“The long-term deficit and debt that we have accumulated is unsustainable. We can’t keep on just borrowing from China or borrowing from other countries,” Obama told a town hall meeting event in New Mexico.
“What’s also true is at some point they’re just going to get tired of buying our debt,” he said.
“And when that happens, we will really have to raise interest rates to be able to borrow and that will raise interest rates for everybody.”
The key words here are “when that happens”. So…we can 1. cut spending, 2. raise taxes, 3. monetize the debt, 4. sell the debt to US citizens instead of China, and others. Of course it will be some combination of these 4, but how much will each be emphasized? Swamp Report sees little political appetite for 1 and 2. Option 3 is already being used aggressively. To utilize option 4 to absorb much of the debt, while continuing to use option 3, requires a resurgence of panic.
