Free Republic

/snip Many would today argue that it was simply a case of the Fed's failure to take the punchbowl away in time. Such analysis misses a key facet of Bubble dynamics. Once the Mortgage Finance Bubble gained a foothold there was absolutely no way policymakers were going to be willing to risk bursting such a consequential Bubble. I see ample support for my view that Bubble dynamics have taken root throughout government finance. This unprecedented inflation includes Federal Reserve Credit, Treasury borrowings, Agency debt, GSE MBS guarantees, FHA and FDIC insurance, massive pension and healthcare obligations, the myriad new market...

Yesterday, April 26, was Debt Day, and it was the earliest debt day ever. Debt Day is the symbolic day of the year that Congress runs out of money obtained normally through taxes and revenue, and the day that it has to begin financing its expenditures through debt. This year, it is far earlier than it has been in any time in our nation’s history, a little more than halfway through the government fiscal year which begins every October 1. In contrast, last fiscal year did not see debt day until August 3, over three months later.

This bubble of government makes all other economic bubbles that have come before seem puny by comparison. Furthermore, this bubble is uniquely world wide. As liquidity is running out and credit is drying up, many nations are in a chain reaction realizing the hot air on which their financial and political systems stand. In any case the dreams of Obama, the RINOs, and the Democrats will become painfully deflated as the era of big government comes to a close. All bubbles come to an end when the liquidity is no longer available. After a certain point the bubble cannot be...

As liquidity is running out and credit is drying up, many nations are in a chain reaction realizing the hot air on which their financial and political systems stand. In any case the dreams of Obama, the RINOs, and the Democrats will become painfully deflated as the era of big government comes to a close. All bubbles come to an end when the liquidity is no longer available. After a certain point the bubble cannot be stopped by outside forces, but it does stop when the available resources are no longer available. It is like a fire that rages until...