wednesday the government will hit the current debt limit of $12.1 trillion sometime in the second half of this year. It was just two months ago that Congress boosted the debt ceiling from $11.1 trillion as part of the legislation that enacted President Barack Obama's $787 billion economic stimulus program.
The $361 billion in borrowing needs for the current quarter compared with borrowing of just $13 billion in the same period a year ago. Normally the government's borrowing needs shrink in the spring quarter because of all the tax revenue being collected.
The government is projecting that the borrowing needs for the July-September quarter will total $515 billion, compared with borrowing of $530 billion for the year-ago period.
Some private economists have expressed concerns the soaring budget deficits could trigger fears among bond investors, many of them foreigners, about the government's ballooning borrowing needs.
However, Treasury officials said there had been no evidence of that. They noted that all the financial market turmoil since October has pushed Treasury bond rates lower as worried investors have snapped up U.S. government debt, believing it to be the safest type of investment in turbulent times.
Treasury's benchmark 10-year bond initially tumbled last month after the Fed said it would purchase up to $300 billion in Treasurys over six months as a way of pushing mortgage rates lower and helping bolster the battered U.S. housing market. Since that time, 10-year notes have rebounded a bit and are now trading around 3 percent, still low by historic standards.
"We are the deepest and most liquid market in the world," Karthik Ramanathan, Treasury's acting assistant secretary for financial markets, told reporters Wednesday. "When there are flights to quality ... the U.S. Treasury market is first and foremost in individual's minds and we believe that will continue in the future."
The increase in the frequency of auctions of 30-year bonds follows a Treasury decision in February to bring back the seven-year note.
Ramanathan said he believed Treasury now had introduced a sufficient diversity of debt maturities to handle the rising borrowing needs and that the only changes needed in coming months will be increases in the size of the offerings.

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http://www.sfexaminer.com/opinion/Examiner-Editorial-Get-ready-for-Obamas-coming-hyperinflation-44030232.html

Examiner Editorial: Get ready for Obama"™s coming hyperinflation

04/29/09 7:19 PM [/align]
Santayana"™s maxim "” those who refuse to learn from history are doomed to repeat it "” has grown threadbare from heavy use. But it unavoidably comes to mind this week, as President Barack Obama and his fellow Democrats on Capitol Hill blithely put the final touches on the chief executive"™s proposed 2010 federal budget.
With an unprecedented deficit that"™s approaching $2 trillion, this budget proposal is a surefire prescription for hyperinflation. So every senator and representative who votes for this monster $3.6 trillion budget will be endorsing a spending spree that could very well turn America into the next Weimar Republic. For those too young to remember, that was the period in Germany in the years between the two world wars when people needed wheelbarrows full of money to buy a loaf of bread.
In a 1993 interview, Harvard University law professor Friedrich Kessler offered a chilling portrait of the Weimar Republic: "œIt was horrible. Horrible! Like lightning it struck. No one was prepared. The shelves in the grocery store were empty. You could buy nothing with your paper money."�
Thanks to the expanding profligacy on Capitol Hill, a version of such economic hell will likely happen here, according to two prominent economists. Johns Hopkins University professor Steve Hanke notes that the Federal Reserve"™s balance sheet "œhas more than doubled in size since August. Unless the Fed shrinks its balance sheet,"� he warns, "œ... inflation will roar back with a vengeance."�
The printing presses have been running nonstop since Congress approved the Troubled Asset Relief Program and the $787 billion bailout of insolvent firms that went wobbly after abusing "œeasy credit."� Yet with interest rates now close to zero, Hanke points out that the Fed is merely "œprescribing more of the same."�
In their groundbreaking Monetary History of the United States, Anna Schwartz and the late Nobel Prize winner Milton Friedman found that then (as now) a huge influx of foreign capital accompanied the early stages of Weimar hyperinflation. Schwartz, who today believes the "œsystemic risk"� cited as justification to recapitalize failed financial institutions was just an excuse to save bankers"™ hides, agrees that massive inflation is "œunavoidable."�
There have been other, more recent, bouts of hyperinflation. After years of deficits, the former Yugoslavia tried to print its way out of a similar predicament, then imposed price controls to counter the inevitable 15 to 25 percent annual inflation rate. Economic collapse quickly followed the worst hyperinflation in history. On Nov. 12, 1993, 1 million dinars could be traded for one German deutsche mark; by Jan. 4, 1994, the exchange rate was 6 trillion to one.
With Obama"™s reckless 2010 budget "” which was passed without a single Republican vote "” Democrats are playing with inflationary fire.
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